News Release

Released: 11/16/01 Contact: Michael Bernard
NR 01-57 604-899-6524 or
(BC & Alberta) 1-800-373-6393

Vancouver – A couple who violated the Securities Act by selling risky exempt market securities to more than 100 clients must pay a total of $60,000 in penalties under a settlement reached with the BC Securities Commission.

Jacob Norman Friesen and his wife Irene Rose Friesen agreed to the penalties plus other restrictions in a settlement signed Wednesday by BCSC Executive Director Steve Wilson. A $50,000 penalty was imposed on Jacob Friesen, of which $15,000 represents investigation costs and Irene Friesen was assessed a sanction of $10,000, half of which are investigation costs.

The two, who were principals of Friesen Securities and Friesen Financial Services of White Rock, were also prohibited from serving as compliance officers for any registrant for 10 years. Jacob Friesen is prohibited from serving as a partner, director or officer of any registrant for at least five years and until he enrols in a course for partners, directors and officers. Irene Friesen is prohibited from serving as a partner, director or officer of any registrant for at least two years and until she enrols in a course for partners, directors and officers.

The Friesens, who sold exempt market securities without being properly registered, came under scrutiny during a routine examination by Commission staff in 1997. Commission staff described most of the securities as highly risky and speculative and subject to restrictions that made them difficult if not impossible for the clients to resell. Despite warnings from BCSC staff, Jacob Friesen, who was restricted to selling only mutual funds, continued to advise clients to buy the securities.

“Some of the trades in exempt securities by Friesen for his clients were not suitable for those clients based upon the risk tolerance, level of investment knowledge, age and stated investment objectives of those clients,” staff said. Some of the couple’s clients even redeemed mutual funds to buy the securities recommended by the couple.

The securities, exempt from registration and disclosure requirements under the Securities Act, are intended for sophisticated investors who can afford to lose all of their investment. Evidence showed the couple hosted a number of seminars and sales presentations for their clients and distributed a newsletter to clients and other investors called the Friesen Financial Voice, which contained promotional ads of the exempt securities. Some of the clients who bought the securities have suffered financial losses or devaluation of their investment portfolios.

Commission staff found several other violations of the Securities Act including improper reporting of the sale of securities, record-keeping deficiencies and missing or deficient know your client forms. The couple have been subject to restrictions on their registration to sell securities since 1999.

In the settlement, Jacob Friesen was prohibited from selling exempt market securities for at least five years and Irene Friesen for at least two years. If they become fully registered, they are to be subject to strict supervision by their employer for six months.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts within the province. Copies of the settlements can be viewed in the documents database of the commission’s website www.bcsc.bc.ca or by contacting Communications Manager Michael Bernard at 604-899-6524.

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