OCMT 2013

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

The respondents did not participate.

The Commission found that the respondents' conduct was egregious and warranted severe sanctions to protect the public interest and provide specific and general deterrence.

The Commission ordered permanent market bans, administrative penalties totaling $900,000, disgorgement of $359,200, and costs of $50,000 against the respondents.

Staff of the Ontario Securities Commission sought sanctions and costs against the respondents following an Agreed Statement of Facts in which the respondents admitted to unregistered trading, illegal distribution, and making misleading statements.

The respondents, acting as a transfer agent, mailed over 10,000 letters to investors falsely claiming an unpaid dividend to induce warrant exercises.

The Commission ordered permanent trading and market prohibitions against the directing mind and his companies, along with a $100,000 administrative penalty.

A lesser five-year prohibition and $2,500 penalty were ordered against his wife, who acted as a nominee director.

The respondents were also ordered to pay $60,000 in costs.

The Ontario Securities Commission held a sanctions and costs hearing following a merits decision that found the respondents engaged in unregistered trading, illegal distribution of securities, and fraud through a boiler room operation.

The respondents raised approximately $1.2 million from 57 investors, misappropriating a significant portion for personal use.

The Commission ordered permanent market bans against the respondents, including permanent director and officer bans for the individual respondent.

The respondents were also ordered to pay an administrative penalty of $400,000, disgorge $1,231,800 on a joint and several basis, and pay $280,721.02 in costs.

Staff of the Ontario Securities Commission sought sanctions and costs against Medra following a merits decision finding that Medra engaged in unregistered trading, illegal distribution, and fraud.

The Commission ordered permanent market bans and a $400,000 administrative penalty against Medra.

Staff's request for a disgorgement order of over $7.4 million was dismissed because the amount had already been accounted for in a disgorgement order against Medra's directing mind in a prior settlement.

Medra was also ordered to pay costs of $69,528.75.

Staff of the Ontario Securities Commission brought allegations against Blackwood & Rose Inc., Steven Zetchus, and Justin Kreller for unregistered trading and securities fraud.

The respondents solicited U.S. residents to send funds purportedly to facilitate the sale of their shares in Gigapix Studios, Inc., but misappropriated the funds for personal use.

The Commission found that the respondents engaged in the business of trading in securities without registration and perpetrated a fraud on investors.

Zetchus, as the sole director and directing mind of Blackwood, was deemed to have also failed to comply with Ontario securities law.

Enforcement Staff of the Ontario Securities Commission brought a motion to admit into evidence selected excerpts from transcripts of compelled examinations of the respondents conducted pursuant to section 13 of the Securities Act.

The respondents opposed the motion, arguing that the admission of compelled testimony violated the Securities Act, the Evidence Act, the Charter, and principles of procedural fairness.

One respondent also brought a cross-motion seeking a confidentiality order for the motion materials.

The Commission held that compelled testimony is admissible in regulatory proceedings and is not precluded by the Charter or the Evidence Act.

However, to ensure fairness and obtain the best evidence, the Commission directed that Staff may only tender the transcripts at the conclusion of its case for those respondents who do not undertake to testify, with a limited exception for proving allegations of misleading statements.

The Commission also granted the cross-motion, ordering the motion materials to remain confidential while releasing the decision publicly.

Following a merits hearing where the respondents were found to have 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 bans, significant administrative penalties, and disgorgement against the directing minds of the fraudulent scheme.

The salesperson respondents received market bans ranging from 5 to 10 years, along with administrative penalties and disgorgement orders equal to the commissions they earned.

Costs were also apportioned among the respondents.

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

The Commission ordered permanent and long-term trading, acquisition, and exemption bans against the corporate and individual respondents, along with director and officer bans.

The Commission also ordered administrative penalties totaling $935,000, disgorgement of over $2.5 million, and costs of $305,000, finding that the respondents' conduct was serious, deceitful, and caused substantial harm to investors.

The applicants sought a stay of a Director's Decision that permanently suspended their registration as an exempt market dealer and dealing representative, pending a hearing and review by the Commission.

Applying the RJR-MacDonald test, the Commission found there was a serious issue to be tried, the applicants would suffer irreparable harm to their business and livelihood without a stay, and the balance of convenience favoured granting a conditional stay.

The Commission ordered a stay subject to conditions requiring the applicants to post the Director's Decision on their website and provide it to clients.

The Commission also ordered the removal of an Investor Alert from its website but declined to order a retraction.

The Ontario Securities Commission held a sanctions and costs hearing following a merits decision that found the respondents engaged in unregistered trading and illegal distribution of securities related to land and solar panel agreements.

The Commission imposed market participation bans of 10 years for the corporate respondents and their directing mind, Chaddock, and 5 years for the subordinate sales employees, Baum and Strumos.

The Commission ordered significant administrative penalties and disgorgement, finding that the respondents obtained over $3 million from investors through their non-compliance with Ontario securities law.

Costs were also awarded against the respondents.

Staff of the Ontario Securities Commission brought proceedings against the respondents for operating fraudulent advance-fee schemes.

The respondents solicited investors to pay upfront fees for the purported exchange or sale of virtually worthless shares, but the transactions never occurred and investors suffered complete losses.

The Commission found that the respondents engaged in the business of trading in securities without registration, contrary to s. 25(1) of the Securities Act, and perpetrated a fraud on investors, contrary to s. 126.1(b).

The Commission ordered permanent trading and acquisition bans against the corporate respondents and ordered disgorgement of the funds obtained through the fraudulent schemes.

Staff of the Ontario Securities Commission brought a proceeding seeking an inter-jurisdictional enforcement order against the respondent under subsection 127(10) of the Securities Act.

The respondent was previously found by the British Columbia Securities Commission to have perpetrated a fraud and was subject to permanent market conduct restrictions in that province.

The Commission found that the respondent's conduct would have constituted a breach of Ontario securities law had it occurred in Ontario.

To protect Ontario investors and capital markets, the Commission granted the order and imposed permanent market conduct restrictions on the respondent, including permanent bans on trading, acting as a director or officer, and acting as a registrant.

The applicants, respondents in an enforcement proceeding alleging unregistered trading and advising in commodity futures, brought a motion for direction to summons approximately 700 witnesses for the merits hearing.

The proposed witnesses included 679 account holders, Commission enforcement staff, brokerage executives, and other individuals.

The Commission held that while the threshold for issuing a summons is low, the evidence sought must be relevant and not unduly repetitious.

The Commission found that the applicants failed to demonstrate that all 679 account holders would provide relevant, non-repetitious evidence, but permitted a representative sample to be called.

The requests to summons enforcement staff and other witnesses were denied at this stage due to an insufficient basis demonstrating relevance or necessity.

The Ontario Securities Commission held a sanctions hearing regarding Michael Chomica following his guilty plea and criminal conviction for fraud under the Securities Act.

Chomica and Commission Staff submitted an Agreed Statement of Facts and a Joint Submission on Sanctions.

The Commission found that Chomica's fraudulent misconduct required strong sanctions.

The Commission ordered permanent trading, acquisition, and exemption bans, permanent director and officer bans, a permanent ban from acting as a registrant, and a $550,000 disgorgement order.

Following a merits decision finding that the respondents breached multiple provisions of the Securities Act by making materially untrue or misleading statements in offering memoranda and promotional materials, failing to file offering memoranda, and breaching a temporary cease trade order, the Commission held a hearing to determine sanctions and costs.

The Commission found that the respondents' misconduct was very serious, resulting in approximately $20 million in investor losses.

The Commission ordered that the respondents cease trading in securities and be denied exemptions for 10 years, with a limited carve-out for the individual respondent's RRSP.

The individual respondent was permanently prohibited from acting as a director or officer of any issuer, reprimanded, and ordered to disgorge $420,000 and pay an administrative penalty of $750,000.

The Commission also ordered the individual respondent to pay $251,145.37 in costs.

The Commission declined to impose certain permanent market prohibitions requested by Staff because they were not included in the original Notice of Hearing.

The Ontario Securities Commission held a merits hearing regarding allegations of illegal distribution and fraud against the respondents.

The respondents were involved in a corporate hijacking scheme where dormant companies were reincorporated, and new shares were issued and deposited into trading accounts.

The respondents then liquidated these shares in large volumes.

The Commission found that the respondents traded securities without a prospectus, contrary to s. 53(1) of the Securities Act, and engaged in fraudulent conduct by depositing and selling shares they knew or ought to have known were part of a scheme to defraud investors, contrary to s. 126.1(b).

Allegations of market manipulation under s. 126.1(a) were not established.

Staff of the Ontario Securities Commission alleged that the respondents engaged in unregistered trading, illegal distribution of securities, and securities fraud through three interconnected schemes involving BFM Industries Inc., Liquid Gold International Corp., and Nanotech Industries Inc. The Commission found that Sandy Winick orchestrated the schemes, using a fictitious investment bank to sell shares in inactive companies to foreign investors, and misappropriated the funds for personal use.

Winick and Gregory J. Curry were found to have contravened the Securities Act, including provisions against unregistered trading, illegal distribution, and fraud, and were deemed liable as directors/officers.

Staff of the Ontario Securities Commission alleged that the respondents, Z2A Corp. and its sole director Christine Hewitt, engaged in unregistered trading and illegal distribution of securities in connection with a charitable gifting program run by Innovative Gifting Inc. (IGI).

The respondents facilitated the issuance of shares in RCT Global Networks Inc. to donors in exchange for cash donations, receiving a 10% commission on the cash donated.

The Commission found that the respondents' conduct constituted acts in furtherance of trades in RCT securities, contrary to s. 25(1)(a) of the Securities Act.

Furthermore, the trades involved previously unissued treasury shares, constituting an illegal distribution contrary to s. 53(1).

As the directing mind of Z2A, Hewitt was deemed to have authorized, permitted, and acquiesced in the non-compliance pursuant to s. 129.2 of the Act.

IIROC Staff applied for a hearing and review of an IIROC Hearing Panel decision that dismissed allegations against TD Securities Inc. (TDSI) for failing to comply with its trading supervision obligations.

The IIROC Hearing Panel had found that several TDSI traders entered artificial closing bids but concluded that TDSI's supervisory system was adequate.

On review, the Ontario Securities Commission found that the IIROC Hearing Panel did not overlook or misapprehend material evidence, nor did it err in law or proceed on an incorrect principle.

The Commission deferred to the IIROC Hearing Panel's factual determinations and its assessment of the adequacy of TDSI's multi-tiered supervisory system.

The application was dismissed.

Following a hearing on the merits where findings were made against David Paul Pelcowitz and IMG International Inc., the Ontario Securities Commission held a sanctions and costs hearing.

Staff and Pelcowitz presented a joint submission on sanctions and costs, which the Commission accepted as appropriate and proportionate.

The Commission ordered permanent market bans against Pelcowitz and IMG, an administrative penalty of $300,000 against Pelcowitz, joint and several disgorgement of $605,029.08, and costs of $100,000 against Pelcowitz.