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News Release

Securities Commission Releases Greymont Decision

  • Date:

    1996-02-23

  • Number:

    96/08

Released: February 20, 1996  Contact: Ron Messent  660-4800 or (BC only) 1-800-373-6393

The British Columbia Securities Commission has fined Derek Mason and Greymont Capital Corporation the sum of $30,000 for their misconduct in an offering of securities for Greymont Capital (VCC) Corporation under the provincial Small Business Venture Capital Act. The Commission has also:

- ordered that all persons cease trading in securities of Greymont VCC, - prohibited Mason and Greymont Capital from trading in securities for 20 years, - prohibited Mason from being a director or officer of any issuer for 20 years, - ordered Mason and Greymont Capital to pay the costs of the hearing.

The orders were announced today in a decision by the Securities Commission following a hearing held in February and March 1995.

Mason established Greymont VCC to raise funds from the public under the Small Business Venture Capital Act. Investors in companies registered under that act are eligible for tax credits of 30 per cent against their provincial income tax. The companies are required to invest the funds raised from investors, less administrative expenses, in eligible small businesses in British Columbia.

Greymont VCC became registered under the Small Business Venture Capital Act and raised $440,000 from 22 investors between September and December 1993. The share offering was conducted by Mason and Greymont Capital, his private company. None of the money was invested in an eligible small business. Most of it was misappropriated by Mason and Greymont Capital for their own benefit.

Greymont VCC was ultimately deregistered under the Small Business Venture Capital Act, disqualifying the investors from receiving tax credits. The bank accounts of Greymont Capital and Greymont VCC were frozen by the Securities Commission in June 1994. By that time, only $175,000 of the funds raised from investors remained.

The Securities Commission found that Mason conducted an illegal distribution of Greymont VCC securities, certified a false and misleading offering memorandum and caused it to be used in the distribution, misled investors about the availability of tax credits, backdated documents and cheques to misrepresent the dates when investments occurred, and misappropriated funds from Greymont VCC for his personal benefit.

The Commission said

"This type of conduct is damaging to the capital markets in the province. The SBVC program was established by the government to assist small enterprises in raising capital. The abuse of the program by Mason is damaging to investor confidence in the program and in the venture capital market generally. Masons conduct in this matter and his refusal to acknowledge his responsibility indicate to us that he is a threat to the investing public in the province."

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

Copies of the Commissions decision (22 pages) may be obtained in person at 1100 - 865 Hornby Street, Vancouver, British Columbia.