Settlements

KENNETH MUIR [Sec. 161 & Agreed Stmt]

BCSECCOM #:
Document Type:
Sec. 161 & Agreed Stmt
Published Date:
1999-05-28
Effective Date:
1999-05-25
Details:


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

AND

IN THE MATTER OF KENNETH MUIR


Order Under Section 161


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

NOW THEREFORE the Executive Director, considering that it would be in the public interest to do so, orders, by consent, that:
  • under section 161(1)(f) of the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”), Muir’s registration as a registered representative under the Act be suspended for a period of 30 days commencing August 1, 1999, followed by a period of strict supervision by his current employer for a period of 12 months following his reinstatement as a registered representative.

DATED at Vancouver, British Columbia, on May 25, 1999.






Wayne R. Redwick, C.G.A.
A/Executive Director





SCHEDULE A

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

AND

IN THE MATTER OF KENNETH MUIR


Agreed Statement of Facts and Undertaking


      The following agreement has been reached between Kenneth Muir (“Muir”) and the Executive Director.

1. As the basis for the order referred to in paragraph three and the undertakings referred to in paragraph four of this agreement, Muir acknowledges the following facts as correct:
      Background
      (a) during the period between February 1, 1995 and July 31, 1995 (the “Period”), Muir was registered under the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”) as a salesman, and was employed by Brink, Hudson & Lefever Inc. (“Brink”);

      (b) during the Period, Muir conducted trades in the securities of Micro Minerals Inc. (the “Company”), an exchange issuer in the province of British Columbia;

      (c) the trading in the securities of the Company by Muir was conducted on behalf of various clients, including Frederick Sebastian (“Sebastian”);

      (d) during the Period, Muir accepted trading orders from Sebastian on behalf of accounts held in the names of the following clients:
          (i) Frederick Sebastian;
          (ii) Linda Sebastian;
          (iii) Jeff Sebastian;
          (iv) Giles Kavanagh;
          (v) Jack Symes;
          (vi) Rhonda Windrum;
          (vii) Jim Peterson; and
          (viii) Richard Schmalenberg;
              (the “Related Accounts”);
      (e) with the exception of the account held in the name of Jeff Sebastian, Muir failed to obtain written trading authorization for the Related Accounts permitting Sebastian to place the trading orders;

      (f) Muir knew, or ought reasonably to have known, that the principals of the Related Accounts were acting in concert with regard to their trading activities in the securities of the Company;

      Trading Matters

      (g) during the Period, the following transactions in the securities of the Company were effected by Muir through the Vancouver Stock Exchange (the “Exchange”) on behalf of the Related Accounts:

      (i) the purchase of 555,300 shares of the Company; and

      (ii) the sale of 919,300 shares of the Company;

      (h) this trading activity included 7 trades, representing 82,200 shares traded in the Company, conducted by Muir, resulting in the Related Accounts being on both the buy and sell sides of the transaction;

      (i) the purchases effected by Muir on behalf of Sebastian and the Related Accounts represented 16.0% of the overall buying volume conducted through the Exchange during the Period;

      (j) the sales effected by Muir on behalf of Sebastian and the Related Accounts represented 26.4% of the overall selling volume conducted through the Exchange during the Period;

      (k) during the Period the Related Accounts exhibited several instances of non-economic trading in the securities of the Company;
      (l) during the Period the Related Accounts conducted 70 trades which resulted in an upward movement of the share price (an “Uptick”) for the securities of the Company, which represented 29.7 % of the overall Uptick trades conducted in the shares of the Company during the Period;

      (m) Muir ought reasonably to have known that the trading in the securities of the Company which he effected on behalf of the Related Accounts represented a significant amount of the overall trading volume conducted through the Exchange during the Period;

      (n) Muir ought reasonably to have known that the trading activities described in subparagraphs 1.7 to 1.12 which he conducted on behalf of the Related Accounts during the Period would have an effect on the price of the securities of the Company;

      Credit Matters

      (o) the Related Accounts were opened, and should have been operated, as cash accounts with regard to the trades conducted by Muir and Brink during the Period;

      (p) during the Period, Muir was aware that the Related Accounts engaged predominantly in the following trading practices:
          (i) a pattern of continuously conducting purchases of securities while the account was either in an outstanding debit position or had inadequate funds to provide settlement for these transactions;

          (ii) a pattern of failing to provide payment for purchases of securities by the settlement date;

          (iii) a pattern of carrying debits past the prescribed settlement date;

          (iv) a pattern of forced selling of securities for credit purposes, either by Brink, or by Sebastian on behalf of the Related Accounts at the request of Brink, after settlement dates to cover debits in the respective accounts; and

          (v) a pattern of subsequently repurchasing the same securities a short time later at approximately the same price;
      (q) Muir knew, or ought reasonably to have known, that the principals of the Related Accounts, particularly Sebastian, held additional trading accounts with Robert Orr (“Orr”), a salesman employed by Pacific International Securities Inc. (“Pacific”), during the Period;

      (r) Muir ought reasonably to have known that a significant number of the sales of securities referred to in subparagraph 1.16.4 were being purchased by Pacific;

      (s) Muir ought reasonably to have known that a significant number of the subsequent repurchases of securities referred to in subparagraph 1.16.5 were being sold by Pacific;

      (t) Muir knew, or ought reasonably to have known, that the trades referred to in subparagraphs 1.18 and 1.19 were orchestrated or prearranged (“Match Trades”);

      (u) Muir knew, or ought reasonably to have known, that the trading patterns reflected in subparagraphs 1.16 - 1.20 were consistent with a scheme to defer payment for securities of the Company;

      (v) Muir ought to have ceased processing transactions for the Related Accounts until the credit matters had been dealt with through the deposit of funds;

      (w) based upon the conduct outlined in subparagraphs 1.7 - 1.22 above, Muir directly or indirectly engaged in, or participated in, a scheme relating to trading in, and the acquisition of, shares of the Company, when he knew, or ought reasonably to have known, that the scheme created a misleading appearance of trading activity in, and an artificial price for, the securities of the Company, contrary to section 57 of the Act; and

      (x) during the Period, Muir and Brink realized commissions and other charges in relation to the trading activities conducted through the Related Accounts which totaled in excess of $80,000.00.
2. Muir’s involvement in these matters is mitigated by the following:
      (a) Muir has represented to staff of the British Columbia Securities Commission (the “Commission”) that he had no intention to participate in any breaches of the Act;

      (b) Muir has represented to the staff of the Commission that during the Period he raised concerns about the trading and credit activities in the Related Accounts with the compliance department at Brink, but that he was advised by the compliance department that the trading activities were acceptable so long as trades were not conducted between accounts in the same name;

      (c) Muir has represented to the Commission that Sebastian informed him that no breaches of the Act had occurred in relation to the trading conducted by Sebastian through the Related Accounts; and

      (d) Muir has co-operated fully with the Commission in its investigation relating to these matters.
3. Muir consents to an Order (the “Order”) by the Executive Director that his registration as a registered representative under the Act be suspended for a period of 30 days commencing August 1, 1999, followed by a period of strict supervision by his current employer for a period of 12 months following his reinstatement as a registered representative.

4. Muir undertakes and agrees to:
      (a) fully comply with the provisions of the Act, and the Securities Rules, B.C. Reg. 194/97 and the bylaws, rules and policies of the Exchange;

      (b) rewrite the conduct and practices exam; and

      (c) pay to the Commission the sum of $5,000 for costs relating to the investigation and the sum of $35,000 by way of penalty. The payment shall be made in accordance with the following schedule:
          (i) $5,200.00 upon execution of this agreement;

          (ii) $1,450.00 payable on the 1st day of every month commencing on July 1st, 1999, for a period of 24 months; and
          (iii) on the terms set out in a Promissory Note executed by Muir in favour of the Commission.
5. Muir 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 May 17, 1999.

“Alan H. Finlayson” )
Witness Signature )
)
Alan H. Finlayson )
Witness Name (Please Print) )
1600 - 1030 West Georgia Street ) “Kenneth Muir”
Vancouver, BC V6E 2Y3 ) Kenneth Muir
Address )
)
Lawyer )
Occupation )

DATED at Vancouver, British Columbia, on May 17 , 1999.





Wayne Redwick, C.G.A.
A/Executive Director