News Release

Vancouver  – The B.C. Securities Commission called a Kamloops man “the most dangerous kind of market abuser there is” in ruling that he acted contrary to the public interest when he made misrepresentations and committed fraud in selling $1.5-million of unqualified securities to investors.

For a five-year period, beginning in 1996, Steven Peter Hughes, a former registrant, sold what he called high-yield, low-risk securities to people in and around Kamloops by promising the investors – mostly senior citizens – a two-year return of 25 per cent. Hughes said that he was in the business of assessing, investing and managing venture capital investments on behalf of investors. BCSC staff testified that Hughes invested less than $300,000 of the investors’ $1.5 million. He used most of the money to pay for his unrelated personal expenses.

In selling the investments, Hughes misrepresented the risk and likelihood of a return to investors when, among other misrepresentations, he:

Promised the investment returns when his business had no sources of revenue other than new investors’ monies

Paid interest and capital due to existing investors from new investors’ funds

Told investors that their money had “matured” and had been rolled over into another business when he had spent all of the money

Represented to some investors that his business was financially healthy when he knew that it was insolvent

Used investors’ funds to make improper payments to himself, including a settlement penalty imposed by the BCSC in 1999

Most investors lost all of the money they invested with Hughes.

Almost all of Hughes’ investors were seniors from the Desert Gardens Senior Center in Kamloops who had been referred to him by John Grigg. Grigg was a former alderman, licensed insurance agent, a self-professed seniors’ advocate and the author of a local weekly newspaper column for seniors. In sending investors to Hughes, Grigg received a five per cent referral fee from Hughes. When Grigg was interviewed by BCSC staff in April 2002, he was 76 and in poor health. He has since died.

“There is little doubt that ordinary, decent people would feel that Hughes’s conduct was clearly dishonest and unscrupulous,” said the commission panel in rendering its decision. “Indeed most of the investors were ordinary, decent people who could ill afford, but bore, the brunt of Hughes’ dishonest and unscrupulous conduct.”

In its decision, the panel noted that Hughes traded and distributed securities despite being subject to a cease-trade order issued as part of his February 1999 settlement with the Executive Director.

“[Hughes] deliberately breached securities legislation requirements he knew he was obliged to meet. As a previous registrant he knew about the duty to know and make suitable investments for clients and deal with them fairly. He deliberately preyed on senior citizens because he knew they were easy and trusting targets. Grigg led them to Hughes and Hughes abused them without a twinge of guilt,” said the panel.

“When it was clear his business was insolvent and his house of cards was falling down he did not break stride in continuing to solicit funds from vulnerable seniors with the same specious representations that he had made all along.”

The panel concluded, “In our view, he is the most dangerous kind of market abuser there is.”

The commission will hear further submissions before issuing sanctions.

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 decision can be viewed in the documents database of the commission’s websitewww.bcsc.bc.caor by contacting Andrew Poon, Media Relations, 604-899-6880.