Melissa MacKewn

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.

The appellants brought a motion to stay Ontario Securities Commission (OSC) proceedings pending the appeal of an OSC decision refusing to stay the proceedings for reasonable apprehension of bias.

The court found that while issue estoppel did not entirely preclude the motion due to changed circumstances, the appellants failed to establish irreparable harm.

The court also found that the balance of convenience favoured allowing the OSC proceedings to conclude before addressing the bias issue on appeal.

The motion for a stay was dismissed.

Staff of the Ontario Securities Commission brought a settlement hearing regarding the respondents John R. Miszuk and Kenneth G. Howling, former officers of Biovail Corporation.

Miszuk admitted to failing to take appropriate care in considering the recognition of revenue and foreign exchange accounting in Biovail's interim financial statements.

Howling admitted to failing to take greater care to ensure accurate information was disseminated to the investing public regarding the financial impact of a truck accident.

The Commission approved the settlement agreements, finding the agreed sanctions, which included reprimands, director and officer bans, and costs payments, to be within acceptable parameters and in the public interest.

The Ontario Securities Commission approved a settlement agreement with the respondent.

The respondent acknowledged engaging in insider trading contrary to s. 76(1) of the Securities Act, failing to file required insider reports under s. 107, and failing to correct a Management Information Circular that incorrectly stated his share ownership.

The Commission found the sanctions, which included a reprimand, fairly reflected the gravity of the conduct and approved the settlement as being in the public interest.