News Release

Vancouver -- A Burnaby man that the British Columbia Securities Commission found used the Internet to perpetrate “pump and dump” schemes to manipulate stock prices has lost his court appeal contesting the penalty he received from the commission.

In September 2002, the commission banned Jesse Hogan from the B.C. securities markets for 10 years and ordered him to pay a $25,000 administrative penalty for market manipulation.

Hogan appealed the administrative penalty saying it was not reasonable. He argued that the penalty was disproportionate to penalties the commission imposed in other cases and that the penalty failed to take adequate account of his ability to pay.

In January 2005, in a unanimous judgment, the B.C. Court of Appeal dismissed Hogan’s appeal.

The court held that “administrative penalties in each case have to be viewed in light of the overall penalties imposed, the particular circumstances of the conduct involved, and the commission’s reasonable perception of what is required in the public interest at the time the penalty is imposed.”

The court also held that “the administrative penalty imposed is not analogous to a fine imposed in criminal proceedings where the failure to pay the fine could result in default time in prison” and that it is not necessary for the amount of the penalty to be commensurate with ability to pay. The court said,

“… if Mr. Hogan were correct in saying that the amount of his penalty should be commensurate with his ability to pay, then individuals such as himself, who have no other assets and who do not make their living as licensed players in the market, could engage in the same type of activity as Mr. Hogan, and, because of their straightened (sic) financial circumstances (after disgorging any profit they made), face no real penalty. The amount of the administrative penalty in this case recognizes the need to deter just those types of players from manipulating the market.”

Hogan manipulated shares in five junior technology firms quoted on the National Association of Securities Dealers Over-the-Counter Bulletin Board in the U.S. For each company, he bought shares, posted hundreds of false messages on Internet bulletin boards, waited for the share price to rise on the basis of this false information, and sold his shares at a profit.

Hogan’s total profit from the manipulations was $41,752 (U.S.). Following the commission decision, Hogan consented to disgorge his profit under a court order and agreed to take a course in business ethics.

The B.C. Securities Commission is an independent provincial government agency responsible for regulating trading in securities within the province. You may view the commission’s decision on our website www.bcsc.bc.ca by typing in the search box, Jesse Hogan or 2002 BCSECCOM 811. If you have questions, contact Andrew Poon, Media Relations, 604-899-6880.