OCMT 2010

The applicants, respondents in an enforcement proceeding, brought a motion to dismiss or adjourn the proceedings.

They argued there was a reasonable apprehension of bias due to the Ontario Securities Commission's multifunctional structure and a separate panel's approval of settlement agreements with other respondents.

They also challenged the Commission's jurisdiction, claiming they were not participants in Ontario's capital markets.

The Commission dismissed the motion, finding no sufficient evidence of institutional bias and noting that the Supreme Court of Canada has upheld the integrated agency model.

The jurisdictional challenge was dismissed as premature, to be determined at the merits hearing.

The applicants sought a hearing and review of an IIROC sanctions decision, arguing that the reasons provided by the IIROC panel were inadequate.

The applicants had admitted to failing to properly perform gatekeeper responsibilities and failing to adequately supervise conduct.

The IIROC panel imposed sanctions that were significantly more severe than those sought by IIROC staff, including a life suspension and a $250,000 fine for the principal applicant.

The Commission found that the IIROC panel's reasons failed to address mitigating factors, appeared to sanction the applicants for unadmitted conduct such as fraud and illegal distributions, and misstated the agreed facts.

The Commission concluded that the reasons were so inadequate as to constitute an error in law, set aside the decision, and invited submissions on whether it should substitute its own decision or remit the matter for a re-hearing.

Nunavut Iron Ore Acquisition Inc. applied to the Ontario Securities Commission for an order cease trading the shareholder rights plan of Baffinland Iron Mines Corporation.

Nunavut had made an unsolicited takeover bid for Baffinland, which was followed by a higher competing offer from ArcelorMittal supported by the Baffinland board.

The Commission found that the rights plan had served its purpose by facilitating an auction and generating a competing bid.

Maintaining the rights plan would only serve to eliminate the timing advantage of Nunavut's first-in-time offer and force an extension, potentially depriving shareholders of a revised offer.

The Commission concluded it was in the public interest to cease trade the rights plan immediately, allowing shareholders to decide between the competing offers.

The moving party sought an adjournment of the sanctions hearing pending his application to the Divisional Court for judicial review of the decision on the merits.

He argued he was denied procedural fairness because the Commission failed to consider a settlement agreement he entered into with Staff.

The Commission denied the adjournment motion, finding it premature.

Granting the adjournment would place an incomplete record before the Divisional Court, as the sanctions applied to the moving party would be unknown.

The Commission also rejected the submission that the moving party was denied procedural fairness bringing him within the exception in Ontario (Liquor Control Board) v. Lifford Wine Agencies, noting little or no prejudice to him in proceeding with the sanctions hearing.

Staff of the Ontario Securities Commission brought allegations against Donald and Lisa Buchanan for their involvement in the sale of securities in Gold-Quest International and Harmoney Club Inc. Based on agreed statements of fact, the Commission found that Donald Buchanan engaged in unregistered trading, illegal distributions, and breached a temporary cease trade order, raising approximately US $4.3 million from Ontario investors in what was alleged to be a Ponzi scheme.

Lisa Buchanan admitted her conduct was contrary to the public interest.

The Commission held that Donald Buchanan's status as an undischarged bankrupt did not preclude it from ordering financial sanctions, as the Commission only becomes a creditor upon making the order.

The Commission imposed permanent market bans on both respondents, and ordered Donald Buchanan to disgorge $352,000 and pay an administrative penalty of $300,000, which was higher than the $150,000 requested by Staff, to ensure adequate deterrence.

Following a merits decision finding that the respondents engaged in illegal trading and distribution of securities in a multi-jurisdictional scheme, the Commission held a sanctions and costs hearing.

The corporate respondents had been petitioned into bankruptcy.

The Commission determined that while the Bankruptcy and Insolvency Act did not prevent it from exercising its public interest jurisdiction, it would restrict monetary orders to the individual respondents to avoid depleting assets available for investors.

The Commission ordered permanent market bans against the individual respondents, noting their egregious conduct, offshore transfer of funds, and one respondent's prior disciplinary history.

Each individual respondent was ordered to pay a $200,000 administrative penalty and disgorge funds they personally obtained or transferred offshore.

The individual respondents were also ordered to pay $117,441.51 in costs.

The Ontario Securities Commission held a hearing regarding allegations of a 'pump and dump' scheme involving shares of Sulja Nevada.

The respondents Vucicevich, Banumas, and Shah did not contest the allegations.

The Commission found that Vucicevich issued materially misleading press releases to artificially inflate the stock price and subsequently sold shares through nominee accounts held by Banumas and Shah.

The Commission concluded that Vucicevich traded without registration, distributed securities without a prospectus, and perpetrated a fraud contrary to the Securities Act.

Banumas and Shah were found to have contributed to a misleading appearance of trading activity.

The Ontario Securities Commission held a hearing regarding a 'pump and dump' scheme involving the promotion and sale of shares of Sulja Nevada.

Based on uncontested evidence, the Commission found that Steven Sulja, as CEO, breached subsection 126.2(1) of the Securities Act by failing to correct false statements in press releases regarding merger opportunities, revenue potential, and audit arrangements.

The Commission also found that Sam Sulja breached subsection 126.1(a) of the Act by trading heavily as a nominee to conceal another party's involvement, thereby creating a misleading appearance of trading activity.

The Executive Director of the Ontario Securities Commission applied under s. 144 of the Securities Act to vary or revoke a prior Commission decision that required notice be given to two corporate account holders of a bank before disclosing compelled documents to a foreign regulator.

Staff also sought a sealing order for fresh evidence without disclosing it to the bank.

The Commission granted the sealing order but required confidential disclosure to the bank's counsel to ensure procedural fairness.

The Commission dismissed the s. 144 application, finding that Staff was improperly using the provision as an appeal mechanism, which is contrary to the legislative intent of the Act and the public interest.

The Ontario Securities Commission held a hearing on the merits regarding allegations that the respondents engaged in unregistered trading, advising without registration, and fraud.

The respondents failed to appear.

The Commission found that the respondents sold securities without registration or available exemptions, acted as advisors without registration, and perpetrated a fraud on investors by misappropriating funds for personal use, posting false trading results, and using investor funds to pay returns to other investors.

The respondent, who resided in China, brought a motion for an order that the hearing on the merits be conducted electronically by video conference, citing financial inability to travel to Ontario or retain counsel.

Staff of the Commission objected, arguing that a 15-day electronic hearing involving multiple witnesses and credibility assessments would cause significant prejudice.

The Vice-Chair dismissed the motion, finding that an electronic hearing would likely cause significant prejudice to Staff and raised concerns about maintaining the integrity of the hearing process and assessing witness credibility.

Following his criminal conviction for insider trading, Staff of the Ontario Securities Commission sought an order imposing sanctions against the respondent under subsection 127(1) of the Securities Act.

The Commission found that it had jurisdiction under subsection 127(10) to make a public interest order based on the criminal conviction.

The Commission ordered a 12-year prohibition on trading and acquiring securities, with a limited carve-out for registered retirement accounts, and a 12-year ban on acting as a director or officer of a reporting issuer.

Following a merits hearing where the respondents were found to have engaged in unregistered trading and illegal distribution of securities through an investment scheme, the Ontario Securities Commission held a hearing to determine sanctions and costs.

The Commission ordered permanent market bans against all respondents, with limited exceptions for the individual respondents' RRSPs.

The Commission also ordered administrative penalties of $50,000 for each individual respondent and $40,000 for each corporate respondent, disgorgement of $500,000 on a joint and several basis, and costs of $169,651.25.

The Ontario Securities Commission held a hearing to consider whether IMAGIN Diagnostic Centres Inc. and Patrick J. Rooney breached the registration requirements of the Securities Act.

The Commission found that IMAGIN acted as a market intermediary by employing a sales team to actively solicit and sell its securities to investors, raising approximately $14 million.

As a market intermediary, IMAGIN was not entitled to rely on the accredited investor or closely-held issuer exemptions from registration.

The Commission also found that Mr. Rooney, although not formally appointed, was a de facto officer and director who controlled IMAGIN and authorized, permitted, or acquiesced in its unregistered trading.

Both respondents were found to have breached subsection 25(1)(a) of the Act.

Staff of the Ontario Securities Commission alleged that the respondents solicited European investors to invest in a fraudulent investment scheme offered by Lehman Cohort Global Group Inc. The respondents used a Toronto virtual office and Toronto bank accounts to mislead investors into believing they were dealing with a legitimate Ontario company.

The Commission found that Lehman and its directing mind, Anton Schnedl, traded in securities without registration and knowingly perpetrated a fraud by misappropriating investor funds, contrary to sections 25(1)(a) and 126.1(b) of the Securities Act.

Representatives Richard Unzer and Alexander Grundmann were found to have traded without registration, but the fraud allegations against them were dismissed due to insufficient evidence of their knowledge.

All respondents were found to have acted contrary to the public interest.

Staff of the Ontario Securities Commission brought a hearing under section 127 of the Securities Act regarding Magna International Inc.'s proposed plan of arrangement to collapse its multiple voting share structure.

Staff alleged the management information circular lacked sufficient information and the transaction was contrary to the public interest.

The Commission found the proposed transaction was not abusive, but concluded the circular failed to provide shareholders with sufficient disclosure to make an informed decision, particularly given the lack of a board recommendation and the transaction's nature as a related party transaction.

The Commission ordered that the circular be amended to include specific material information, including financial analysis and alternatives considered by the special committee, before the shareholder vote could proceed.

The respondent pleaded guilty to criminal fraud over $5,000 for operating a massive Ponzi scheme involving over $45 million in investor funds.

Staff of the Ontario Securities Commission sought permanent market bans under the inter-jurisdictional enforcement provision in subsection 127(10) of the Securities Act.

The Commission held that subsection 127(10) can operate retrospectively because its purpose is to protect the public rather than to punish.

Finding that the respondent's criminal conviction arose from a course of conduct related to securities, the Commission concluded it was in the public interest to permanently ban the respondent from trading, acquiring securities, and acting as a director or officer.

The applicant, an investment advisor, sought a stay of an Ontario Securities Commission decision dismissing his application for a hearing and review of an IIROC disciplinary decision.

The IIROC hearing panel had permanently banned the applicant and imposed a fine and costs for having undisclosed financial interests in client accounts.

The Commission considered the RJR MacDonald test for granting a stay pending appeal.

Finding that the Divisional Court was in a better position to determine the merits of the appeal and whether a stay should be granted, the Commission granted a short 60-day extension of the interim stay to allow the applicant to commence an appeal and bring a stay motion before the Divisional Court.

The applicant sought a hearing and review of a decision by the Ontario District Council of the Investment Industry Regulatory Organization of Canada (IIROC), which found he engaged in conduct unbecoming by having an undisclosed financial interest in client accounts.

The Ontario Securities Commission applied a restrained approach to reviewing the self-regulatory organization's decision, finding that the applicant failed to demonstrate that the District Council proceeded on an incorrect principle, erred in law, or overlooked material evidence.

The application was dismissed.

Staff of the Ontario Securities Commission alleged that the corporate and individual respondents engaged in unregistered trading and illegal distributions of securities in relation to purported biofuels technology companies.

The Commission found that the respondents acted as market intermediaries whose primary business was raising capital, precluding reliance on the accredited investor exemption.

The individual respondents engaged in acts in furtherance of trades by signing treasury directions, opening bank accounts, and maintaining misleading websites.

The Commission also affirmed its jurisdiction over the matter despite the use of offshore entities, finding a substantial connection to Ontario.

The respondents were found to have breached sections 25 and 53 of the Securities Act and acted contrary to the public interest.