Settlements
DAVID WALFORD THOMAS [Sec. 161 & Settlement Agrmt.]
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BCSECCOM #:
2000 BCSECCOM 368, 2000 BCSECCOM 369
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Document Type:
Sec. 161 & Settlement Agrmt.
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Published Date:
2000-12-28
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Effective Date:
2000-12-28
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Details:
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2000 BCSECCOM 368
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF DAVID WALFORD THOMAS
Order Under Section 161
[para 1]
WHEREAS a Settlement Agreement was executed by David Walford Thomas and the Executive Director, a copy of which is attached hereto as "Schedule A".
[para 2]
NOW THEREFORE, the Executive Director, considering that it would be in the public interest to do so, orders BY CONSENT, that:
2.1 pursuant to section 161(1)(c) of the Securities Act, R.S.B.C. 1996, c. 418 (the "Act"), any or all of the exemptions described in sections 44 to 47, 74, 75, 98 or 99 of the Act do not apply to Thomas for a period of 4 years from the date of the Order with the exception that Thomas may trade in securities solely through a registered dealer under section 45(2)(7) of the Act;
2.2 pursuant to section 161(1)(d) of the Act, Thomas is prohibited from becoming or acting as a director or officer of any reporting issuer, or of any issuer which provides administrative or management services to a reporting issuer, for a period ending on the later of:
2.2.1 4 years from the date of the Order; and
2.2.2 the date that Thomas has successfully completed a course of study satisfactory to the Executive Director concerning the duties and responsibilities of directors and officers of reporting issuers; and
2.3 pursuant to section 161(1)(d) of the Act, Thomas is prohibited from engaging in investor relations activities for a period of 4 years from the date of the Order.
[para 3]
DATED at Vancouver, British Columbia, on December 28, 2000.
Steve Wilson
Executive Director
2000 BCSECCOM 369
Schedule “A”
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF DAVID WALFORD THOMAS
Settlement Agreement
[para 1]
1. The following settlement of issues has been reached between David Walford Thomas (“Thomas”) and the Executive Director.
Agreed Statement of Facts
[para 2]
2. Thomas acknowledges the following facts as correct:
2.1 Redell Mining Corp. (“Redell”), now FM Resource Corp., was at all material times, a reporting issuer and its common shares were listed on the Vancouver Stock Exchange (“VSE”), now the Canadian Venture Exchange.
2.2 Glen Elmo White (“White”) was a director and President of Redell from September 1993, to June 30, 1996. White was, during all material times, a professional engineer.
2.3 Thomas was a director and executive vice-president of Redell from June 1995, to April 96.
2.4 During the period from August 1994, to May 1996 (the “Relevant Period”), Redell conducted a substantial promotional campaign and through brochures, newsletters and news releases (collectively, the “Disclosure Documents”) the public was, among other things, solicited to invest in the securities of Redell.
2.5 During the Relevant Period, Redell also raised money through various exempt distributions, including three offering memoranda (collectively, the “OMs”) filed with the British Columbia Securities Commission. Some $3.4 million was raised by Redell using the OMs. The OMs were each executed and certified by White and Thomas on behalf of Redell to contain all material information.
2.6 The Disclosure Documents, the OMs, and material change reports relating to the Disclosure Documents, were filed by Redell with the Commission. The Disclosure Documents were signed by either White, Thomas or both and were issued or caused to be issued on behalf of Redell by either White or Thomas or both.
2.7 White was primarily responsible for overseeing development of La Forma by Redell. Thomas was primarily responsible for Redell’s public relations activities. White assisted Thomas with the public relations activities.
2.8 Representations were made in the Disclosure Documents and the OMs regarding the reserves of gold ore at Redell’s La Forma Gold Mine located in the Yukon Territory. During the Relevant Period, estimates of the gold reserves of La Forma as represented in the Disclosure Documents and the OMs increased over time from about 170,000 ounces in August 1994, to over 850,000 ounces in May 1996.
2.9 During the Relevant Period, the price of Redell’s shares rose from less than $1.00 per share to in excess of $6.00 per share, with approximately 16 million shares trading on the VSE during the Relevant Period.
2.10 The VSE halted trading of Redell on May 10, 1996, and suspended trading of Redell on June 4, 1996. The VSE required Redell to obtain an independent engineering review of the gold reserves for La Forma. An independent review was conducted by Ash & Company using a narrow vein approach in determining reserves. Ash & Company could only confirm the existence of about 70,000 to 90,000 ounces of gold as a “resource”, a less certain category than a “reserve”.
2.11 White was responsible for most of the reserve representations published by Redell in the Disclosure Documents and the OMs and that many of those representations had not been properly prepared and could not be supported.
2.12 On July 4, 1997, White and Thomas were each charged with 20 counts alleging breaches of the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”). Nineteen of the counts involved misrepresentations made in the Disclosure Documents, the OMs, and material change reports relating to the reserve figures for La Forma, contrary to then sections 35 and 138, now sections 50 and 168.1 of the Act (the “Charges”).
2.13 On August 13, 1997, the Executive Director issued a Temporary Order and Notice of Hearing Under Section 161 in which orders were made against White and Thomas. The Commission has extended those orders from time to time.
2.14 On October 6, 1997, the Commission issued a Partial Revocation Order Under Section 171 to permit White to trade in securities, other than securities of Redell, solely through a registered dealer under section 45(2)(7) of the Act until the hearing was held and a decision rendered.
2.15 A trial of the Charges was held in British Columbia Provincial Court during June, September and December 1998. On February 25, 1999, White was found guilty on counts 2 through 20 relating to the misrepresentations in the Disclosure Documents and the OMs but was acquitted on count 1, being fraud pursuant to then section 41.1, now section 57. Thomas was found guilty on counts 8, 9, 10 and 11 relating to misrepresentations in four corporate profiles but was acquitted on all other 16 counts.
2.16 On September 10, 1999, White was sentenced to a fine of $100,000 on the 19 counts upon which he was convicted and Thomas was sentenced to a fine of $30,000.
2.17 White appealed his conviction and the sentence to the British Columbia Supreme Court and the appeal was heard on June 15 and 16, 2000. On or about July 12, 2000, Madam Justice Humphries allowed White’s appeal with respect to counts 8, 9, 10 and 11 relating to the misrepresentations in the corporate profiles and ordered a new trial on those counts. Madam Justice Humphries also ordered that the fine of $100,000 be reduced proportionately to exclude those four counts. The appeal regarding White’s conviction on the remainder of the counts and of the sentence was dismissed.
2.18 White appealed the decision of Madam Justice Humphries to the British Columbia Court of Appeal but on November 23, 2000, abandoned the appeal in its entirety.
Mitigating Factors
[para 3]
3. The Executive Director has taken into account the following facts as factors mitigating the sanctions which would otherwise have applied in the public interest:
3.1 the conviction of Thomas on 4 counts of misrepresentation under the Act and the fine imposed; and
3.2 representations by Thomas to the Executive Director that, while an insider of Redell, Thomas made all required filings with the Commission regarding his ownership and changes in ownership of securities of Redell.
Order
[para 4]
4. Thomas consents to an order by the Executive Director (the “Order”) that:
4.1 pursuant to section 161(1)(c) of the Act, any or all of the exemptions described in sections 44 to 47, 74, 75, 98 or 99 of the Act do not apply to Thomas for a period of 4 years from the date of the Order with the exception that Thomas may trade in securities solely through a registered dealer under section 45(2)(7) of the Act;
4.2 pursuant to section 161(1)(d) of the Act, Thomas is prohibited from becoming or acting as a director or officer of any reporting issuer, or of any issuer which provides administrative or management services to a reporting issuer, for a period ending on the later of:
4.2.1 4 years from the date of the Order; and
4.2.2 the date that Thomas has successfully completed a course of study satisfactory to the Executive Director concerning the duties and responsibilities of directors and officers of reporting issuers; and
4.3 pursuant to section 161(1)(d) of the Act, Thomas is prohibited from engaging in investor relations activities for a period of 4 years from the date of the Order.
Waiver
[para 5]
5. Thomas 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.
[para 6]
DATED at Vancouver, British Columbia, on December 27, 2000.
“David Walford Thomas”
Witness signature
Gereth McCaskill
Witness name (please print)
The Toronto-Dominion Bank
10436 King George Hwy
104th Avenue
Surrey, BC V3T 2W7
Witness address
Mgr Personal Bkg
Witness occupation
DATED at Vancouver, British Columbia, on December 28, 2000.
Steve Wilson
Executive Director