Paul M. Moore

Counsel for two respondents brought a motion to be removed as counsel of record, citing the respondents' failure to cooperate and provide information necessary for their representation.

The respondents did not respond to communications or the notice of motion, and did not attend the hearing.

The Commission granted the motion, noting that counsel cannot properly represent clients without their cooperation and information.

The Commission also warned that future requests for adjournments by the respondents based on a lack of counsel would not be viewed favourably, as they had sufficient time to retain new counsel before the scheduled hearing.

The applicant, acting as receiver and manager of a company, applied under s. 17(1) of the Securities Act for an order permitting the use of transcripts of compelled testimony in civil proceedings against the company's former auditor.

The Commission dismissed the application, holding that the public interest under s. 17 relates to balancing the integrity of the investigative process and the privacy of those investigated, and does not include facilitating civil actions by investors.

The Commission also confirmed that the applicant could ask relevant questions in the civil proceedings provided the transcripts were not used or referenced.

The Ontario Securities Commission approved a settlement agreement with a former vice president regarding allegations of insider trading and failure to disclose a material change.

The respondent admitted to exercising options and selling shares while aware of an undisclosed contract dispute, avoiding a loss of approximately $729,000.

The settlement included a 15-year trading ban, a 15-year ban on acting as a director or officer, and a $150,000 administrative penalty.

The Commission found the settlement to be in the public interest, noting mitigating factors such as the respondent's lack of experience, reliance on the company's CFO, and cooperation with Staff.

Staff of the Ontario Securities Commission alleged that Universal Settlements International Inc. (USI) traded in securities without registration or a prospectus by offering viatical products to investors.

The central issue was whether these viatical products—fractional interests in the death benefits of life insurance policies—constituted 'investment contracts' under s. 1(1) of the Securities Act.

Applying the Howey and Pacific Coast tests, the Commission found that the products involved an investment of funds with a view to profit in a common enterprise, where profits were derived from the undeniably significant efforts of USI and its agents.

Consequently, the viatical products were deemed securities, requiring USI to comply with the Act's registration and prospectus requirements.

The respondent brought motions for immediate disclosure of materials generated during an investigation and for permission to use those materials to prepare for an interview by the United States Securities and Exchange Commission (SEC).

The Ontario Securities Commission ordered staff to disclose the materials immediately, finding that 'as soon as is reasonably practicable' means without delay if no herculean efforts are required.

The Commission also held that the respondent's use of the materials to prepare for the SEC interview would not breach the implied undertaking rule or section 16(2) of the Securities Act, given the intertwined nature of the SEC and Commission investigations.

Teck Cominco Limited applied to the Ontario Securities Commission for an order to cease trade any securities issued under Inco Limited's shareholder rights plan.

The parties consented to an order lifting the rights plan against the Teck bid effective August 16, 2006.

The Commission determined it was in the public interest to lift the rights plan not only against the Teck bid, but against all potential bidders, to ensure an unrestricted auction and allow shareholders to evaluate all offers.

The Ontario Securities Commission held a hearing to consider a settlement agreement between Staff and the respondent regarding insider trading.

The respondent, an insider of AiT, traded shares with knowledge of undisclosed material facts and failed to file insider reports on time.

The Commission approved the settlement agreement, which included a two-year cease trade order, a two-year director and officer ban, a reprimand, a $24,000 payment representing 1.5 times the profit made, and $5,000 in costs, finding the sanctions to be within acceptable parameters and in the public interest.

Staff of the Ontario Securities Commission sought costs of $30,748.50 against the respondents following a hearing on the merits and sanctions.

The individual respondent, who was unrepresented, did not attend the costs hearing or file submissions.

The Commission reviewed staff's timesheets and hourly rates, finding the claimed amount to be conservative and reasonable.

The Commission ordered the respondents to pay $30,748.50 in costs on a joint and several basis.

The Ontario Securities Commission found that the respondents, Richard Ochnik and 1464210 Ontario Inc., engaged in an illegal RRSP/loan scheme.

The respondents traded securities without registration and distributed securities without a prospectus, contrary to sections 25 and 53 of the Securities Act.

Ochnik targeted financially vulnerable individuals, inducing them to collapse locked-in retirement funds to invest in his company in exchange for promised 'non-repayable loans' that many never received.

The Commission concluded the conduct was egregious and predatory, imposing permanent cease trade orders, permanent director and officer bans against Ochnik, and directing Staff to apply to the Superior Court for restitution orders.

The respondents brought a motion to dismiss the proceeding against them on the basis that it was commenced outside the six-year limitation period under section 129.1 of the Securities Act.

Staff alleged a course of conduct involving unregistered trading and illegal distributions that culminated in sales to broker dealers prior to the limitation date, but argued that subsequent receipt of proceeds and certain private share transfers brought the conduct within the limitation period.

The Commission held that the subsequent events were not integral to the alleged wrongdoing and that the Statement of Allegations contained no separate allegations of wrongdoing for events after the limitation date.

The motion was granted and the proceeding dismissed.

The Ontario Securities Commission held a settlement hearing regarding Zephyr Alternative Power Inc.'s issuance of convertible debentures.

Zephyr relied on the accredited investor exemption but failed to ensure that all investors met the criteria, as some subscription agreements lacked completed certification schedules.

Additionally, Zephyr failed to ensure that the subscription agreements accurately reflected the 20 percent sales commission paid to limited market dealers, with some agreements incorrectly stating a 10 percent commission.

The Commission approved the settlement agreement, which included a reprimand, the implementation of a compliance program, and an undertaking by Zephyr to offer rescission to affected investors.

The respondent, a U.S.-based internet securities firm, traded U.S. securities on behalf of Canadian residents without being registered in any Canadian jurisdiction.

The respondent acknowledged the breach, which it claimed was due to a good faith but erroneous belief that its non-solicitation of Canadian residents exempted it from registration.

A joint hearing of multiple provincial securities commissions was held to consider a settlement agreement.

The commissions approved the settlement agreement, which included a payment of $550,000 CAD and an undertaking by the respondent's Canadian affiliate to seek registration, finding the sanctions to be in the public interest and proportionate to the misconduct.

The Ontario Securities Commission held a hearing to consider whether to approve settlement agreements between Staff and the respondents, Gregory and Walter Hryniw.

The respondents admitted to providing false and misleading statements to Staff during an investigation into trading in a Bermuda account.

The Commission approved the settlement agreements, which included a three-year trading ban, a three-year prohibition on acting as an officer or director, a reprimand, and a payment of $2,500 each towards costs.

The Commission also permitted the hearing to proceed electronically via telephone conference, despite the reprimand sanction, due to the respondents' out-of-province residency and impecuniosity.

Staff of the Ontario Securities Commission brought a settlement hearing regarding Wells Fargo Financial Canada Corporation's failure to file prospectus supplements on time on four occasions.

The Commission approved the settlement agreement, noting that inadvertence and reliance on outside counsel were not valid excuses for late filings.

The Commission imposed an administrative penalty of $20,000, emphasizing that this novel use of an administrative penalty serves as a specific deterrent to the respondent and a general warning to market participants about the importance of timely filings.

Following a decision on the merits where the respondents were ordered to pay the costs of the Commission's investigation and hearing, a costs hearing was held to determine the quantum.

The respondents sought an adjournment, arguing that staff's disclosure of costs was insufficient, but the motion was dismissed as out of time.

Staff submitted a bill of costs for $32,332.60, supported by dockets that grouped tasks under generic descriptions.

The Commission found the docket entries insufficiently detailed to justify the full amount claimed and applied a substantial discount, fixing the quantum of costs at $20,000.00 to be paid jointly and severally by the respondents.

The applicant, a registered trader, sought a hearing and review of a decision by the hearing panel of Market Regulation Services Inc. (RS) finding him guilty of frontrunning contrary to Rule 4-204(1) of the Rules of the Toronto Stock Exchange.

The applicant argued he was denied procedural fairness, that the RS Panel erred in law by finding that risk and disadvantage to the client were not elements of the offence, and that the RS Panel overlooked evidence suggesting the trade was meant to facilitate a client order.

The Commission affirmed the RS Panel's decision, holding that the applicant had notice of the case to meet, that risk and disadvantage are not elements of Rule 4-204(1), and that the applicant's proposed inference was unsupported speculation.

The sanctions, including a $15,000 fine and a one-month suspension, were confirmed.

Credit Suisse First Boston Canada Inc. (CSFB) applied for a hearing and review of a decision by the hearing panel of Market Regulation Services Inc. (RS) that disqualified its counsel, Stikeman Elliott, from acting in an RS proceeding.

RS alleged that Stikeman Elliott was in a conflict of interest because it had previously advised the Toronto Stock Exchange (TSE) on the creation of RS, and was now raising defences on behalf of CSFB that attacked the very regulatory structure it helped create.

The Ontario Securities Commission upheld the disqualification, finding that Stikeman Elliott owed a subsisting duty of loyalty to RS as a former client and possessed relevant confidential information with a risk of misuse.

The Commission concluded that permitting the law firm to repudiate its own prior legal advice would undermine public confidence in the administration of justice.

The Ontario Securities Commission held a hearing to consider a settlement agreement between Staff and the respondent regarding allegations of illegal insider trading.

The respondent admitted to receiving undisclosed material information from a close friend who was a managing director at a securities firm, and using that information to trade in the securities of two reporting issuers, realizing a profit of approximately $1.9 million.

The Commission approved the settlement agreement as being in the public interest, noting the respondent's cooperation with Staff, his agreement to a permanent cease trade order and director/officer ban, a voluntary payment of $1.9 million, and $25,000 in costs.