Margot C. Howard

Staff of the Ontario Securities Commission alleged that the respondents engaged in a fraudulent advance fee scheme targeting UK residents, involving artificial offers to purchase shares at inflated prices and requiring advance fees.

The Commission found that David Pelcowitz and IMG International Inc. committed fraud and traded in securities without registration.

However, the Commission declined to make findings against Michael Smith and Nest Acquisitions and Mergers, concluding that they were fictitious entities or aliases used by unknown persons, and that it is contrary to the public interest to make findings against persons unknown to the Commission.

The Ontario Securities Commission held a merits hearing regarding allegations that Juniper Fund Management Corporation, its principal Roy Brown, and two mutual funds breached various provisions of the Securities Act.

The Commission found that the respondents failed to maintain proper books and records, acted as an unregistered mutual fund dealer, made misleading statements in their prospectus, engaged in prohibited investments and loans, and breached their statutory duty of care.

Brown was found liable as a director and officer for authorizing and acquiescing in the non-compliance.

A sanctions and costs hearing was scheduled.

The applicant, RBC Global Asset Management Inc., applied for exemptive relief from the mutual fund conflict of interest investment restrictions, management reporting requirements, and self-dealing prohibitions under the Securities Act and National Instrument 31-103.

The relief was sought to permit pooled funds to invest using a fund-of-fund structure and to revoke and replace prior relief to remove a multi-tier restriction for certain top pooled funds.

The Ontario Securities Commission granted the requested exemptions, subject to specific conditions regarding disclosure, fee duplication, and voting rights.

Following a merits decision finding that the respondents engaged in unregistered trading and illegal distribution of securities, the Ontario Securities Commission held a sanctions and costs hearing.

The respondents raised approximately $25 million from investors for currency trading, resulting in significant losses.

The Commission ordered 15-year trading and director/officer bans against the respondents, with a carve-out allowing the individual respondent to trade in his own account.

The Commission also ordered the respondents to jointly and severally disgorge $2,193,873, representing the funds used for personal benefit, and imposed an administrative penalty of $250,000 on each respondent.

Costs of $150,000 were awarded to Staff.

The Filer, PetroMagdalena Energy Corp., applied for a decision that it is no longer a reporting issuer in the applicable jurisdictions.

Following a court-approved plan of arrangement, all of the Filer's common shares were acquired by a purchaser, and its options and warrants were cancelled.

The Filer's securities were delisted from the TSX Venture Exchange, and its outstanding notes were redeemed.

As the Filer's securities are beneficially owned by fewer than 15 security holders in each jurisdiction and fewer than 51 worldwide, the Ontario Securities Commission granted the requested exemptive relief.

The applicant, a U.S. public company, applied for an exemption from the prospectus requirements under section 53 of the Securities Act to distribute shares of its wholly-owned subsidiary to its shareholders as a dividend in specie.

The distribution was part of a spin-off transaction.

The Ontario Securities Commission granted the exemption, noting that the applicant had a de minimis presence in Canada, the subsidiary would become an independent public company in the Netherlands, and no investment decision was required from Canadian shareholders.

Following a hearing on the merits where the respondents were found to have engaged in fraudulent conduct, unregistered trading, and illegal distribution of securities involving over $25 million from 1,700 investors, the Commission held a sanctions hearing.

The Commission ordered permanent market bans against all corporate and individual respondents.

The individual respondents were each ordered to pay an administrative penalty of $750,000, disgorge the sums they personally misappropriated (totaling $5.82 million), and pay costs of $163,145.

The Filers, a U.K. listed parent company and its Canadian wholly-owned subsidiary, applied for exemptive relief from continuous disclosure, corporate governance, certification, audit committee, and insider reporting requirements under various National Instruments and the Securities Act.

The subsidiary had issued debt securities fully guaranteed by the parent, but could not rely on the standard credit support issuer exemption because the parent was not an SEC issuer.

The Ontario Securities Commission, as principal regulator, granted the requested relief subject to conditions substantially analogous to the credit support issuer exemption, including that the parent comply with U.K. disclosure requirements and file its U.K. disclosure documents in Canada.

The applicant, a French issuer, applied for exemptive relief from the prospectus and dealer registration requirements under the Securities Act (Ontario) for an employee share offering.

The offering involved the use of collective employee shareholding vehicles (FCPEs) under French law, preventing reliance on standard exemptions.

The Ontario Securities Commission granted the requested relief, subject to conditions regarding the first trade of the acquired securities.

The respondent, Caroline Myriam Frayssignes, brought a motion requesting that all documentary evidence relied upon by Staff at the merits hearing be translated into French.

The Commission dismissed the motion, finding that there is no absolute right to the translation of third-party documents or internal investigation evidence under the French Language Services Act, as such evidence does not constitute a 'service' provided to the public.

Furthermore, the Commission held that the respondent failed to demonstrate any actual prejudice to her right to make full answer and defence that would warrant an order for translation on procedural fairness grounds.

The applicants, ING Direct Asset Management Limited and ING Direct Funds Limited, applied to the Ontario Securities Commission for exemptive relief from the prospectus delivery requirements under the Securities Act.

They sought permission to send or deliver the most recently filed Fund Facts document instead of the simplified prospectus to satisfy the requirement to deliver a prospectus within two days of a mutual fund purchase.

The Commission granted the exemptive relief, subject to conditions including that investors be granted equivalent rights of withdrawal and rescission upon the delivery of the Fund Facts, and that the relief terminates upon the coming into force of any legislation or rule relating to the delivery of the Fund Facts.

The respondent brought a motion to revoke or vary a previous decision denying an adjournment of the merits hearing, citing medical reasons.

The respondent was represented by an unlicensed agent (a law student).

The Commission first determined that a law student cannot act as an agent in a contested motion before an administrative tribunal under the Law Society Act and LSUC By-Laws.

On the merits of the adjournment motion, the Commission found no new information to justify varying the original decision under section 144 of the Securities Act.

The motion was dismissed, with the Commission noting the significant delay in the proceedings and prejudice to the unitholders and Staff.

Staff of the Ontario Securities Commission alleged that the respondents engaged in a fraudulent investment scheme involving foreign exchange (Forex) trading.

The respondents raised approximately $29 million from over 1,700 Ontario investors, many of whom borrowed funds through RRSP loans.

The Commission found that the respondents diverted approximately $20 million to uses other than Forex investments, including significant transfers to themselves, and paid fictitious profits to investors to attract new funds.

The Commission concluded that all respondents engaged in fraudulent conduct, unregistered trading, and an illegal distribution of securities, and acted contrary to the public interest.

Following a merits decision finding the respondents engaged in unregistered trading and advising, misled Commission staff, and breached a temporary cease trade order, the Commission held a sanctions and costs hearing.

The Commission ordered a 15-year trading ban and a 15-year director/officer ban against the respondents, with a carve-out allowing the individual respondent to trade in his personal accounts.

The Commission declined to impose an administrative penalty because no investor funds were raised and no investors were harmed.

The respondents were ordered to pay $45,278.75 in costs.

The applicant, RBC Global Asset Management Inc., applied for exemptive relief from certain investment restrictions, consent requirements, and reporting requirements under the Securities Act and National Instrument 31-103.

The relief was sought to permit top funds to invest in underlying funds in a fund-on-fund structure, expanding upon prior relief granted to a predecessor entity.

The Ontario Securities Commission granted the requested relief, subject to conditions including that the top funds are distributed on a private placement basis, the investments are compatible with the top funds' objectives, and appropriate disclosure is provided to investors.

The Ontario Securities Commission alleged that M P Global Financial Ltd. and its sole director, Joe Feng Deng, engaged in unregistered trading, unregistered advising, and an illegal distribution of securities by selling 'Guarantee Corporation Debentures' to over 150 investors, raising over $21 million.

The funds were purportedly for foreign currency trading, but significant amounts were lost or used to pay other investors.

The Commission found that the Debentures were investment contracts and therefore securities.

The respondents breached the registration and prospectus requirements of the Securities Act.

Mr. Deng was found liable as a director for the corporate breaches.

The allegations of unregistered advising were dismissed due to insufficient evidence.

The conduct was found to be contrary to the public interest.

Following a merits decision finding that the respondents breached the registration requirements of the Securities Act by engaging in unregistered trading of IMAGIN securities, the Ontario Securities Commission held a hearing on sanctions and costs.

The Commission ordered that the individual respondent permanently cease trading in IMAGIN securities, be prohibited from acting as a director or officer of any issuer for 15 years, and be reprimanded.

The Commission declined to impose an administrative penalty, finding the other sanctions sufficient for deterrence.

The respondents were also ordered to pay $57,482.50 in costs, reduced from the requested amount to reflect their partial compliance efforts in paying filing fees.

The applicants applied for an order under subsection 74(1) of the Securities Act exempting them from the prospectus requirement in section 53 for the first trade of common shares of a non-reporting issuer.

The exemption was sought because the applicants and other Canadian residents own more than 10% of the outstanding shares, making the standard exemption in section 2.14 of National Instrument 45-102 unavailable.

The Commission granted the exemption subject to conditions, including that the first trade be made through an exchange outside Canada or to a person outside Canada.

The Ontario Securities Commission held a hearing to consider whether Goldbridge Financial Inc. and Wesley Wayne Weber breached the Securities Act by engaging in unregistered trading and advising.

The respondents posted advertisements online offering trading services and "free" day trading lessons conditional on depositing funds into a corporate trading account.

The Commission found that the respondents breached sections 25(1)(a) and 25(1)(c) of the Act as they were not registered and no exemptions were available.

Furthermore, Mr. Weber breached section 122(1)(a) by making false and misleading statements to Commission Staff and a Commission Panel regarding his trading activities and the use of false names to open online brokerage accounts.

The Commission also found that the respondents acted contrary to the public interest by breaching a temporary cease trade order.

A sanctions and costs hearing was ordered to be scheduled.

The Filer, Drive Products Income Fund, applied for a decision that it is no longer a reporting issuer in the applicable jurisdictions following a take-over bid and compulsory acquisition by 2256479 Ontario Inc. The Filer's units were delisted from the TSX and its outstanding securities are beneficially owned by fewer than 15 security holders in each jurisdiction.

The Ontario Securities Commission, as principal regulator, granted the requested exemptive relief.