Wendell S. Wigle

Staff of the Ontario Securities Commission alleged that the corporate and individual respondents engaged in unregistered trading and illegal distributions of securities in relation to purported biofuels technology companies.

The Commission found that the respondents acted as market intermediaries whose primary business was raising capital, precluding reliance on the accredited investor exemption.

The individual respondents engaged in acts in furtherance of trades by signing treasury directions, opening bank accounts, and maintaining misleading websites.

The Commission also affirmed its jurisdiction over the matter despite the use of offshore entities, finding a substantial connection to Ontario.

The respondents were found to have breached sections 25 and 53 of the Securities Act and acted contrary to the public interest.

Staff of the Ontario Securities Commission brought allegations against Norshield Asset Management (Canada) Ltd., Olympus United Group Inc., John Xanthoudakis, Dale Smith, and Peter Kefalas regarding the collapse of the Norshield Investment Structure, which resulted in significant losses for retail investors.

The Commission found that Xanthoudakis and Smith were the directing minds of the complex investment structure.

The respondents breached Ontario securities laws by failing to deal fairly, honestly, and in good faith with clients, specifically by communicating artificially inflated net asset values and engaging in preferential redemptions.

They also failed to maintain proper books and records and provided materially misleading information to Commission Staff during an investigation.

The Commission concluded that the respondents' conduct was abusive to the integrity of Ontario's capital markets and contrary to the public interest.

Following a merits decision finding that the respondents breached continuous disclosure obligations by failing to disclose the potential revocation of mining leases in Sierra Leone, the Ontario Securities Commission held a hearing to determine sanctions and costs.

The Commission declined to impose administrative penalties or order the corporate respondent to implement new disclosure policies because Staff failed to provide adequate notice of these specific sanctions in the Notice of Hearing.

The CEO, who was the driving force behind the non-disclosure, was reprimanded and banned from acting as a director or officer of any issuer for 10 years.

The CFO, who acquiesced in the failures, was reprimanded and banned for 12 months.

The corporate respondent and the CEO were ordered to pay $60,000 and $40,000 respectively towards the costs of the investigation and hearing.

The Ontario Securities Commission held a hearing to consider whether to impose sanctions against Euston Capital Corp. and George Schwartz based on findings and orders made by securities regulatory authorities in Saskatchewan, Alberta, Manitoba, and British Columbia.

The Commission determined that it had jurisdiction to make a reciprocal order under section 127 and subsection 127(10) of the Securities Act.

The Commission held that subsection 127(10) operates retrospectively because its purpose is to protect the public, not to punish.

Finding that the Respondents' conduct in other jurisdictions would have violated Ontario securities laws and harmed investors, the Commission ordered that the Respondents cease trading in securities for ten years, be prohibited from acquiring securities for ten years, and that Schwartz be prohibited from acting as a director or officer of any issuer for ten years.

Staff of the Investment Dealers Association of Canada (IDA) applied for a hearing and review of an IDA Hearing Panel's penalty decision regarding two registered representatives who facilitated manipulative trading.

IDA Staff argued the Hearing Panel erred in principle by imposing a two-month suspension, $25,000 fines, and $40,000 in costs, which was less than the requested sanctions.

The Ontario Securities Commission dismissed the application, finding that the Hearing Panel considered the appropriate factors, including the respondents' ability to pay, their legal costs, and their subsequent compliance, and did not proceed on any incorrect principle.

The Ontario Securities Commission held a hearing to consider a settlement agreement between Staff and Gord McQuarrie regarding allegations of unregistered trading, illegal distribution, and making prohibited representations in relation to Shallow Oil & Gas Inc. McQuarrie admitted to acting as a salesperson, trading without registration, and falsely representing that the company would be listed on a stock exchange.

The Commission approved the settlement, finding the agreed sanctions—including a $500 administrative penalty, $2,500 disgorgement, $500 in costs, a permanent telephoning ban, and a 4-year market ban—to be within acceptable parameters and in the public interest.

The Ontario Securities Commission held a hearing to consider a proposed Settlement Agreement between Staff and the respondent.

The respondent admitted to failing to act with due diligence by executing unauthorized trades and participating in abusive trading practices, including market manipulation and creating a false appearance of trading volume in a reporting issuer's shares.

The Commission approved the settlement, finding the agreed sanctions—including a five-year trading ban and permanent bans on acting as a director, officer, or registrant—to be within acceptable parameters and in the public interest to provide specific and general deterrence.

Following a merits decision finding that the respondents violated registration and prospectus requirements under the Securities Act, the Ontario Securities Commission held a sanctions and costs hearing.

The respondents did not attend.

The Commission ordered a 10-year cease trade and acquisition ban, a 10-year director and officer ban for the individual respondent, and $2,000 in costs, finding these sanctions necessary to protect investors and deter future misconduct.

The moving parties, respondents in an ongoing enforcement proceeding, brought a motion to stay the proceeding on the grounds of a reasonable apprehension of bias.

The motion was based on public comments made by the Chair of the Ontario Securities Commission during a television interview regarding the honesty of the individuals who ran Norshield.

The moving parties argued that these comments created a reasonable apprehension of bias on the part of the hearing panel under the doctrines of systemic bias, institutional impartiality, and corporate taint.

The Commission dismissed the motion, finding that the integrated agency model is statutorily authorized and that safeguards exist to separate the adjudicative function from the Chair and enforcement staff.

The panel concluded that a fully informed reasonable person would not apprehend bias on the part of the independent hearing panel based on the Chair's comments.

The moving parties brought a motion to revoke or vary a direction issued by the Ontario Securities Commission freezing the assets of the offshore funds.

The moving parties argued the direction contradicted a Superior Court decision refusing a Mareva injunction in a related civil proceeding.

The Commission dismissed the motion, finding that the regulatory proceeding is separate from the civil litigation and that the public interest favoured preserving the assets pending a Superior Court hearing to continue the direction.

The Ontario Securities Commission held a hearing on the merits regarding allegations that the respondents traded and distributed securities without registration or a prospectus.

The respondents solicited investments in promissory notes via the internet, promising high returns.

The Commission found that the respondents breached sections 25(1) and 53(1) of the Securities Act by trading and distributing securities without registration or a prospectus, and acted contrary to the public interest.

Following a merits decision finding that the respondents engaged in unregistered trading, illegal distributions, and high-pressure sales tactics, the Ontario Securities Commission held a hearing to determine sanctions and costs.

The Commission found the respondents' conduct to be egregious, involving misrepresentations to investors and breaches of prior Commission orders.

The Commission ordered permanent and 20-year trading bans, director and officer bans, and telephoning prohibitions.

Administrative penalties of $200,000 each were imposed on First Global and Grossman, and $20,000 on Shuman.

The respondents were also ordered to pay costs totaling $62,573.74.

The Ontario Securities Commission held a hearing to consider a proposed Settlement Agreement between Staff and the respondent.

The respondent admitted to acting as an advisor and performing acts in furtherance of a trade without being registered, contrary to s. 25(1) of the Securities Act.

The Commission approved the settlement, noting the respondent's cooperation, the lack of harm to investors, and his efforts to correct his conduct.

The respondent was ordered to cease trading and acquiring securities for nine months, lost exemptions for nine months, and was ordered to pay $3,000 in costs.

The Ontario Securities Commission held a hearing to consider a settlement agreement between Staff and the respondent, who had previously been subject to cease trade orders.

The respondent admitted to breaching the prior orders by engaging in unauthorized discretionary trading and defrauding investors of substantial funds, for which he was also criminally convicted and sentenced to imprisonment.

The Commission approved the settlement agreement, finding that permanently restricting the respondent from registering, trading, or acting as an officer or director of any issuer was in the public interest.

The respondents brought a motion for particulars regarding allegations of illegal trading and distributions under the Securities Act.

They argued that the Statement of Allegations and the voluminous disclosure provided by Staff were insufficient to allow them to know the case to meet.

The Commission held that while Staff is not required to meet the strict standard of a criminal proceeding, the duty of procedural fairness requires sufficient particularization of the material facts.

The Commission directed Staff to provide additional specific particulars regarding the alleged illegal distributions, solicitation meetings, and representations, but dismissed the motion to enforce an alleged undertaking by Staff.

Staff of the Ontario Securities Commission brought a motion to defer the hearing of Constitutional Motions brought by the respondents until the hearing on the merits.

The respondents sought to challenge the constitutionality of the investigation provisions of the Securities Act and the manner in which Staff obtained and used an investigation order.

The Commission granted Staff's motion, finding that Charter challenges should generally be decided on a complete factual record rather than in a factual vacuum.

The Commission concluded that the constitutional issues could not be fairly or completely resolved without regard to the contested facts and anticipated evidence that would be presented at the hearing on the merits.

Staff of the Ontario Securities Commission brought a motion to adjourn the respondents' Constitutional Motions until the hearing on the merits.

The respondents' motions challenged the constitutionality of section 11 of the Securities Act and the use of compelled evidence, seeking a stay of proceedings.

The Commission granted Staff's motion, holding that Charter challenges and requests for a stay of proceedings should generally not be decided in a factual vacuum.

The Commission found that a complete factual record, which could only be developed at the hearing on the merits, was necessary to properly assess whether the respondents' Charter rights were violated and what remedies might be appropriate.

Staff of the Ontario Securities Commission brought a motion to remove counsel for the respondent, Deborah Weinstein, on the basis of a conflict of interest.

Counsel had previously represented six outside directors of the same company during the investigation phase, and Staff anticipated calling these directors as witnesses.

The Commission found that a potential conflict of interest existed because counsel might have to cross-examine his former clients.

However, balancing the public interest in the administration of justice with the respondent's right to counsel of choice, the Commission ordered a compromise: counsel could remain on the record provided the respondent retained independent counsel to conduct any cross-examination of the former clients, with strict screening measures in place.

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 Ontario Securities Commission held a hearing to determine whether Momentas Corporation and its founders, Howard Rash and Alexander Funt, violated the Securities Act by trading securities without registration.

Momentas raised over $7.8 million from the sale of convertible debentures using an in-house sales team.

The Commission found that Momentas acted as a market intermediary and could not rely on the accredited investor exemption.

Furthermore, Rash and Funt engaged in acts in furtherance of trades and, as de facto officers and directors, authorized Momentas' breaches of Ontario securities law.

A subsequent hearing was ordered to determine appropriate sanctions.