The 小蓝视频 Securities Commission announced a hearing panel has fined a 小蓝视频 man and his company $100,000 total for unregistered investment referrals with two unidentified registered dealer firms.
A commission hearing panel ordered Michael Duane Onstad, last known to reside in Vancouver, and Surrey-based LOC Consultants Inc., to each pay $50,000 fines for soliciting and referring 33 investors to purchase $7.6 million worth of "flow-through" shares of companies without being registered.
The panel also banned both Onstad and LOC from the investment market for four years, according to the panel’s May 20 ruling.
Onstad ran the investors’ purchases through two registered dealer firms that paid him close to $240,000 in referral fees. Onstad was not registered in any capacity under 小蓝视频’s Securities Act, according to a panel ruling that followed a hearing Onstad and LOC did not attend.
LOC qualified for an exemption from the requirement to be registered, but failed to file the necessary documentation, according to the panel.
The panel noted the misconduct did not reach levels of more serious concern granted there is no evidence that the investors did not receive what they contracted to purchase, or that they lost money.
“The investors were referred to registrants to complete their purchases of securities and therefore received the necessary investor protections. There is no suggestion of wrongdoing on the part of the dealers,” stated the panel of three commissioners, Deborah Armour, Judith Downes and Warren Funt.
The dealers’ names were withheld by the commission.
“This matter is significantly different than cases involving fraud or misrepresentation where respondents directly obtained funds from investors through their misconduct. In this case LOC obtained the referral fees because of their conduct contrary to the Act, but the fees could have been paid without breaching the Act as an exemption was available if the Respondents had properly filed the necessary records,” the panel added.
The commission issued a press release May 21, noting the panel declined to impose a disgorgement payment—an order representing the amount of money obtained—against LOC, stating that it was not in the public interest and would be “disproportionate and punitive” in this case.
The unnamed dealers are registered with the Canadian Investment Regulatory Organization, which addresses its own set of rules. BIV reached out to CIRO to see if it was aware of the case.
, a registered dealer firm can take referrals from unregistered individuals under limited circumstances.
