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News Release

Securities Commission Fines Canpol and Borkowski

  • Date:

    1996-09-13

  • Number:

    96/26

Released: September 9, 1996  Contact: Ron Messent  660-4800 or (BC only) 1-800-373-6393

The British Columbia Securities Commission has imposed fines totalling $35,000 and other regulatory penalties on Canpol Holding (a.k.a. Commercial and Productive Enterprise Canpol Company Ltd.) and its principal Paul Jan Borkowski for their activities in distributing securities of Canpol to residents of British Columbia in contravention of the Securities Act.

The Commission has ordered that

· Canpol pay a fine of $10,000; · all trading cease in Canpol's securities until Canpol files and obtains a receipt for a prospectus; · Borkowski pay a fine of $25,000; · Borkowski's trading rights be removed for 15 years; · Borkowski be prohibited from becoming or acting as a director or officer of a company for 15 years; · Canpol and Borkowski pay the costs of the hearing.

The penalties were announced today in a decision by a Securities Commission panel following a hearing held in February and May 1995. Written submissions were filed subsequent to the hearing by Commission staff. Borkowski requested several extensions of time to file written submissions but has not filed them as of the date of the decision.

Canpol was incorporated in Poland in 1992 and purported to be in the business of producing building materials using a product called "Insulboard". Borkowski was the major shareholder and the controlling mind of Canpol. Canpol initially raised financing from investors in Alberta for a series of joint ventures in North America and Eastern Europe.

In the fall of 1993, Canpol began soliciting investments in the Kelowna area of British Columbia. Between September 1993 and April 1994, ten British Columbia residents purchased Canpol shares, for amounts ranging from $9,900 to $60,000. The total amount invested by these ten people was $272,886.

All of the money raised by the sale of Canpol shares has been spent. Canpol currently has no cash and few, if any, other assets. Despite requests from several Canpol shareholders as well as Commission staff, Canpol has failed to provide either financial statements or a proper accounting setting out precisely how the money raised from the sale of its shares was spent.

The Commission found that Canpol and Borkowski distributed shares of Canpol to British Columbia investors when neither Canpol nor Borkowski was registered under the Securities Act, no prospectus had been filed, and no registration or prospectus exemptions were available.

The Commission panel said:

"Securities legislation is intended to strike a balance between the need to protect investors and the need for businesses to raise capital. The Securities Act provides various exemptions from the registration and prospectus requirements that would permit a private, start-up company like Canpol to raise capital from sophisticated investors or persons connected to the company or its principals. Canpol and Borkowski ignored all of the rules and restrictions associated with the use of these exemptions. They sold securities to the public without dealing through a registered dealer or providing the mandated disclosure. As a result, a number of investors suffered losses and the capital raising process for small issuers was brought into disrepute."

The British Columbia Securities Commission is a provincial government agency responsible for regulating trading in securities and exchange contracts.

Copies of the Commission's decision (11 pages) may be obtained in person at 1100 - 865 Hornby Street, Vancouver, British Columbia.