Settlements

STEPHEN PETER HUGHES [Sec. 161 & Agreed Stmt]

BCSECCOM #:
Document Type:
Sec. 161 & Agreed Stmt
Published Date:
1999-02-26
Effective Date:
1999-02-16
Details:


IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418

AND

IN THE MATTER OF STEPHEN PETER HUGHES


Order Under Section 161

WHEREAS an Agreed Statement of Facts and Undertaking was executed by Stephen Peter Hughes (“Hughes”) and the Executive Director, a copy of which is attached hereto as Schedule “A” (the “Agreement”):

NOW THEREFORE the Executive Director, considering that it would be in the public interest to do so, orders, by consent, that:

1. under section 161(1)(c) of the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”), all of the exemptions described in sections 44-47, 74, 75, 98 and 99 of the Act do not apply to Hughes for a period ending on the later of:

      1.1 the date Hughes satisfies his obligation to pay the sum of $5,000 as described in paragraph 4 of the Agreement; and

      1.2 one year from the date of this order;
        save that Hughes may rely on the exemption set out at section 45(2)(7) of the Act.


    DATED at Vancouver, British Columbia, on February 16, 1999.




    Michael J. Watson
    Executive Director






    Schedule “A”
    IN THE MATTER OF THE SECURITIES ACT
    R.S.B.C. 1996, c. 418

    AND

    IN THE MATTER OF STEPHEN PETER HUGHES


    Agreed Statement of Facts and Undertaking

        The following agreement has been reached between Stephen Peter Hughes (“Hughes”) and the Executive Director:

    1. As the basis for the orders and undertakings referred to below, Hughes acknowledges the following facts as correct:
        TAC Investment Program
        1.1 TAC International Limited (“TACL”) is a company incorporated pursuant to the laws of the Commonwealth of the Bahamas;

        1.2 TACL does not have an office in British Columbia and is not a reporting issuer in British Columbia;

        1.3 TACL is not registered to carry on business in British Columbia;

        1.4 TACL is not registered pursuant to section 34 of the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”);

        1.5 between August 1996 and August 1997, TACL developed a network of investment consultants who acted as sales persons in British Columbia;

        1.6 TACL, through investment consultants, including Hughes (as described below), promoted an investment program in British Columbia which involved trading in bank debentures or instruments which required an investor to incorporate an international business corporation (“IBC”);

        1.7 TACL would facilitate an investor incorporating an IBC at a cost of $1,500 (US). TACL would then loan $1,500 (US) to the investor’s IBC which money was then purportedly pooled by TACL with the money of other investors in order to invest in a bank debenture trading program;

        1.8 investors were told:
            1.8.1 the $1,500 (US) loan from TACL was to be repaid in 12 months;

            1.8.2 the loan was interest free and, further, the loan was to be repaid through profits generated through the investment in bank debentures; and

            1.8.3 TACL advised investors that the loan would not be repayable if the investment in the bank debenture trading program failed;
        1.9 participation in the bank debenture trading program offered by TACL to investors in British Columbia is trading in a security as that term is defined in section 1 of the Act;

        1.10 TACL represented to investors that returns on the investment of $1,500 (US) would be 40% in the forty-five (45) days after investment and 60% in every forty-five (45) day period thereafter;

        1.11 investment consultants were to earn a commission for recruiting other investors, which was 30% of the initial IBC fee of $1,500 (US) and commission on any profit generated by the investor’s IBC through trading in the bank debenture trading program;

        1.12 TACL developed a network of regional, provincial, national and international vice presidents who were individuals to whom investment consultants reported;

        1.13 during the time of the operation of its investment program in British Columbia, TACL recruited approximately 171 investors in British Columbia and raised at least $256,000 (US) from investors in British Columbia;

        Role of Stephen Hughes

        1.14 Hughes was introduced to TACL in the summer of 1996 by Michael Shaw;

        1.15 Hughes was a district vice president of TACL and his job was to recruit individuals as investment consultants, rather than to sell IBCs to investors;

        1.16 Hughes’ title as vice president did not give him any decision-making powers in TACL, but rather simply enabled him to oversee other investment consultants, and gave him a different commission structure as vice-president;

        1.17 Hughes did not personally purchase an IBC through TACL;

        1.18 Hughes worked with TACL until October 1996, at which time he resigned;

        1.19 during his tenure with TACL, Hughes recruited three investment consultants: Jane Kriese, Tim Barry and Brian Wilson, each of whom purchased an IBC through TACL;

        1.20 during his employment with TACL, Hughes was never paid any commissions or salary promised;

        1.21 although at the time Hughes was employed by TACL he was not registered under the Act in any capacity, Hughes had been formerly registered under the Act as a mutual fund salesman when he was employed with CT Fund Services from October 1, 1992 to July 2, 1996. As a result, Hughes should have known he was required to be registered under the Act; and

        1.22 Hughes’ actions as a vice president of TACL in recruiting the three investment consultants referred to in paragraph 1.19 were actions in furtherance of the trading in securities effected when the three investment consultants sold securities to members of the public. As Hughes was not registered and as the securities had not been qualified by a prospectus and no exemptions were available for the trades, Hughes contravened sections 34 and 61 of the Act;
    2. Hughes consents to an order by the Executive Director (the “Order”) that:
        2.1 under section 161(1)(c) of the Act, any or all of the exemptions described in sections 44-47, 74, 75, 98 or 99 of the Act do not apply to Hughes for a period ending on the later of:
            2.1.1 the date Hughes satisfies his obligation in paragraph 4 below, including any accrued interest; and

            2.1.2 one year from the date of the Order;
        save that Hughes is entitled to rely on the exemption set out at section 45(2)(7) of the Act;

    3. Hughes undertakes to comply with the Act and the Securities Rules, B.C. Reg. 194/97 and all applicable regulations, policies and guidelines.

    4. Hughes undertakes to pay the Commission the sum of $5,000 by March 31, 1999, consisting of $2,000 in investigation costs and $3,000 in administrative penalty.

    5. Hughes waives any right he may have, under the Act or otherwise, to a hearing, hearing and review, judicial review or appeal related to, in connection with or incidental to this agreement and any related orders.


    DATED at Vancouver, British Columbia, on February 11, 1999.


    David J. Ouellette_________)
    Witness Name (please print))
    )
    “David Ouellette”__________)“Stephen Peter Hughes”
    Witness Signature)
    80-800 Valhalla Dr._______)
    Kamloops, BC___________)
    Address)
    Businessman___________)
    Occupation)

    DATED at Vancouver, British Columbia, on February 12, 1999.





    Michael J. Watson
    Executive Director