News Release

Vancouver – The British Columbia Securities Commission has imposed stiff sanctions against three B.C. men who broke securities laws in leading investors – in most cases, elderly people and retirees – to collectively lose more than $2-million.

A commission panel issued findings and sanctions against Paul Larry O’Connor, a former registered representative and investment adviser based in Parksville, B.C. O’Connor committed fraud when he lied to clients to induce them to redeem their mutual fund holdings and turn this money over to him for use in his own business, and when he used part of the money for his personal expenses. As a registered salesperson, he failed to deal fairly, honestly and in good faith with clients and he made inappropriate and unsuitable investment recommendations.

O’Connor is permanently banned from the capital markets and must pay a $200,000 administrative penalty as well as about $48,000 in commission hearing costs.

“O’Connor wilfully ignored securities requirements, put his own interests in front of those of his Clients, showed complete disregard for his regulatory duties, and lied to the Clients,” the panel said in rendering its decision. “His conduct damaged the integrity of the securities markets in British Columbia.”

The panel found that O’Connor lied to three clients – who were 90, 85 and 80-years-old in February 1998 – to get them to redeem their mutual fund holdings and give him the money. He told them that their money would be used to support the business of Conservative Investment & Estate Consultants, a firm he operated as a sole proprietorship.

Between February 1998 and February 2001, the three clients gave O’Connor in all about $163,000. The clients have lost all or most of their money.

“O’Connor made the false statement that Conservative would provide a good return.   He also made the false statement that the funds would be used to support the business, when he was using the funds advanced to Conservative for business and personal purposes.   He deceived the Clients by failing to inform them that the business was not doing well,” said the panel. “He failed to providethe Clients with any information or documentation about Conservative’s financial position and the real risks associated with the transactions.He converted funds to his own use.”

By the beginning of the commission’s investigation into this matter in 2002, two of the clients had died and one had become mentally incapable due to dementia.

O’Connor delivered the eulogy at one client’s funeral but he did not inform the client’s estate of the amount owed.

The commission also issued sanctions against Steven Peter Hughes, a Kamloops man and former registrant, who the commission described as “the most dangerous kind of market abuser there is” for his misrepresentation and fraud in selling about $1.4-million of securities to investors. Hughes has been permanently banned from the capital markets and ordered to pay an administrative penalty of $250,000.

For a five-year period, until May 2001, Hughes 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. Instead, he used at least $1.1-million of this money for personal expenses. During part of this period, Hughes was subject to a cease trade order issued by the commission, but continued to trade securities in direct contravention of the order.

“[Hughes] enriched himself through illegal sales of securities, misrepresentation and fraud,” the panel said in ordering the sanctions. “He chose victims who were vulnerable and trusting. He did some of this while he was under a Commission cease trade order. Hughes poses a significant risk to investors and markets in British Columbia. He is a repeat offender with a complete disregard for the rules governing our capital markets. We must deter him, and others, from similar conduct.”

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

Sanctions were also levied against Eric Wayne Nelson, a Surrey man who carried on business as an investment adviser without being registered as required under securities laws and lost over $550,000 entrusted to him. He has been barred from the capital markets for 10 years and ordered to pay an administrative penalty of $50,000.

About 10 B.C. residents gave Nelson over $550,000 to invest for them. He used some of the money for his own purposes, but lost the vast majority of it trading options on the NASDAQ 100 index and the S&P 100 index.

The B.C. Securities Commission is an independent provincial government agency responsible for regulating trading in securities within the province. You may view the decisions on our website www.bcsc.bc.ca by typing in the search box the names of the parties above or 2005 BCSECCOM 195, 196 or 197. If you have questions, contact Andrew Poon, Media Relations, 604-899-6880.