Wendell S. Wigle, Q.C.

The Ontario Securities Commission held a hearing to consider a proposed Settlement Agreement between Staff and Brian H. Crombie, former CFO of Biovail Corporation.

Crombie admitted to acquiescing in improper accounting practices regarding revenue recognition, disseminating materially inaccurate information concerning a truck accident, and providing misleading information to Staff during a continuous disclosure review.

The Commission approved the Settlement Agreement, finding it in the public interest.

Crombie was reprimanded, banned from acting as a director or officer of a reporting issuer for eight years, ordered to pay an administrative penalty of $250,000, and ordered to pay $50,000 in costs.

The Ontario Securities Commission held a hearing to determine whether Rex Diamond Mining Corporation and its officers breached the Securities Act by failing to disclose material changes regarding the cancellation of its mining leases in Sierra Leone.

The Commission found that Rex failed to issue news releases and file material change reports when it received warning letters and notices that its leases were cancelled.

The Commission also found that Rex provided misleading disclosure in its public filings and provided an incomplete chronology to Market Regulation Services Inc. The CEO and CFO were found to have authorized, permitted, or acquiesced in these breaches, acting contrary to the public interest.

The Applicant, a mutual funds salesperson, sought a hearing and review of a Director's decision refusing to transfer his registration to a new employer.

The Applicant had been terminated for cause by his previous employer, a bank, for misappropriating Air Miles coupons for his own and his wife's benefit over a five-year period.

The Commission conducted a hearing de novo and found that the Applicant's conduct demonstrated a standard of business conduct below that required of a securities industry professional.

The Commission concluded that the Applicant lacked the trustworthiness and integrity required of a registrant and denied the request to transfer his registration.

Staff of the Ontario Securities Commission alleged that the respondents engaged in unregistered trading and illegal distribution of securities, breached cease trade orders, and used high-pressure sales tactics.

The Commission found that the respondents traded in First Global shares without being registered and without a prospectus, contrary to sections 25(1) and 53(1) of the Securities Act.

The respondents also breached multiple Commission orders and made misrepresentations to investors.

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

A subsequent hearing was ordered to determine sanctions.

The respondents requested that the Commission's Confidential Reasons and Decision dated May 18, 2007 be redacted to remove their names and identifying information prior to public release, relying on the confidentiality provisions in section 16 of the Securities Act.

Staff argued that subsection 17(6) permitted disclosure in connection with a proceeding and opposed a broad sealing order, but did not object to anonymizing the parties.

The Commission held that while it had the authority to release the reasons unredacted, it would exercise its discretion to release a redacted version until the commencement of the hearing on the merits.

Following a hearing on the merits where the respondents were found to have violated registration requirements under the Securities Act by selling convertible debentures without being registered, the Ontario Securities Commission held a sanctions and costs hearing.

The Commission found that the respondents, acting as de facto directors, raised over $7.8 million from investors and took over $2.5 million in undisclosed management draws.

To protect the public interest and deter future misconduct, the Commission ordered permanent cease trade orders, permanent bans on acting as directors or officers, disgorgement of the management draws totaling $2.56 million, administrative penalties of $50,000 each, reprimands, and costs of $38,782.

The respondent was alleged to have breached a previous Commission order and settlement agreement by trading shares while subject to a cease trade order, failing to provide a copy of the order to registrants, and making false statements to Staff regarding his assets.

The Commission found that the respondent committed the alleged breaches.

In determining sanctions, the Commission considered the respondent's repeated disregard for Commission orders and attempts to conceal his actions as aggravating factors.

The Commission ordered a 10-year cease trade and director/officer ban, and ordered the respondent to pay $15,000 in costs.

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

The respondents had filed motions challenging the constitutionality of section 11 of the Securities Act and the manner in which an investigation order was obtained and used, alleging violations of their Charter rights.

The Commission held that the Constitutional Motions should be dealt with in the course of the hearing on the merits because a determination in advance would deprive the Commission of the complete factual basis necessary for a proper consideration of the alleged Charter violations.

Staff's motion was granted and the Constitutional Motions were deferred to the hearing panel.

Staff of the Ontario Securities Commission alleged that the respondent violated a Cease Trade Order by giving instructions to sell shares in a corporate account over which he had sole trading authority.

The respondent argued that the order's exception permitting trading 'for his own account(s)' allowed trading through a corporate entity.

The Commission rejected this interpretation, finding that the exception did not allow trading through corporate vehicles, even if the respondent was the beneficial owner.

The Commission concluded that the respondent breached the Cease Trade Order and ordered a three-year trading ban, removal of exemptions, and $15,000 in costs.

The respondent, president of a reporting issuer, failed to file insider reports for 21 trades within the required 10-day period, breaching section 107(2) of the Securities Act.

Staff of the Commission and the respondent entered into a settlement agreement proposing a $5,000 administrative penalty and $3,500 in costs.

The Commission approved the settlement agreement, finding it to be in the public interest, proportionately appropriate, and a sufficient specific and general deterrent.

The Ontario Securities Commission held a hearing to determine whether it was in the public interest to impose sanctions against Pierre Alfred Montpellier and his companies under section 127 of the Securities Act.

Montpellier had previously pleaded guilty to criminal fraud and theft for operating a Ponzi scheme that defrauded 128 investors of over $5.3 million.

The Commission found that Montpellier's egregious conduct demonstrated he could not be trusted to participate in the capital markets.

The Commission ordered that Montpellier's registration be terminated, that he and his companies permanently cease trading in securities (with no RRSP carve-out), and that he be permanently prohibited from acting as a director or officer of any issuer.

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 approved a settlement agreement concerning the respondents' involvement in an 'overtrade' of Bioscrypt Inc. shares.

Paradigm Capital Inc., acting as an agent for a private placement, facilitated secondary market trades for a mutual fund manager who had been solicited for the private placement.

This resulted in shares being sold by persons with knowledge of an undisclosed material fact to persons without such knowledge.

The Commission found this conduct contrary to the public interest, reprimanded the respondents, imposed trading restrictions, and ordered settlement payments and costs.