Paul K. Bates

The Ontario Securities Commission held a hearing to consider whether to approve a Settlement Agreement between Staff and Biovail Corporation.

Biovail admitted to inaccurate and false public disclosure that materially impacted its financial statements, including failing to disclose arrangements with a research vehicle, improperly recognizing revenue from a 'bill and hold' transaction, failing to correct a material error in exchange rates, and disseminating incorrect statements regarding a truck accident.

Biovail also provided misleading information to Staff.

The Commission approved the Settlement Agreement, finding it in the public interest, and ordered Biovail to be reprimanded, pay a $5,000,000 administrative penalty, pay $1,500,000 in costs, and retain a consultant to review its compliance training.

Staff of the Ontario Securities Commission sought to extend a temporary cease trade order prohibiting short selling in the common equity securities of certain financial sector issuers interlisted in the United States.

The initial order was issued to prevent regulatory arbitrage following emergency orders by the United States Securities and Exchange Commission.

The Commission found it in the public interest to extend the order to parallel the SEC's extensions, thereby promoting fair and orderly markets in Ontario.

The temporary cease trade order was extended with amendments.

The Ontario Securities Commission held a hearing to consider whether to approve a settlement agreement between Staff and the respondent, a former director and officer of Philip Services Corp. The respondent admitted to failing to ensure that the company filed financial statements containing full, true, and plain disclosure regarding a restructuring charge, holding certificates, unrecorded liabilities, and a financing arrangement.

The Commission approved the settlement agreement as being in the public interest, imposing sanctions that included a 20-year director and officer ban, a 10-year trading ban, a reprimand, and $125,000 in costs.

Staff of the Ontario Securities Commission alleged that the respondent, a lawyer and business consultant, engaged in unregistered trading and advising, illegal distributions, and made misleading representations regarding securities of Saxton Investments Ltd. and Sussex International Ltd. The respondent had attended meetings and provided updates on Cuban business operations to investors and salespeople.

The Commission found that the respondent's conduct was informational rather than promotional, and did not amount to acts in furtherance of a trade or advising.

The Commission also found insufficient evidence that the respondent knew the operations were running at a loss when he provided updates, or that he engaged in illegal distributions.

All allegations were dismissed.

The Ontario Securities Commission held a hearing to consider a settlement agreement between staff and the respondents regarding repeated failures to file annual and interim financial statements and related certificates on time.

The respondents admitted their conduct was contrary to the public interest and Ontario securities laws.

The Commission approved the settlement, ordering the corporate respondents to institute procedural changes and each pay a $5,000 administrative penalty, and reprimanding all respondents, including the individual respondent.

The Special Committee of Financial Models Company Inc. applied for orders under sections 104(1) and 127(1) of the Securities Act to cease-trade a take-over bid by a significant shareholder, Katotakis.

The Special Committee alleged the bid did not comply with Part XX of the Act and was contrary to the public interest because it relied on locked-up shares to meet minority approval thresholds for a follow-on transaction and improperly relied on a valuation exemption.

The Ontario Securities Commission dismissed the application, finding no technical breach of Rule 61-501 and no abuse of the capital markets, as the transaction was not artificial and did not defeat the reasonable expectations of shareholders given the prior disclosure of the shareholder agreement.

The Ontario Securities Commission approved a settlement agreement with the respondent.

The respondent acknowledged engaging in insider trading contrary to s. 76(1) of the Securities Act, failing to file required insider reports under s. 107, and failing to correct a Management Information Circular that incorrectly stated his share ownership.

The Commission found the sanctions, which included a reprimand, fairly reflected the gravity of the conduct and approved the settlement as being in the public interest.

The Ontario Securities Commission approved a settlement agreement with Mark Edward Valentine, former chair of Thompson Kernaghan & Co. Valentine pleaded guilty to securities fraud in the US and admitted to creating a culture of conflict of interest and noncompliance in Ontario.

The Commission found the settlement, which included a permanent director/officer ban, a 15-year cease-trade order, termination of registration, and a $100,000 costs payment, to be in the public interest.

The Ontario Securities Commission held a hearing regarding a former branch manager at a registered dealer.

The respondent was alleged to have provided inaccurate 'Proof of Funds' letters to a client to facilitate a high-yield investment program.

The letters misrepresented the funds in the accounts, falsely stated funds would be held, and attested to the legitimacy of funds without due diligence.

The respondent did not attend the hearing.

The Commission found the respondent's conduct contrary to the public interest, noting his failure in his gatekeeper role as a registrant and branch manager.

The respondent's registration was terminated for 10 years, he was permanently banned from supervisory roles, reprimanded, and ordered to pay $126,938.50 in costs.

Following his criminal conviction for insider trading, the Ontario Securities Commission held a hearing to determine whether to impose public interest sanctions against the respondent under s. 127 of the Securities Act.

The respondent, while an officer and director of a reporting issuer, had sold shares with knowledge of undisclosed material negative assay results, avoiding significant losses.

The Commission found his conduct egregious and a breach of fiduciary duty.

To protect the capital markets, the Commission ordered a 15-year cease trade order and a 15-year ban on acting as a director or officer of any reporting issuer, with limited carve-outs for personal trading.

The applicant, a group retirement plan administrator registered as a mutual fund dealer and portfolio manager, sought an exemption from the requirement to become a member of the Mutual Funds Dealers Association (MFDA).

The applicant argued its business model, which included discretionary trading, was incompatible with MFDA rules and that restructuring would be costly and confusing to clients.

The Commission denied the exemption, emphasizing that investor protection and the benefits of MFDA oversight outweighed the administrative and financial burdens of restructuring.

A temporary exemption was granted to allow the applicant time to apply for MFDA membership.

Staff of the Ontario Securities Commission sought to extend a temporary order suspending the respondent's registration and cease trading his securities pending a hearing on the merits.

The respondent did not oppose the registration suspension but sought to vary the cease trade order to allow trading in NASDAQ and over-the-counter markets.

The Commission found that the existing permissible trading areas covered a substantial proportion of North American securities and declined to expand them.

The temporary order was extended on its existing terms until July 31, 2004, or the commencement of the hearing.

The Staff of the Investment Dealers Association of Canada applied for a hearing and review of a District Council decision regarding a registered representative who traded for a client attempting to manipulate the market price of a security.

The District Council had dismissed the allegation that the respondent facilitated the business of an unregistered entity and imposed a penalty without a fine or disgorgement.

The Ontario Securities Commission found that the District Council misapprehended the evidence of facilitation and the public interest in strong sanctions for willful market manipulation.

The Commission set aside the dismissal, imposed a fine of $128,504.55 (including disgorgement of commissions), and suspended the respondent's approval for seven years.