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News Release

Securities Commission Releases Decision on Metaxa and Bu-Max

  • Date:

    1995-04-28

  • Number:

    95/15

Released: April 21, 1995  Contact: Ron Messent  660-4800 or 1-800-373-6393

The British Columbia Securities Commission has imposed a 25-year prohibition from trading securities and from being a director or officer of a company on Francis D. Balfour. The orders are based on his activities in 1989 as a promoter and de facto director of Metaxa Resources Ltd. and Bu-Max Gold Corp.

One other director of Bu-Max -- Leonard E. Tinkler -- faces the same prohibitions for 15 years. Peter Cox, who was a director of Metaxa and Bu-Max has been prohibited from trading securities and from being a director or officer of a public company for four years.

Balfour and Tinkler were also ordered to pay the costs of the hearing.

The penalties were announced today in a decision by the Securities Commission following a hearing held in July and November 1993 into the affairs of Metaxa and Bu-Max and the conduct of their directors and officers. Five other individuals associated with the companies entered into settlement agreements with Commission staff prior to the hearing and consented to various enforcement orders.

Metaxa and Bu-Max completed initial public offerings of their securities in 1989 and became listed on the Vancouver Stock Exchange. Trading in the shares of Metaxa and Bu-Max was halted by the Exchange on July 21, 1989, less than two months after Metaxa was listed and only four days after Bu-Max was listed. Both companies were delisted on March 4, 1991.

In its decision released today, the Commission found that:

- Balfour was a promoter and de facto director of Metaxa and Bu-Max, who conducted the affairs of the companies through nominees, including Tinkler, and whose role in the companies' affairs was not disclosed in their prospectuses;

- Virtually all of the money raised by Metaxa through its initial public offering was paid out on Balfour's direction in the month following the offering, mostly for purposes unrelated to the business of Metaxa;

- Part of the offering proceeds was used to pay for the purchase of Metaxa shares from the offering, thereby creating a misleading appearance of trading activity in Metaxa shares; - Balfour failed to file insider reports disclosing his trading of Metaxa shares; and - Balfour and Tinkler misappropriated substantially all of the proceeds of Bu-Max's initial public offering.

The Commission said

"This case involves the plundering of two reporting issuers upon the completion of their initial public offerings. It is a particularly bad example of the type of conduct that brings the public securities markets, and particularly the Exchange, into disrepute."

The Commission found that Balfour was primarily responsible for the violations and that he breached his duties as a director and officer of Metaxa and Bu-Max.
"Balfour was the main player in this drama. He orchestrated the offerings, concealing his involvement through the appointment of nominees. He misappropriated the proceeds of Metaxa's offering and used part of them to manipulate the market in Metaxa shares. He misappropriated $40,000 of the proceeds of Bu-Max's offering, before he was beaten to the rest of the money by Tinkler. Balfour has demonstrated by his conduct a complete disregard for the rules of the market."

Tinkler was found to have a less direct role.
"Tinkler stumbled into this picture and acted as a nominee for Balfour. However, when presented with the opportunity, he showed himself to be a quick learner in the art of plundering an issuer."
Cox had no involvement in the misappropriation or the manipulation but he signed the prospectuses that failed to disclose Balfour as a promoter and de facto director. The Commission found that "Cox did facilitate Balfour's exploits by providing him the clean shells and allowing him to remain in the shadows by conducting the offerings through nominees."

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 (25 pages) may be obtained in person at 1100 - 865 Hornby Street, Vancouver, British Columbia.