Securities Law

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order under s. 127(10) of the Securities Act to impose market conduct restrictions on the respondents, mirroring an order made by the Alberta Securities Commission.

The ASC had found that the respondents made materially misleading statements and that one respondent perpetrated a fraud in connection with a life settlement investment scheme.

The Commission rejected arguments that the proposed sanctions violated the Charter or the Canadian Human Rights Act.

Finding it necessary to protect Ontario investors and capital markets, the Commission granted the order and imposed reciprocal market conduct restrictions, including a permanent ban on trading and acquiring securities for the respondent who perpetrated the fraud.

Staff of the Ontario Securities Commission sought sanctions and costs against Z2A Corp. and Christine Hewitt following a merits hearing that found they engaged in unregistered trading and illegal distributions of securities.

The respondents facilitated a charitable gifting program where donors received shares of a company in exchange for cash donations, with the respondents supplying the shares and retaining a significant portion of the funds.

The Commission found the respondents' conduct to be serious and ordered them to cease trading in securities for five years, resign from any director or officer positions, and pay administrative penalties of $15,000 each.

The respondents were also ordered to disgorge $229,453.10 obtained from their non-compliance and pay $50,000 in costs.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order against the respondents under s. 127(10) of the Securities Act, based on a prior decision of the British Columbia Securities Commission (BCSC).

The BCSC had found that the respondents engaged in unregistered trading, illegal distribution, and fraud, and imposed permanent market bans and financial penalties.

The OSC found it was in the public interest to protect Ontario investors and capital markets by imposing permanent cease trade orders and director/officer bans against the respondents, consistent with the BCSC order.

The Applicants brought a motion requesting the dismissal of the proceeding against them and, alternatively, that the proceeding be heard by another panel member due to a reasonable apprehension of bias.

They also sought to vary a prior interlocutory decision limiting their witness list.

The Ontario Securities Commission dismissed the motion in its entirety.

The Commission held that a motion to dismiss based on the merits of the allegations was premature.

It also found no novel issues or evidence to justify varying the prior witness motion decision under section 78(1) of the Commodity Futures Act.

Finally, the Commission concluded that the Applicants' disagreement with the prior decision did not establish a reasonable apprehension of bias.

Following a merits hearing where the individual respondents were found to have engaged in unregistered trading and fraudulent conduct in relation to a corporate hijacking scheme, the Commission held a hearing to determine sanctions and costs.

The respondents failed to attend despite receiving notice, and the hearing proceeded in their absence.

The Commission found their conduct to be egregious and ordered 15-year market bans, administrative penalties of $100,000 for Khodjaiants and $75,000 for Dubinsky, and disgorgement of the funds obtained through the scheme.

The respondents were also ordered to pay $263,708.53 in costs on a joint and several basis.

Permanent cease trade orders were also issued against the corporate respondents.

Staff of the Ontario Securities Commission brought allegations against the respondents for breaches of the Securities Act.

The Commission found that the respondents engaged in unregistered trading and illegal distribution of securities by selling previously unissued shares to foreign investors through a non-existent investment bank.

The corporate respondents, directed by a de facto officer, perpetrated a fraud by making false statements and depleting investor funds for personal expenses.

The individual respondent, as a director and officer, was deemed to have authorized, permitted, or acquiesced in the corporations' non-compliance with Ontario securities law.

The Commission concluded that the respondents breached the Act and acted contrary to the public interest.

The Ontario Securities Commission held a hearing on the merits regarding allegations that Global Energy Group, Ltd. and several individuals operated a fraudulent investment scheme.

The respondents sold unregistered securities in the form of limited partnership units in purported Kentucky oil drilling programs to investors, raising over US$16 million.

The Commission found that the respondents traded in securities without registration and distributed securities without a prospectus, with no exemptions available.

Furthermore, the Commission found that the directing minds of Global Energy, Vadim Tsatskin and Christina Harper, perpetrated a fraud on investors by making false representations about the company's history, the use of investor funds, and the expected returns.

The Commission concluded that the respondents' conduct breached the Securities Act and was contrary to the public interest.

Staff of the Ontario Securities Commission sought sanctions against the respondents following their criminal convictions for fraud, unregistered trading, and illegal distribution of securities in connection with a boiler room operation.

Relying on the inter-jurisdictional enforcement provisions in s. 127(10) of the Securities Act, the Commission found it was in the public interest to impose sanctions.

The Commission ordered permanent market bans against the respondents, permanent director and officer bans, and joint and several disgorgement of $205,000, representing the funds illegally obtained from investors.

The applicants brought motions to quash summonses issued by Staff of the Ontario Securities Commission to two lawyers, compelling them to attend examinations.

Staff argued the summonses were part of an ongoing investigation into insider tipping and trading.

The applicants argued the summonses were an improper attempt to conduct pre-hearing discovery of witnesses who would testify at the upcoming merits hearing.

The Commission found that the real purpose of the summonses was to prepare for the merits hearing, which is an inappropriate use of Staff's investigative powers.

The motions were granted and the summonses were quashed.

The Ontario Securities Commission held a merits hearing regarding allegations that the respondents engaged in unregistered trading, illegal distribution of securities, and fraud in relation to a foreign exchange trading investment scheme.

The Commission found that the respondents raised approximately $1.8 million from investors without being registered and without filing a prospectus.

Furthermore, the directing minds of the corporate respondent used investor funds to pay earlier investors and for personal expenses, perpetrating a fraud.

The Commission concluded that the respondents breached multiple sections of the Securities Act and acted contrary to the public interest.

Following a merits decision finding the respondents engaged in unregistered trading and illegal distribution of securities, the Ontario Securities Commission held a hearing to determine sanctions and costs.

The Commission imposed permanent trading and director/officer bans on the respondents, with limited carve-outs for RESPs.

The Commission also ordered administrative penalties of $300,000 for Elin and $400,000 for Mellon, and joint disgorgement of $353,229.19.

Staff's request for costs was denied due to an unexplained 18-month delay in the proceedings.

The respondent Wing brought a motion seeking an order that Staff of the Ontario Securities Commission make proper and meaningful disclosure by preparing separate disclosure briefs for each category of allegations.

Wing argued that Staff's provision of an electronic database containing over 370,000 records was a 'dump truck' disclosure that failed to meet the Stinchcombe standard.

The Commission dismissed the motion, finding that Staff had met its disclosure obligations by providing a reasonably searchable and accessible database, and that perfect disclosure is not required in complex cases involving large volumes of material.

A related motion for confidentiality was also dismissed as premature.

The Respondents in a securities fraud proceeding brought a motion seeking disclosure of certain internal documents from Commission Staff, including drafts, internal commentary, and documents evidencing Staff's decision to commence proceedings.

The Commission applied the Stinchcombe standard of disclosure, requiring Staff to disclose all relevant information gathered during the investigation.

However, the Commission dismissed the motion with respect to internally-generated documents evidencing Staff's analysis, commentary, or opinions (Staff work product), finding them irrelevant to the issues to be decided at the merits hearing.

The motion was allowed in part for documents gathered during the investigation and communications between Staff and the Respondents, subject to privilege.

The respondent, a directing mind of a mutual fund manager, pled guilty to criminal fraud and admitted to contravening Ontario securities law by misappropriating investor funds and authorizing payments to himself.

Following an agreed statement of facts, a sanctions hearing was held.

The Commission ordered permanent trading and registration bans, a reprimand, and disgorgement of $320,000, rejecting the respondent's argument that he lacked the ability to pay.

Staff of the Ontario Securities Commission sought to extend a temporary cease trade order against the respondent.

The respondent opposed the extension, arguing that the allegations justifying the temporary order were not included in the recently filed Statement of Allegations.

The Commission found sufficient evidence of potentially harmful conduct to justify an extension, but declined to extend it indefinitely.

The temporary order was extended for a finite period to allow Staff an opportunity to amend the Statement of Allegations to include the conduct that gave rise to the temporary order.

Following a merits decision finding that the respondents engaged in unregistered trading, illegal distribution of securities, and fraud, the Ontario Securities Commission held a hearing to determine sanctions and costs.

The Commission ordered permanent market prohibitions against the corporate respondent and the individual respondent, Schiavone.

Schiavone was also ordered to pay a $300,000 administrative penalty, disgorge $43,300 individually, and be jointly and severally liable with the corporate respondent to disgorge $295,700.

The respondents were ordered to pay $39,666.62 in costs.

Following a merits hearing where the respondent was found to have engaged in unregistered trading, illegal distribution of securities, and making prohibited representations in a boiler room scheme, the Commission held a sanctions and costs hearing.

The respondent did not appear.

The Commission ordered the respondent to cease trading in securities for three years, prohibited him from acquiring securities for three years, reprimanded him, ordered disgorgement of $595 in commissions earned, and permanently banned him from telephoning residences for the purpose of trading securities.

During a merits hearing, Staff of the Ontario Securities Commission and the respondent presented an Agreed Statement of Facts in which the respondent admitted to unregistered trading and illegal distribution in contravention of the Securities Act.

The Commission ordered that all prior evidence be withdrawn and replaced with the Agreed Statement of Facts, declared the merits hearing concluded, and scheduled a sanctions hearing.

Following a merits decision finding the respondents engaged in securities fraud, unregistered trading, and illegal distribution, the Ontario Securities Commission held a sanctions and costs hearing.

The respondents had raised over $10 million from offshore investors, misappropriating the funds for personal use and high-risk enterprises.

The Commission ordered permanent market bans against the respondents, an administrative penalty of $500,000 each, joint and several disgorgement of $8,892,906, and $250,000 in costs.

Following a merits decision finding that the respondents engaged in unregistered trading and illegal distribution of securities, the Ontario Securities Commission held a sanctions and costs hearing.

The respondents raised approximately $25 million from investors for currency trading, resulting in significant losses.

The Commission ordered 15-year trading and director/officer bans against the respondents, with a carve-out allowing the individual respondent to trade in his own account.

The Commission also ordered the respondents to jointly and severally disgorge $2,193,873, representing the funds used for personal benefit, and imposed an administrative penalty of $250,000 on each respondent.

Costs of $150,000 were awarded to Staff.