OCMT 2018

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

The BCSC had found that the respondents engaged in unregistered trading and illegal distributions of securities, and imposed monetary and non-monetary sanctions.

The Ontario Securities Commission found that the statutory requirements for a reciprocal order were met and that it was in the public interest to protect Ontario investors by imposing substantially similar non-monetary sanctions, including trading bans and director/officer prohibitions, against both the individual respondent and the dissolved corporate respondent.

Staff of the Ontario Securities Commission alleged that a reporting issuer and seven of its former officers and directors contravened Ontario securities law by making materially misleading disclosures regarding copper production and financial performance, failing to maintain adequate internal controls, and providing inadequate risk disclosure.

The respondents admitted to the contraventions and to conduct contrary to the public interest.

The Commission approved a settlement agreement requiring the corporate respondent to make a $28.5 million voluntary payment and pay $1.5 million in costs, while the individual respondents agreed to pay administrative penalties ranging from $350,000 to $2.45 million, pay $50,000 each in costs, and be subject to director and officer bans.

The Commission found the settlement fell within a range of reasonable outcomes and was in the public interest.

The Ontario Securities Commission approved a settlement agreement between Staff and Questrade Wealth Management Inc. Questrade admitted to acting contrary to the public interest by failing to take appropriate steps to determine whether a conflict of interest existed before investing client money in WisdomTree ETFs.

The Commission ordered a reprimand, $100,000 in costs, and accepted a voluntary payment of $2.9 million, finding the settlement reasonable and in the public interest.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order under s. 127(10) of the Securities Act against the respondent, who had entered into a settlement agreement with the British Columbia Securities Commission admitting to perpetrating a fraud on investors.

The respondent had raised $200,000 through a promissory note for a business with no revenue, and misappropriated the funds for personal use.

The Commission found it was in the public interest to issue a reciprocal order, permanently prohibiting the respondent from trading in securities or derivatives, and from acting as a director or officer of any issuer or registrant, subject to limited carve-outs for personal accounts.

Following a merits decision finding that the respondent engaged in unregistered trading and advising, the Commission held a written hearing to determine sanctions and costs.

The respondent had placed over 440 discretionary trades in a senior retiree's locked-in retirement account, resulting in a loss of over $56,000.

The Commission ordered 10-year market bans, a 15-year ban on acting as a registrant, investment fund manager or promoter, and a $100,000 administrative penalty.

The Commission also ordered the respondent to pay costs of $35,871.51.

The market bans included an exception for the respondent's own RRSP and RRIF accounts, but only after the administrative penalty and costs are paid in full.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order against the respondent following his criminal conviction for defrauding 41 investors of approximately $10 million in a Ponzi scheme.

The Commission found that the respondent's criminal conviction arose from a course of conduct related to securities, as the fraudulent transactions met the test for investment contracts.

Given the egregious nature of the fraud, the significant harm to investors, and the respondent's lack of remorse, the Commission concluded it was in the public interest to permanently prohibit the respondent from participating in Ontario's capital markets.

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

The BCSC had found that the respondents engaged in an illegal distribution of securities and perpetrated multiple acts of fraud.

The Ontario Securities Commission found that it was in the public interest to issue an order substantially reciprocating the non-monetary sanctions imposed by the BCSC, including permanent prohibitions on trading, acquiring securities, and acting as a director or officer of any issuer or registrant.

A minority shareholder of the respondent company brought an application under s. 127 of the Securities Act seeking to block a going-private transaction structured as a plan of arrangement.

The applicant alleged the controlling shareholders improperly relied on the 90 percent exemption from minority approval requirements by engaging in a multi-step strategy to dilute minority interests.

The Commission dismissed the application for standing, finding that the applicant delayed in bringing the application, failed to establish a prima facie case of abusive conduct, and had adequate alternative remedies under the CBCA to address concerns regarding price and fairness.

Staff of the Ontario Securities Commission and the respondents entered into a settlement agreement regarding allegations of market manipulation.

During the material time, the respondents engaged in approximately 60 incidents of "spoofing" on the Montreal Exchange, using non-bona fide direct electronic access orders to manipulate the National Best Bid or Offer and trade at artificial prices, profiting by approximately $250,000.

The respondents admitted to breaching s. 126.1(1)(a) of the Securities Act.

The Commission approved the settlement agreement, finding the agreed sanctions, which included administrative penalties totaling $970,000, trading bans, and costs of $30,000, to be reasonable and in the public interest.

Staff of the Ontario Securities Commission alleged that Dennis Meharchand and Valt.X Holdings Inc. illegally distributed securities, engaged in unregistered trading, and committed fraud.

The Commission found that the respondents distributed common shares, convertible notes, and investment contracts without a prospectus or an available exemption.

The respondents also engaged in the business of trading securities without being registered.

Furthermore, Mr. Meharchand committed fraud by making false statements to investors about the use of funds and by using investor funds for improper personal purposes, including gambling.

The Commission concluded that the respondents breached the Securities Act and directed a hearing regarding sanctions and costs.

Staff of the Ontario Securities Commission commenced an enforcement proceeding against Caldwell Investment Management Ltd. (CIM) alleging failure to provide best execution of trades.

CIM brought a motion seeking disclosure of communications between Staff and potential experts, as well as information regarding the best execution practices of other OSC registrants.

The Commission denied the motion, finding that communications with potential experts were protected by litigation privilege and that the practices of other registrants were irrelevant and confidential.

The Commission ordered disclosure of only one factual notation from the expert materials.

Staff of the Ontario Securities Commission sought approval of a settlement agreement with eToro (Europe) Limited, a Cyprus-based brokerage firm. eToro admitted to breaching Ontario securities law by operating an online trading platform that allowed Ontario residents to trade contracts for differences (CFDs) without being registered or filing a prospectus.

Despite previous assurances to Staff that it did not accept trades from Ontario residents, eToro opened nearly 2,500 accounts for Ontario investors.

The Commission approved the settlement, finding it in the public interest, and ordered an administrative penalty of $550,000, disgorgement of $1,791,163, and costs of $25,000, noting eToro's cooperation and implementation of enhanced compliance procedures.

The Ontario Securities Commission approved a settlement agreement between Staff and Omega Securities Inc. (OSI) regarding OSI's failure to comply with transparency requirements under National Instrument 21-101.

OSI operated two Alternative Trading Systems and disseminated inaccurate information regarding broker identities, order receipt times, and trade execution times across its data feeds.

The settlement included an administrative penalty of $500,000 and the imposition of terms and conditions on OSI's registration to ensure ongoing compliance, including the retention of an independent systems reviewer.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order against the respondents under subsection 127(10) of the Securities Act, based on a prior order by the Alberta Securities Commission.

The ASC had found that the respondents engaged in unregistered trading, advising, and fraud.

The Ontario Securities Commission found that the statutory threshold was met and that it was in the public interest to issue a protective order.

The Commission ordered market-access bans and other restrictions against the respondents to protect Ontario's capital markets.

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.

The BCSC had found that the respondents perpetrated a fraud of approximately $1.4 million on nine investors.

The Commission found that the threshold under s. 127(10) was met and that it was in the public interest to issue a protective order.

The Commission ordered permanent bans on trading, acquiring securities, and acting as a director, officer, registrant, or promoter against the respondents.

Staff of the Ontario Securities Commission applied for an order authorizing the disclosure of 33 records to the Ministry of Finance and the Information and Privacy Commissioner of Ontario to respond to a freedom of information appeal.

The records were subject to the confidentiality provisions of section 16 of the Securities Act.

The Commission granted the order for 29 of the records, finding it in the public interest to facilitate the appeal process.

For the remaining four records, which were copies of a transcript of an examination of a third party, the Commission authorized disclosure of only the redacted front page to protect the third party's privacy interests, as they had not been given notice of the application.

Staff of the Ontario Securities Commission brought an expedited proceeding seeking a reciprocal protective order against the respondent under subsection 127(10) of the Securities Act.

The respondent had previously entered into a settlement agreement with the Nova Scotia Securities Commission, admitting to acting as an adviser without registration.

The respondent consented to the Ontario order.

The Commission granted the order, imposing trading bans, exemptions bans, and director/officer prohibitions mirroring the Nova Scotia order to the extent possible under Ontario law.

The respondent, a former CEO and Ultimate Designated Person of a registered firm, made materially misleading statements under oath to Commission Staff during an investigation into the misuse of insider information.

Staff and the respondent reached a settlement agreement which included a $125,000 administrative penalty, $10,000 in costs, and a two-year ban from participating in the capital markets.

The Commission approved the settlement agreement, finding that the respondent's conduct constituted a serious breach of Ontario securities law and that the agreed sanctions fell within the range of reasonable outcomes and were in the public interest.

Brian Sutton, former CFO of First Leaside Securities Inc., applied for a review of an IIROC panel decision finding he breached Dealer Member Rule 38.6(c) regarding the pricing of unlisted fund units.

IIROC Staff cross-applied for a review of the sanctions.

The Ontario Securities Commission found the IIROC panel made cumulative evidentiary errors, warranting a hearing de novo.

Conducting its own analysis, the Commission concluded Sutton's reliance on an illusory 'active market' to price units at $1.00 was unreasonable and breached his obligations.

The Commission set aside the IIROC sanctions and imposed a $50,000 fine, a three-year prohibition on approval as a CFO, a reprimand, and $50,000 in costs.

The Ontario Securities Commission held a hearing in writing to determine whether the respondent, a former registrant permanently prohibited from conducting securities-related business, engaged in unregistered trading and advising.

The respondent had unfettered access to a former client's locked-in retirement account and executed over 440 discretionary trades, resulting in significant losses.

The Commission found that the respondent's conduct satisfied the business purpose test and constituted unregistered trading and advising contrary to subsections 25(1) and 25(3) of the Securities Act.

The respondent was found to have acted contrary to the public interest.