BCSC

Settlements

ANDREW SIM KATZ [Sec. 161 & Agreed Stmnt.]

BCSECCOM #:	Document Type: Sec. 161 & Agreed Stmnt.
Published Date: 1999-12-24	Effective Date: 1999-12-22
Details:

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

AND

IN THE MATTER OF ANDREW SIM KATZ

Order Under Section 161

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

2. NOW THEREFORE, the Executive Director, considering that it would be in the public interest to do so, orders, BY CONSENT, that:

2.1 under section 161(1)(c) of the

Securities Act, R.S.B.C. 1996, c. 418 (the “Act”) the exemptions described in sections 44 to 47, 74, 75, 98, and 99 of the Act do not apply to Katz acting directly, or indirectly through another person or company, or through any person or company acting on his behalf, including a trust arrangement, until Katz receives and maintains Canadian Venture Exchange (the “Exchange”) approval and registration with the British Columbia Securities Commission (the “Commission”). Should Katz not receive or maintain both Exchange approval and registration with the Commission, then the above exemptions do not apply to Katz, acting directly or indirectly, for a period of eight years from the date of this order:

2.1.1 except that Katz may trade securities beneficially owned by him at the date of this order, subject to the following conditions:

2.1.1.1 within two weeks of the date of this order, Katz must deliver a sworn declaration to the Executive Director listing all of the securities beneficially owned by him at the date of this order;

2.1.1.2 any trades must take place within one year of the date of this order through a single registered dealer designated in writing

by Katz and approved by the Executive Director;

2.1.1.3 before any such trades take place, Katz must deliver to the registered dealer a copy of this order; and

2.1.1.4 Katz will instruct his registered dealer to provide the Executive Director with a copy of the confirmation slip evidencing the trade within four days of the date of the trade;

2.2 under section 161(1)(d) of the

Act, Katz is prohibited from engaging in investor relations activities in British Columbia for eight years after the date of this order; and

2.3 under section 161(1)(d) of the

Act, Katz will resign forthwith from any position that he holds as a director or officer of any issuer in British Columbia and is prohibited from becoming or acting as a director or officer in British Columbia of any issuer until the later of:

2.3.1 the date he successfully completes a course of study satisfactory to the Executive Director concerning the duties and responsibilities of directors and officers; and

2.3.2 a period of eight years from the date of this order.

DATED at Vancouver, British Columbia, on December 22, 1999.

Steve Wilson
Executive Director

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

AND

IN THE MATTER OF ANDREW SIM KATZ

Agreed Statement of Facts and Undertaking

The following agreement has been reached between Andrew Sim Katz (“Katz”) and the Executive Director:

1. As the basis for the orders referred to in paragraph 2 below, Katz acknowledges the following facts as correct:

1.1 Katz is a resident of British Columbia and from December 13, 1989 until February 25, 1998, was registered pursuant to the

Securities Act, R.S.B.C. 1996, c. 418 (the “Act”) as an investment advisor;

1.2 the securities of Caprice Greystoke Enterprises Ltd. (“Caprice”) were listed for trading on the Vancouver Stock Exchange during the period December 1, 1991 to August 31, 1993;

1.3 between December 1, 1991 and October 1, 1992 (“Period 1”), and from May 3, 1993 to August 31, 1993 (“Period 2”), while employed by Pacific International Securities Inc. (“Pacific”), also a registrant under the

Act, Katz used or knowingly participated in the use of manipulative or deceptive methods of trading in connection with the purchase or sale of the securities of Caprice in breach of section 57(a) of the Act;

1.4 the methods used by Katz during Period 1 and Period 2 created a false and misleading appearance of trading activity or an artificial price for the securities of Caprice, contrary to section 57(a) of the

Act. Such methods included:

1.4.1 trading in large blocks of shares of Caprice in nominee accounts controlled by Caprice’s president, John Spector (the “Nominee Accounts”);

1.4.2 trading Caprice shares for the nominee accounts in a manner that created no economic benefit for his clients but gave the market place the impression of volume and a further result of which was to earn commissions for Katz from trading in these accounts;

1.4.3 transferring securities of Caprice between accounts where there was no beneficial change of ownership of the securities, a practice known as wash trading;

1.4.4 buying securities of Caprice which resulted in an upward movement of the shares price ( an “Uptick”) and conducting trades at prices higher than the previous trade or order where there were no subsequent trades, thereby affecting the market price of Caprice (a “High Close”);

1.4.5 the execution and clearing of orders through other member firms (a “Jitney Trade”) to disguise the players in the market place; and

1.4.6 using his inventory account to facilitate taking the side of the market opposite that taken by his clients in transactions involving the buying and selling securities in Caprice;

1.5 the particulars of the improper trading activity by Katz which was in breach of section 57(a) of the

Act, included the following:

1.5.1 in Period 1 Katz was involved in transactions that constituted 11% of the high closings of Caprice in the last half hour of trading;

1.5.2 Katz was involved in wash trade transactions 86 times in Period 1;

1.5.3 Katz conducted transactions in nominee accounts he was responsible for in Period 1 which created no economic benefit for his clients but gave the market place the impression of volume. He earned net commission of $13,711 in Period 1 from trading in these accounts;

1.5.4 during Period 2 there were a total of 629 uptick trades. Katz was responsible for 31% of those trades and entered 67% of the high close trades after 1:00 p.m. in Period 2 and was also responsible for 24% of the new high closes of Caprice in Period 2; and

1.5.5 Katz’s practice of taking the side of the market opposite to the side taken by his clients in buying and selling Caprice in Period 2 included that his inventory account conducted 641 trades in Caprice. Katz was opposite his clients for 145 or 22% of those trades;

1.6 On March 9, 1998 a Disciplinary Panel of the Vancouver Stock Exchange imposed the following penalty on Katz as a result of the conduct referred to above:

1.6.1 withdrawal of Exchange approval for three years;

1.6.2 permanent withdrawal of approval of Katz as a VCT Trader;

1.6.3 Katz pay $350,000, being a fine of $150,000, disgorgement of profits and commissions of $100,000, and $100,000 on account of costs; and

1.6.4 should Katz regain approval and resume employment with a member of the Exchange, he is permitted to trade only under strict supervision for a period of 24 months.

2. Katz consents to an order by the Executive Director (the “Order”) that:

2.1 under section 161(1)(c) of the

Act, the exemptions described in sections 44 to 47, 74, 75, 98, and 99 of the Act do not apply to Katz acting directly, or indirectly through another person or company, or through any person or company acting on his behalf, including a trust arrangement, until Katz receives and maintains Exchange approval and registration with the Commission. Should Katz not receive or maintain both Exchange approval and registration with the Commission, then the above exemptions do not apply to Katz, acting directly or indirectly, for a period of eight years from the date of the Order;

2.1.1 except that Katz may trade securities beneficially owned by him at the date of the Order, subject to the following conditions:

2.1.1.1 within two weeks of the date of the Order, Katz must deliver a sworn declaration to the Executive Director listing all of the securities beneficially owned by him at the date of the Order;

2.1.1.2 any trades must take place within one year of the date of the Order through a single registered dealer designated in writing

by Katz and approved by the Executive Director;

2.1.1.3 before any such trades take place, Katz must deliver to the registered dealer a copy of the Order; and

2.1.1.4 Katz will instruct his registered dealer to provide the Executive Director with a copy of the confirmation slip evidencing the trade within four days of the date of the trade;

2.2 under section 161(1)(d) of the

Act, Katz is prohibited from engaging in investor relations activities in British Columbia for eight years after the date of the Order; and

2.3 under section 161(1)(d) of the

2.3.1 the date he successfully completes a course of study satisfactory to the Executive Director concerning the duties and responsibilities of directors and officers; and

2.3.2 a period of eight years from the date of the Order.

3. Katz 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.

4. This agreement may be signed in counterpart.

DATED at, on December 22, 1999.

“Roma Katz” )
Witness Signature )
Roma Katz )
Witness Name ) “Andrew S. Katz”
____________________________ ) ANDREW SIM KATZ
____________________________ )
Address )
____________________________ )
Occupation )

DATED at Vancouver, British Columbia, on 1999.

Steve Wilson
Executive Director

3. Katz 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.

4. This agreement may be signed in counterpart.

DATED at Vancouver, British Columbia, on 1999.

_______________________ )
Witness Signature )
_______________________ )
Witness Name ) ____________________________
____________________________ ) ANDREW SIM KATZ
____________________________ )
Address )
____________________________ )
Occupation )

DATED at Vancouver, British Columbia, on December 22, 1999.

Steve Wilson
Executive Director