Robert Hutchison

Staff of the Ontario Securities Commission alleged that Dennis Meharchand and Valt.X Holdings Inc. illegally distributed securities, engaged in unregistered trading, and committed fraud.

The Commission found that the respondents distributed common shares, convertible notes, and investment contracts without a prospectus or an available exemption.

The respondents also engaged in the business of trading securities without being registered.

Furthermore, Mr. Meharchand committed fraud by making false statements to investors about the use of funds and by using investor funds for improper personal purposes, including gambling.

The Commission concluded that the respondents breached the Securities Act and directed a hearing regarding sanctions and costs.

The respondents, Dennis Meharchand and Valt.X Holdings Inc., brought a motion seeking the recusal of two members of the Commission's Staff involved in an enforcement proceeding against them, alleging tampering with evidence and bias.

The respondents also requested an adjournment of the motion hearing, which the panel denied due to a lack of exceptional circumstances and the respondents' history of delaying the proceeding.

On the merits of the recusal motion, the panel found no evidence of improper conduct or bias by Staff.

The alleged evidence tampering was an inadvertent scanning error that was promptly corrected, and the use of the word 'complaint' in an investigator's evidence summary did not demonstrate bias.

The motion was dismissed.

The respondent entered into a settlement agreement with Staff of the Commission regarding its failure to provide timely delivery of summary disclosure documents to investors who purchased exchange traded fund securities.

The failure was inadvertent and caused by a software programming error, with no evidence of investor losses or financial benefit to the respondent.

The Commission approved the settlement agreement, finding it in the public interest, and ordered a $700,000 administrative penalty, $35,000 in costs, and the implementation of enhanced control and supervision procedures.

The applicant, a former IIROC registrant, sought a hearing and review of an IIROC hearing panel decision that found he failed to use due diligence to ensure investment recommendations were in accordance with clients' risk tolerances.

The applicant argued the IIROC panel erred by making findings in the absence of certain missing documents and by relying on the unqualified expert opinion of an IIROC investigator regarding the risk of various securities.

The Ontario Securities Commission dismissed the application, finding that the applicant had made no effort to obtain the missing documents and had not objected to their absence at the IIROC hearing.

Furthermore, the Commission held that the investigator's evidence regarding the risk of the securities was factual, based on the applicant's own admissions, the firm's ratings, and issuer prospectuses, and did not constitute expert opinion evidence.

The respondent, a partner at a global law firm, admitted to engaging in conduct contrary to the public interest by failing to pre-clear trades in securities of a client issuer, in violation of his firm's policy.

Although there was no allegation of insider trading or violation of Ontario securities law, the respondent was in a special relationship with the issuer.

The Ontario Securities Commission approved a settlement agreement between Staff and the respondent, finding the agreed-upon sanctions and costs to be reasonable and in the public interest.