OCMT 2014

Conrad M. Black brought a motion to stay an Ontario Securities Commission proceeding seeking a reciprocal order under s. 127(10) of the Securities Act based on his U.S. fraud convictions.

Black argued the proceeding was an abuse of process and proposed that his interim undertaking remain in effect instead.

The Commission dismissed the stay motion, finding that a reciprocal order proceeding is an appropriate exercise of its statutory mandate to protect Ontario's capital markets and does not constitute an abuse of process.

The Commission also provided directions limiting the scope of evidence at the upcoming hearing to matters relevant to crafting a protective order, explicitly prohibiting the re-litigation of the U.S. proceedings.

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

The Commission ordered permanent market bans against BFM Industries Inc. and Liquid Gold International Corp., and 15-year market bans against Andrea Lee McCarthy, with exceptions for her RRSP and RESP.

Staff's requests for disgorgement orders were dismissed because the amounts obtained were not reasonably ascertainable without risking double counting with orders previously made against other respondents.

McCarthy was ordered to pay an administrative penalty of $10,000, taking into account her cooperation, limited financial means, and lack of prior experience in the capital markets.

Following a merits decision finding that the Respondents breached the registration and prospectus requirements of the Securities Act, the Ontario Securities Commission held a hearing to determine sanctions and costs.

The Commission first ruled that transcripts from the merits hearing were admissible to provide evidence on sanctioning factors.

The Commission then imposed permanent cease trade orders on the corporate respondent and 10-year cease trade and director/officer bans on the individual respondents.

Administrative penalties totaling $580,000 were ordered against the individual respondents.

The Commission declined to order disgorgement due to uncertainty in calculating the amounts obtained from the illegal conduct.

Costs of $126,216.04 were awarded to Staff, discounted for unproven allegations and unaccepted evidence.

Staff of the Ontario Securities Commission applied for an inter-jurisdictional enforcement order against the respondents under s. 127(10) of the Securities Act, based on a prior order of the British Columbia Securities Commission.

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

The OSC found that it was in the public interest to protect Ontario investors and capital markets by imposing reciprocal sanctions.

The OSC ordered that the respondents cease trading in securities and be prohibited from acting as directors or officers of any issuer for a period of five years, subject to limited exceptions.

Following a merits decision finding the respondents engaged in unregistered trading and perpetrated a fraud on investors through an advance-fee scheme, the Ontario Securities Commission held a hearing to determine sanctions and costs.

The respondents solicited U.S. investors to pay advance fees for the purported sale of shares, misappropriating $15,634.

The Commission ordered permanent market bans, a $100,000 administrative penalty, and disgorgement against the corporate respondent and its directing mind.

A 10-year market ban and $25,000 penalty were ordered against the salesperson respondent.

The respondents were also ordered to pay $49,000 in costs.

Staff of the Ontario Securities Commission applied for an inter-jurisdictional enforcement order against the respondent pursuant to subsection 127(10) of the Securities Act, based on a prior order of the Alberta Securities Commission.

The respondent did not appear or file materials in the written hearing.

The Commission found it in the public interest to issue a reciprocal order, prohibiting the respondent from trading in or acquiring any securities until June 6, 2023.

Staff of the Ontario Securities Commission alleged that the respondents engaged in unregistered trading and illegal distribution of securities in relation to limited partnership units for real estate development in Saskatchewan.

The Commission found that the limited partnership units were securities (investment contracts) and that the respondents, acting as market intermediaries, traded and distributed these securities without being registered and without filing a prospectus, in breach of sections 25(1) and 53(1) of the Securities Act.

Following a merits hearing where the respondents were found to have engaged in a fraudulent boiler room scheme that raised approximately $18 million from investors, the Ontario Securities Commission held a sanctions and costs hearing.

The Commission ordered permanent market participation bans against the individual respondents.

It also ordered disgorgement of approximately $16.7 million, representing the amounts obtained by the respondents as a result of their non-compliance with Ontario securities law.

Administrative penalties totaling over $5.6 million were imposed to provide specific and general deterrence.

Finally, the Commission ordered the respondents to pay $344,500 towards the costs of the investigation and hearing.

The Ontario Securities Commission held a written hearing to consider whether to impose sanctions against the respondent under subsections 127(1) and 127(10) of the Securities Act.

The respondent had previously pleaded guilty and been convicted of three counts of fraud over $5,000 under the Criminal Code for operating an unregistered securities firm and defrauding investors of over $1.1 million.

Relying on the criminal convictions and the sentencing judge's findings, the Commission found it was in the public interest to impose permanent market bans against the respondent to protect investors and the integrity of the capital markets.

Staff of the Ontario Securities Commission brought an application for an inter-jurisdictional enforcement order under subsections 127(1) and 127(10) of the Securities Act against the respondents, who were previously sanctioned by the Alberta Securities Commission for perpetrating a Ponzi scheme and defrauding investors of approximately $52 million.

The respondents did not participate in the written hearing.

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

To protect Ontario investors and capital markets from possible future harm, the Commission exercised its public interest jurisdiction to impose permanent market conduct restrictions on the respondents, substantially identical to those imposed in Alberta.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order under s. 127(10) of the Securities Act to impose market conduct restrictions on the respondents, mirroring an order made by the Alberta Securities Commission.

The ASC had found that the respondents made materially misleading statements and that one respondent perpetrated a fraud in connection with a life settlement investment scheme.

The Commission rejected arguments that the proposed sanctions violated the Charter or the Canadian Human Rights Act.

Finding it necessary to protect Ontario investors and capital markets, the Commission granted the order and imposed reciprocal market conduct restrictions, including a permanent ban on trading and acquiring securities for the respondent who perpetrated the fraud.

Staff of the Ontario Securities Commission sought sanctions and costs against Z2A Corp. and Christine Hewitt following a merits hearing that found they engaged in unregistered trading and illegal distributions of securities.

The respondents facilitated a charitable gifting program where donors received shares of a company in exchange for cash donations, with the respondents supplying the shares and retaining a significant portion of the funds.

The Commission found the respondents' conduct to be serious and ordered them to cease trading in securities for five years, resign from any director or officer positions, and pay administrative penalties of $15,000 each.

The respondents were also ordered to disgorge $229,453.10 obtained from their non-compliance and pay $50,000 in costs.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order against the respondents under s. 127(10) of the Securities Act, based on a prior decision of the British Columbia Securities Commission (BCSC).

The BCSC had found that the respondents engaged in unregistered trading, illegal distribution, and fraud, and imposed permanent market bans and financial penalties.

The OSC found it was in the public interest to protect Ontario investors and capital markets by imposing permanent cease trade orders and director/officer bans against the respondents, consistent with the BCSC order.

The Applicants brought a motion requesting the dismissal of the proceeding against them and, alternatively, that the proceeding be heard by another panel member due to a reasonable apprehension of bias.

They also sought to vary a prior interlocutory decision limiting their witness list.

The Ontario Securities Commission dismissed the motion in its entirety.

The Commission held that a motion to dismiss based on the merits of the allegations was premature.

It also found no novel issues or evidence to justify varying the prior witness motion decision under section 78(1) of the Commodity Futures Act.

Finally, the Commission concluded that the Applicants' disagreement with the prior decision did not establish a reasonable apprehension of bias.

Following a merits hearing where the individual respondents were found to have engaged in unregistered trading and fraudulent conduct in relation to a corporate hijacking scheme, the Commission held a hearing to determine sanctions and costs.

The respondents failed to attend despite receiving notice, and the hearing proceeded in their absence.

The Commission found their conduct to be egregious and ordered 15-year market bans, administrative penalties of $100,000 for Khodjaiants and $75,000 for Dubinsky, and disgorgement of the funds obtained through the scheme.

The respondents were also ordered to pay $263,708.53 in costs on a joint and several basis.

Permanent cease trade orders were also issued against the corporate respondents.

Staff of the Ontario Securities Commission brought allegations against the respondents for breaches of the Securities Act.

The Commission found that the respondents engaged in unregistered trading and illegal distribution of securities by selling previously unissued shares to foreign investors through a non-existent investment bank.

The corporate respondents, directed by a de facto officer, perpetrated a fraud by making false statements and depleting investor funds for personal expenses.

The individual respondent, as a director and officer, was deemed to have authorized, permitted, or acquiesced in the corporations' non-compliance with Ontario securities law.

The Commission concluded that the respondents breached the Act and acted contrary to the public interest.