Securities Law

Following a merits decision finding multiple respondents liable for insider trading, tipping, and misleading Staff, the Ontario Securities Commission held a hearing to determine appropriate sanctions and costs.

The Commission ordered permanent market prohibitions against the tipper and the most egregious trader, along with substantial administrative penalties and costs.

Other respondents received 15-year market prohibitions with limited carve-outs, administrative penalties, and disgorgement orders.

The Commission emphasized the importance of general and specific deterrence, particularly given the respondents' roles as registrants and their efforts to conceal their misconduct.

Staff of the Investment Industry Regulatory Organization of Canada (IIROC) applied for a hearing and review of an IIROC panel's sanctions decision regarding the respondent, a registered representative.

The IIROC panel had found that the respondent recommended and facilitated off-book investments in a private mortgage fund without ensuring prospectus exemptions, resulting in substantial client losses.

The panel imposed a $50,000 fine, close supervision, rewriting of exams, and $45,000 in costs, but declined to impose a suspension.

On review, the Ontario Securities Commission found that the panel erred in law and proceeded on an incorrect principle by failing to impose a suspension for participation in an illegal distribution of securities, and by inappropriately considering the alleged trauma of the proceedings on the respondent.

The Commission allowed the application and substituted its decision, imposing a two-year suspension on the respondent's registration.

The Ontario Securities Commission held a sanctions and costs hearing following a merits decision finding that the respondents engaged in unregistered trading and fraudulent conduct.

Gillani and the Corporate Respondents, who orchestrated a sophisticated scheme that defrauded investors, were ordered to pay a $1 million administrative penalty, disgorge $719,000, pay $200,000 in costs, and were permanently banned from the capital markets.

Driscoll, who acted in furtherance of trades by recruiting investors but was not involved in the fraud, was ordered to disgorge $66,000 in commissions, pay a $30,000 administrative penalty and $15,000 in costs, and received a conditional two-year market ban.

The applicants, claiming to be victims of a Ponzi scheme, sought a disclosure order under section 17 of the Securities Act to obtain transcripts and materials from a Commission investigation.

They sought these materials to assist in a civil action against their former lawyers, alleging breach of fiduciary and professional duties during the investigation.

The Commission found that, unlike typical cases where disclosure is sought against the subjects of an investigation, the applicants sought disclosure against their own lawyers regarding their conduct before the Commission.

Finding no appreciable confidentiality interest remaining and no risk to the concluded investigation, the Commission held it was in the public interest to authorize disclosure of the section 13 transcripts and related communications.

Following a merits hearing where the respondents were found to have engaged in unregistered trading and advising in commodity futures contracts and misled Staff, the Commission held a sanctions and costs hearing.

The Commission ordered permanent market bans against the respondents, administrative penalties of $200,000 each against Khan and his company, disgorgement of $366,324.71, and costs of $191,252.43.

The Commission found the respondents' conduct to be serious and noted Khan's unmanageable behaviour during the hearing, concluding that significant sanctions were necessary for specific and general deterrence.

Staff of the Ontario Securities Commission sought a reciprocal order under subsection 127(10) of the Securities Act against the respondent, who had previously entered into a settlement agreement with the Alberta Securities Commission.

In the Alberta settlement, the respondent admitted to unregistered trading, advising, and illegal distribution of securities, as well as concealing information from investigators.

The respondent took no position on the Ontario hearing and stated he had no intention to carry on business in Ontario.

The Commission found that the threshold for a reciprocal order was met and that it was in the public interest to impose prospective trading and registration bans mirroring those imposed in Alberta to protect Ontario investors.

Bryan Andrew Vickers applied to the Ontario Securities Commission for a hearing and review of an IIROC hearing panel decision that suspended and fined him for failing to adequately supervise a registered representative.

Vickers argued the IIROC panel erred by basing its sanctions on a Guidance Note that was not included in the Agreed Statement of Facts.

The Commission found that the IIROC panel erred in law by considering the unadmitted Guidance Note and that its reasons were inadequate.

The application was granted and the matter was remitted to a newly-constituted IIROC hearing panel for reconsideration.

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

The respondents, who misappropriated substantial funds from investors, did not participate.

The Commission ordered permanent market bans against the respondents, an administrative penalty of $300,000, disgorgement of CAD $1,543,924 and USD $311,667, and costs of $233,013.75.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order under s. 127(1) and s. 127(10) of the Securities Act against the respondents, based on an order from the Connecticut Department of Banking (CDB).

The CDB had found that the respondents engaged in unregistered trading and fraud.

The respondents argued that the CDB order should not be reciprocated because they were denied natural justice in the Connecticut proceeding, citing lack of disclosure, refusal of an adjournment, and reliance on deemed admissions.

The Commission rejected these arguments, finding no denial of natural justice.

The Commission concluded it was in the public interest to impose sanctions, ordering trading bans and prohibiting the individual respondent from acting as a director or officer.

However, the Commission declined to impose the permanent bans sought by Staff, finding insufficient evidence that the individual respondent used investor funds for personal benefit.

Following a merits hearing where the respondents were found to have engaged in unregistered trading, illegal distribution of securities, and fraud in relation to a Forex trading scheme, the Commission held a sanctions and costs hearing.

The Commission ordered permanent market participation bans against the respondents, administrative penalties of $250,000 against Dookhie and $150,000 against Todorov, and disgorgement of $1,046,682 representing the net funds obtained from investors.

The respondents were also ordered to pay costs totaling $267,390.50.

Julian Robert Ricci applied to the Ontario Securities Commission for a hearing and review of an IIROC hearing panel decision that suspended him for 24 months, fined him $200,000, and ordered $15,000 in costs for making misrepresentations to his firm's compliance staff and falsely endorsing client signatures.

Ricci argued the panel overlooked material evidence of client support and his prior non-registered time, and that the suspension was overly harsh.

The Commission dismissed the application, finding the IIROC panel did not overlook material evidence, err in law, or impose an unfit suspension, noting the Commission's restrained approach to interfering with self-regulatory organization sanctions.

The Ontario Securities Commission held a hearing in writing to consider allegations against Peter Balazs and several corporate entities he controlled.

The respondents solicited over $2.6 million CAD and $900,000 USD from investors for foreign currency exchange trading.

The Commission found that the respondents engaged in unregistered trading and illegal distribution of securities.

Furthermore, the Commission concluded that the respondents perpetrated a fraud on investors by misrepresenting the profitability of the trading, using investor funds for personal expenses, and paying existing investors with new investor funds.

Balazs was found liable as a director and officer for authorizing and acquiescing in the corporate respondents' breaches of the Securities Act.

A sanctions hearing was ordered to follow.

Staff of the Ontario Securities Commission alleged that the respondents engaged in unregistered trading, illegal distribution of securities, and fraud in connection with the sale of shares in PlusPetro Inc. The respondents admitted to trading without registration or a prospectus, and to making prohibited representations about future listings.

Following a merits hearing, the Commission found that the respondents also engaged in fraud by making misleading statements to investors about the company's business prospects and by misappropriating investor funds for personal expenses.

The sole director of the corporate respondent was deemed to have authorized, permitted, or acquiesced in the non-compliance.

The Ontario Securities Commission held a hearing to consider whether to impose sanctions on Conrad Black and John Boultbee under the inter-jurisdictional enforcement provisions of the Securities Act, based on their criminal convictions for mail fraud and obstruction of justice in the United States, and Black's settlement with the SEC.

The Commission found that the US convictions arose from conduct related to securities and that the US proceedings met Canadian standards of fairness.

Concluding that sanctions were necessary for specific and general deterrence to protect Ontario's capital markets, the Commission ordered permanent bans prohibiting Black and Boultbee from acting as directors or officers of any issuer, registrant, or investment fund manager.

Staff's request for costs was denied.

The respondents brought a motion to stay the release of the Commission's decision on the merits of their case, pending the final determination of a civil action commenced by investors against the Commission.

The respondents argued that the civil action created a reasonable apprehension of bias, as the Commission might attempt to deflect blame onto the respondents to protect its own interests.

The Commission dismissed the motion, finding that the respondents failed to establish a reasonable apprehension of bias given the strong presumption of impartiality and the institutional safeguards in place.

The Commission further held that the interests of justice and the public interest in the timely and efficient enforcement of securities laws favoured the release of the merits decision.

The Ontario Securities Commission alleged that the Respondents engaged in unregistered trading and advising in commodity futures contracts, made misleading statements to Staff, and acted contrary to the public interest.

The Respondents operated a trading school and assisted students in opening trading accounts with specific brokers, receiving undisclosed referral commissions.

Khan also traded on behalf of clients in managed accounts and provided live trading advice.

The Commission found that the Respondents breached the registration requirements of the Commodity Futures Act, made untrue statements during the investigation, and breached a prior undertaking, all of which constituted conduct contrary to the public interest.

Following a merits decision finding that the respondents engaged in unregistered advising and made misleading statements to Staff, the Ontario Securities Commission held a hearing on sanctions and costs.

The Commission ordered 15-year trading and acquisition bans against the respondents, administrative penalties of $200,000 against Doulis and $100,000 against Liberty, and disgorgement of $37,317 CAD and $8,454 USD.

The respondents were also ordered to pay $198,619.78 in costs.

The applicant, who was the subject of an ongoing administrative proceeding before the Ontario Securities Commission, brought a motion for disclosure of certain investigation notes prepared by Commission Staff.

The applicant sought to use the notes in parallel civil proceedings.

The Commission found that the notes relating to a bank were compelled evidence under section 13 of the Securities Act, and the applicant failed to meet the heavy burden of demonstrating that disclosure was in the public interest.

The Commission also found that the notes relating to three witnesses were voluntary evidence subject to the implied undertaking rule.

The Commission held that the applicant failed to demonstrate a superior public interest in disclosure that would outweigh the need to protect the integrity of the ongoing investigation and the privacy of the witnesses.

The motion was dismissed.

Staff of the Ontario Securities Commission sought an order imposing market conduct restrictions against the respondent following his criminal conviction for 15 counts of fraud over $5,000.

The respondent had misappropriated approximately $6.6 million from investors while employed as a financial consultant.

The Commission found that the respondent's conduct would have constituted a breach of the Securities Act and that it was in the public interest to protect Ontario investors and capital markets.

The Commission ordered permanent market conduct restrictions, including permanent bans on trading, acquiring securities, and acting as a director or officer of any issuer.

Staff of the Ontario Securities Commission brought an application for inter-jurisdictional enforcement under s. 127(10) of the Securities Act, seeking market conduct restrictions against the respondents based on a settlement agreement they entered into with the Alberta Securities Commission.

The respondents had admitted to illegal distributions and making misleading statements in Alberta.

The Commission proceeded by way of a written hearing, which the respondents did not attend.

The Commission found it was in the public interest to impose market conduct restrictions in Ontario substantially similar to those agreed to in Alberta, including trading bans and director/officer bans.