Jane Waechter

Following a merits decision finding that Coventree Inc. and its senior officers, Geoffrey Cornish and Dean Tai, failed to disclose material changes in breach of the Securities Act, the Ontario Securities Commission held a hearing to determine sanctions and costs.

The Commission emphasized the fundamental importance of timely disclosure to the integrity of capital markets.

While noting mitigating factors such as the respondents' lack of intent to mislead and their cooperation with Staff, the Commission imposed significant administrative penalties to achieve specific and general deterrence.

Coventree was ordered to pay a $1 million penalty and $250,000 in costs, while Cornish and Tai were each ordered to pay a $500,000 penalty and were prohibited from acting as directors or officers of a reporting issuer for one year.

The appellants appealed a decision of the Ontario Securities Commission finding they breached the Securities Act by failing to disclose material changes regarding their mining leases in Sierra Leone.

The appellants argued the leases were not material and the Commission improperly relied on hearsay evidence.

The Divisional Court dismissed the appeal, finding the Commission's decision reasonable, as the company had invested heavily in the leases and actively tried to retain them, making the risk of their loss a material change requiring public disclosure.

During a hearing to review a decision of the Toronto Stock Exchange regarding HudBay Minerals Inc.'s proposed acquisition of Lundin Mining Corporation, HudBay and Lundin requested confidentiality orders for certain documents filed in evidence.

The Ontario Securities Commission considered the open court principle and the test for confidentiality under section 9(1) of the Statutory Powers Procedure Act and the Supreme Court's decision in Sierra Club.

The Commission granted confidentiality for documents that were not relevant to its decision on the merits, including handwritten notes and a financial presentation.

However, it ordered that relevant documents, such as special committee minutes and an engagement letter, be made public, subject to minor redactions for third-party sensitive information.

The Ontario Securities Commission held a hearing to consider a settlement agreement between Staff and Kwok-On Aloysius Lo.

Lo admitted to executing trades that created a misleading appearance of trading activity and price, including wash trades, and to trading in the accounts of two other individuals without being registered.

The Commission approved the settlement agreement, finding it in the public interest, and ordered a 10-year registration ban, a 5-year trading ban with an RRSP carve-out, disgorgement of $18,641, and $5,000 in costs.

Staff of the Ontario Securities Commission brought a proceeding against the respondent for engaging in trading practices that contributed to a misleading price for shares of a publicly traded company.

The respondent, while employed at a registered firm but not registered himself, executed late-day trades with limit orders that resulted in upticks, creating a misleading appearance of market activity.

The parties reached a Settlement Agreement wherein the respondent admitted to conduct contrary to the public interest.

The Commission approved the Settlement Agreement, finding the agreed sanctions—including a four-month suspension of registration, a four-month cease trade order, two years of supervision, completion of a conduct course, and $7,000 in costs—to be within acceptable parameters and in the public interest.

The Applicant sought a hearing and review of a Director's decision refusing to grant him registration as an Advising Officer for an Investment Counsel and Portfolio Manager (ICPM) and refusing to register his company as an ICPM.

The Commission found that while the Applicant met the educational requirements, he lacked the requisite work experience in the securities industry, specifically in managing third-party discretionary investment portfolios and being mentored by a registered adviser.

The Commission declined to grant an exemption from the proficiency requirements, concluding that the Applicant's experience in economic research and credit valuation was not equivalent to the required securities industry experience.

The application for registration was denied.

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.

Following a merits hearing where the respondents were found to have traded in securities without registration, engaged in an illegal distribution, and failed to disclose commissions, the Commission held a sanctions hearing.

The Commission ordered a permanent cease trade order and removal of exemptions against the principal respondent, along with a disgorgement order of $600,624.

The other respondents received seven-year cease trade orders and were each ordered to pay $7,500 in costs.

Staff of the Ontario Securities Commission alleged that the Respondents engaged in unregistered trading, illegal distribution of securities, failure to disclose commissions, and made prohibited representations using high-pressure sales tactics.

The Commission found that the Respondents acted as market intermediaries and traded in securities of Andromeda without registration, and distributed securities to non-accredited investors without a prospectus or exemption.

The Commission also found that Allen failed to disclose his 60% commission to investors.

The allegations regarding prohibited representations and high-pressure sales tactics were dismissed due to insufficient evidence.

A hearing on sanctions was ordered.

The Special Committee of Financial Models Company Inc. applied for orders under sections 104(1) and 127(1) of the Securities Act to cease-trade a take-over bid by a significant shareholder, Katotakis.

The Special Committee alleged the bid did not comply with Part XX of the Act and was contrary to the public interest because it relied on locked-up shares to meet minority approval thresholds for a follow-on transaction and improperly relied on a valuation exemption.

The Ontario Securities Commission dismissed the application, finding no technical breach of Rule 61-501 and no abuse of the capital markets, as the transaction was not artificial and did not defeat the reasonable expectations of shareholders given the prior disclosure of the shareholder agreement.