Decisions

GORDON DIX JR., et. al. [Decision]

BCSECCOM #:
2001 BCSECCOM 944
Document Type:
Decision
Published Date:
2001-09-26
Effective Date:
2001-09-25
Details:


2001 BCSECCOM 944


COR#01/107

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


AND


IN THE MATTER OF GORDON DIX JR., RONALD JAMES HENRY AND
SOTA MINING GROUP LTD.



PANEL
Brent W. Aitken
Joan L. Brockman
Roy Wares


SUBMISSIONS OF COMMISSION STAFF RECEIVED FROM
Lorne Herlin


DECISION OF THE COMMISSION


[para 1]
In a decision dated July 20, 2001 we made findings regarding the conduct of Gordon Dix Jr., Ronald James Henry and Sota Mining Group Ltd.: see
In the Matter of Gordon Dix Jr. et al., 2001 BCSECCOM 761. We asked Commission staff to make written submissions about sanctions and costs by August 17, the respondents by September 14. Commission staff made submissions, the respondents did not.

[para 2]
In our findings, we found that:


1. Dix, Henry and Sota sold securities of Sota without being registered and without filing a prospectus, contrary to sections 34 and 61 of the
Securities Act, R.S.B.C. 1996, c. 418,

2. Dix and Henry acted as advisers without being registered, contrary to section 34, and


3. Dix went to investors' residences to sell securities, contrary to section 49.


[para 3]
These respondents contravened the most fundamental elements of securities regulation – that those trading in securities, or advising others about trading in securities, be registered, and that investors be given appropriate disclosure about their investments.


[para 4]
Henry has been involved in the mining business for over 30 years. It seems improbable that with this experience Henry did not know his conduct was in contravention of these basic requirements. Certainly he ought to have known, just as he ought to have known that Dix was utterly unqualified to raise capital for Sota in compliance with securities laws.


[para 5]
As for Dix, we cannot fathom how he concluded he was qualified to sell the Sota securities, having nothing beyond a layman's knowledge of mining or securities.


[para 6]
Here, the tragic element is that Henry and Sota targeted an especially vulnerable group – the elderly and unsophisticated. Most were over 80 and had no knowledge of investment matters.


[para 7]
Apparently, none of this mattered to Dix and Henry. Dix had no qualms about calling on these elderly investors at their homes in pursuit of his 50% commission and 15% equity share in the hoped-for public company.


[para 8]
For his part, Henry was focused on raising capital for his mining company. That such an investment was manifestly unsuitable for the elderly and unsophisticated individuals who invested causes him no concern. To the contrary, he says they are "becoming stinking filthy rich. Sota Mining Ltd. is not an operation where you get rich quick but it is a mining company that is a very lucrative long term investment."


[para 9]
This is an understatement. Any investment in Sota was not only long term, but high risk. (The investors have as yet received no return on their investment and have not recovered their capital.) How Henry came to the conclusion that an investment with these characteristics was suitable for investors in their 80's, is a mystery.


[para 10]
Therefore, considering it to be in the public interest, we order:


Dix


1. under section 161(1)(c) of the Act, that the exemptions in sections 44 to 47, 74, 75, 98 or 99 do not apply to Dix for a period of 10 years from the date of this order, except that he may trade through a registrant for his own account if he provides the registrant with a copy of the Commission's Findings and Decision in this matter;


2. under section 161(1)(d)(i), that Dix resign any position he holds as a director or officer of any issuer;


3. under section 161(1)(d)(ii), that Dix be prohibited from acting as a director or officer of any issuer until he has successfully completed a course of study acceptable to the Executive Director and a period of 10 years has passed from the date of this order;


4. under section 161(1)(d)(iii), that Dix is prohibited from engaging in investor relations activities for a period of 10 years;


5. under section 162, that Dix pay an administrative penalty of $25,000;


Henry


6. under section 161(1)(c), that the exemptions in sections 44 to 47, 74, 75, 98 or 99 do not apply to Henry for a period of 10 years
from the date of this order, except that he may trade through a registrant for his own account if he provides the registrant with a copy of the Commission's Findings and Decision in this matter;

7. under section 161(1)(d)(i), that Henry resign any position he holds as a director or officer of any issuer;


8. under section 161(1)(d)(ii), that Henry be prohibited from acting as a director or officer of any issuer until he has successfully completed a course of study acceptable to the Executive Director and a period of 10 years
has passed from the date of this order;

9. under section 161(1)(d)(iii), that Henry is prohibited from engaging in investor relations activities for a period of 10 years;


10. under section 162, that Henry pay an administrative penalty of $25,000;


Sota


11. under section 161(1)(b), that all persons cease trading in, and are prohibited from purchasing, any securities of Sota Mining Group Ltd. until the Commission orders otherwise.


[para 11]
Considering it to be in the public interest, we also order, under section 174, that Dix, Henry and Sota pay, on a joint and several basis, the prescribed fees and charges for the costs of and related to the hearing.


[para 12]
We direct Commission staff to file an application for costs with the Commission on or before October 12, 2001.


September 25, 2001


[para 13]

FOR THE COMMISSION




Brent W. Aitken, Commissioner




Joan L Brockman, Commissioner




Roy Wares, Commissioner