Ontario Securities Commission
IN THE MATTER OF AAOPTION, GALAXY INTERNATIONAL SOLUTIONS LTD. and DAVID ESHEL
REASONS AND DECISION
(Subsections 127(1) and 127(10) of the Securities Act, RSO 1990, c S.5)
Hearing: In writing
Decision: May 26, 2017
Panel: Monica Kowal
Appearances: Malinda Alvaro For Staff of the Commission
No one appearing for the Respondents
TABLE OF CONTENTS
I.......... STAFF’S REQUEST II........ PROCEDURE III....... FCAA PROCEEDINGS IV....... ANALYSIS V......... DECISION
REASONS AND DECISION
I. STAFF’S REQUEST
1In this written hearing concerning a binary options trading platform, Staff of the Ontario Securities Commission seeks an enforcement order pursuant to subsection 127(1) of the Securities Act, RSO 1990, c S.5 (the “Act”), imposing restrictions on the respondents: AAOption, Galaxy International Solutions Ltd. ("Galaxy") and David Eshel ("Eshel").
2The Financial and Consumer Affairs Authority of Saskatchewan (the “FCAA”) has made an Order imposing sanctions, conditions and restrictions on AAOption, Galaxy and Eshel (collectively, the “Respondents”). Accordingly, Staff relies on paragraph 4 of the inter-jurisdictional enforcement provision found in subsection 127(10) of the Act.
3The Commission conducted a written hearing to consider Staff’s request. These are the reasons granting Staff’s requested order, which will be issued separately.
II. PROCEDURE
4On October 26, 2016, Staff filed a Statement of Allegations against the Respondents. The Commission issued a Notice of Hearing in respect of that Statement of Allegations, setting a hearing date of November 23, 2016. Staff attended on that date and the hearing was adjourned to December 7, 2016, on which date the hearing was adjourned again to January 19, 2017. Throughout the period of adjournments, Staff took continued steps to serve the Respondents, who are all located outside of Canada, as is often the case with firms and individuals involved in binary options trading platforms. Staff’s steps included service:
a. by courier to a United Kingdom address provided on the Respondents’ website, which courier was accepted and signed for;
b. by courier to another United Kingdom address listed on the “contact us” page of the Respondents’ website, which courier package was refused and returned to Staff as undeliverable;1
c. by courier to an Anguilla, British West Indies address reflected on the Whois Data search report for the Respondents’ website, which courier package was also returned as undeliverable; and
d. by e-mail to three addresses that were used for service in the FCAA proceeding, that appeared on the Respondents’ website, and that were reflected on the Whois Data search report for the Respondents’ website. One of the e-mails returned a delivery failure report indicating that the e-mail account did not exist.
5On January 19, 2017, the Respondents did not appear for the scheduled hearing. I found that service had been effected on all Respondents. They were properly served with the Statement of Allegations, the Notice of Hearing, Staff’s disclosures and the Commission’s preliminary Orders. Staff applied to continue the proceeding by way of written hearing. The Commission issued an Order granting Staff’s request and setting a timetable (the “January Order”). Staff’s materials were required to be served and filed no later than January 30, 2017. The Respondents were allowed until February 27, 2017 to serve and file responding materials, if any.
6Staff’s materials were served and filed in accordance with the January Order. None of the Respondents filed responding materials although they were properly served with the Commission’s January Order and with Staff’s hearing materials.
7In March 2017, the Secretary to the Commission wrote to the parties to convey my request for additional submissions regarding the Commission’s jurisdiction to make an inter-jurisdictional enforcement order against AAOption. In response, later that month, Staff filed and served supplemental materials. Again, there was no response from any of the Respondents.
8The Commission can proceed in the absence of a party where that party has received notice of a written hearing and fails to act or participate.2 I am therefore authorized to proceed with this written hearing in the absence of the Respondents.
III. FCAA PROCEEDINGS
9The FCAA proceedings were commenced in November