Settlements
MICHAEL LEE SEIFERT [Sec. 161 & Agreed Stmnt.]
BCSECCOM #:
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Document Type:
Sec. 161 & Agreed Stmnt.
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Published Date:
1999-12-24
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Effective Date:
1999-12-09
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Details:
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IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF MICHAEL LEE SEIFERT
Order Under Section 161
WHEREAS an Agreed Statement of Facts and Undertaking has been executed by Michael Lee Seifert (“Seifert”) 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”), the exemptions described in sections 44 to 47, 74, 75, 98 and 99 of the Act do not apply to Seifert in respect of the trading of securities of any reporting issuer or any issuer that provides management, administrative, promotional or consulting services to a reporting issuer (“Securities”) for a period of 12 years from the date of this Order:
- 1.1 except that Seifert may trade Securities beneficially owned by him, subject to the following conditions:
- 1.1.1 that before any trade takes place, Seifert must deliver a sworn declaration to the Executive Director listing all of the Securities beneficially owned by him at the date of this Order;
1.1.2 that any such trade must take place within one year of the date of the Order through a single registered dealer designated in writing by Seifert and approved by the Executive Director;
1.1.3 that before any such trade takes place, Seifert must deliver to the registered dealer a copy of this Order; and
1.1.4 that Seifert 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. Under subsection 161(1)(d) of the Act, Seifert resign from any position that Seifert holds as a director or officer of any reporting issuer or any issuer that provides management, administrative, promotional or consulting services to a reporting issuer, and is prohibited from becoming or acting as a director or officer of any reporting issuer or any issuer that provides management, administrative, promotional or consulting services to a reporting issuer for a period of 12 years from the date of this Order; and
3. Under section 161(1)(d)(iii) of the Act, Seifert is prohibited from engaging in investor relations activities for a period of 12 years from the date of this Order.
DATED at Vancouver, British Columbia, on December 9th, 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 MICHAEL LEE SEIFERT
Agreed Statement of Facts and Undertaking
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF MICHAEL LEE SEIFERT
Agreed Statement of Facts and Undertaking
The following agreement has been reached between Michael Lee Seifert (“Seifert”) and the Executive Director:
1. As the basis for the orders and undertakings referred to in paragraph 7 of this agreement, Seifert makes the following representations and admissions:
- 1.1 At all material times, Seifert was a barrister and solicitor licensed to practice law in the Province of British Columbia;
1.2 From time to time, Seifert was an insider of reporting issuers in the Province of British Columbia, as follows:
- 1.2.1 Delgratia Mining Corporation (“Delgratia”) (now Central Minera Corp.) - a director and thereby an insider, from June 29, 1994 until September 25, 1995;
1.2.2 Consolidated Dencam Development Corporation (“Dencam”) - an officer and, thereby, an insider, from June 30, 1994 until September 13, 1995; and
1.2.3 Allied Strategies Inc. (“Allied”) (now Sleeman Breweries Ltd.) - a director and, thereby, an insider, from June 12, 1992 until April 26, 1994.
- 1.3 Seifert was legal counsel to, and, thereby, in a special relationship with, Arakis Energy Corporation (“Arakis”) from January, 1992 until December 1995;
1.4 State Petroleum Corporation (“State”) was a non-reporting issuer incorporated under the Company Act,R.S.B.C. 1996, c. 62 (the “Company Act”);
1.5 Anthem International Incorporated (“Anthem”) is a company incorporated in the British Virgin Islands (“BVI”);
- 2.1 During 1989 and following, RYCO Trust Limited and related companies (collectively, “RYCO”) provided trust investment and related services from offices located in St. Helier, Jersey, Channel Islands, United Kingdom;
2.2 In or about September 1989, a trust was established named the Michael L. Seifert Trust (the “Trust”), of which RYCO was the trustee;
2.3 On August 9, 1990, Insco Holdings Limited (“Insco”) was incorporated in the BVI. Legal title to the shares of Insco thereafter was vested in RYCO as trustee of the Trust;
2.4 On or about January 14, 1994, RYCO was sold to Integro Trust Holdings (Jersey) Limited;
2.5 Hereinafter, unless otherwise specified, RYCO/Integro will be used to refer to the activities of the RYCO Group and Integro Trust (and associated companies) in relation to Seifert, the Trust or Insco as appropriate;
2.6 During September 1989 to September 1995, Seifert, from time to time gave instruction or direction to RYCO/Integro respecting the trading activities of Insco. From September 1989 to September 1995, Seifert had control or direction over the shares held by Insco from time to time in reporting issuers in British Columbia;
- 3.1 Trading in Delgratia:
- 3.1.1 Prior to June 29, 1994, Seifert had taken steps to relinquish legal control or direction over all shares of Delgratia held by Insco. Those steps were insufficient to effect a change in control or direction for the purposes of the Act;
3.1.2 Between June 29, 1994 and September 25, 1995, while under Seifert’s control or direction, Insco, through an account maintained at Pacific International Securities Inc. (“Pacific”):
- 3.1.2.1 purchased, in two trades, 2,000 shares of Delgratia, at a total cost of $4,300;
3.1.2.2 sold, in 26 trades, 83,000 shares of Delgratia for proceeds, net of commission, of $385,555; and
- 3.1.2.3 Insco, in addition, received into the account 2,000 shares of Delgratia;
3.1.3 Between June 29, 1994 and September 25, 1995, while under Seifert’s control or direction, Insco, through another account maintained at Pacific, sold, in five trades, 44,000 shares of Delgratia for proceeds, net of commission, of $182,428.50;
3.1.4 Seifert failed to file insider reports disclosing his control or direction over the aforesaid shares in Delgratia, contrary to section 87 of the Act;
- 3.2.1 Between June 30, 1994 and September 13, 1995, while under Seifert’s control or direction, Insco, through an account maintained at Pacific:
- 3.2.1.1 purchased, in three trades, 30,666 shares of Dencam, for a total cost of $24,599.44;
3.2.1.2 sold, in 15 trades, 412,858 shares of Dencam for proceeds, net of commission, of $312,866.46; and
3.2.1.3 Insco, in addition, received into the account 342,033 shares of Dencam;
- 3.2.2 Between June 30, 1994 and September 13, 1995, while under Seifert’s control or direction, Insco, through an account maintained at Marleau Lemire Securities Inc. (“Marleau Lemire”) delivered or otherwise transferred out 6,267 shares of Dencam;
- 3.2.3 From his appointment as an officer and, thereby an insider of Dencam on June 30, 1994 to his formal resignation on September 13, 1995, Seifert played no active role in the management or direction of Dencam;
3.2.4 Seifert failed to file insider reports disclosing his control or direction over the aforesaid shares in Dencam contrary to section 87 of the Act;
- 3.3.1 Between November 1, 1993 and April 26, 1994, while under Seifert’s control or direction, Insco, through an account maintained at Marleau Lemire:
- 3.3.1.1 purchased, in two trades, 5,000 shares of Allied, for a total cost of $4,000;
3.3.1.2 sold, in one trade, 376,000 shares of Allied for proceeds, net of commission, of $451,200; and
3.3.1.3 Insco, in addition, received into the account 400,000 shares of Allied;
- 3.3.2.1 purchased, in two trades, 31,500 shares of Allied, for a total cost of $39,050; and
3.3.2.2 sold, in six trades, 34,500 shares of Allied for proceeds, net of commission, of $50,550;
- 3.3.3.1 sold, in one trade, 150,000 shares of Allied for proceeds, net of commission, of $178,200;
3.3.3.2 received into the account 200,000 shares of Allied; and
3.3.3.3 delivered, or otherwise transferred out, 50,000 shares of Allied;
- 3.4.1 Trading In Allied By Anthem:
- 3.4.1.1 Between November 1, 1993 and April 26, 1994, Seifert had control or direction over 10,000 shares of Allied held in the name of Anthem;
- 4.1 On or about December 31, 1993, Allied made a total distribution of 11,201,015 special warrants at $1.20 per warrant. Insco purchased 372,866 special warrants;
4.2 In respect of the aforesaid purchase of special warrants by Insco, Seifert caused to be filed with the Vancouver Stock Exchange (“VSE”) a private placement questionnaire and undertaking (Form VSE 11 -1 A). This document contained the following statement: “The purchaser has only bearer shares outstanding and is controlled by the Ryco Trust Executor & Trustee Company, a Jersey corporation controlled by its’ [sic] directors namely Michael Sampson, Kerry Carter, Michael Fielding, John Gamlin and Rodger Young”;
4.3 Seifert ought to have known that the said statement failed to accurately and fully state the beneficial ownership of Insco and the control and direction exercised by Seifert over Insco, and that the statement was thereby, made contrary to the public interest;
- 5.1 On or about June 26, 1992, Arakis entered into an agreement with State, whereby, upon State acquiring certain oil and gas concessions located in the Republic of the Sudan, Arakis would acquire all of the issued and outstanding shares of State in exchange for five million common shares of Arakis (the “Purchase Agreement”);
5.2 At the time of the Purchase Agreement, the shareholders of State were Lutfur Khan, Dr. Asif Ali Syed, Nadeem Khan, Waseem Rahman (Pvt.) Ltd. and Westrim Enterprises Ltd. (collectively, the “Original State Shareholders”);
5.3 Prior to the acquisition of State by Arakis, the Purchase Agreement was revised such that Arakis would acquire State in consideration of the issuance of six million common shares of Arakis (the “Revised Purchase Agreement”). The additional one million shares were issued in favour of Anthem (the “Anthem Issuance”), which became a State shareholder shortly prior to the closing of the Revised Purchase Agreement and solely for the purpose of receiving such shares;
5.4 On or about February 11, 1994, in order to facilitate approval of the Revised Purchase Agreement, and on instructions from Terry Alexander, the then president of Arakis, Seifert represented to the VSE that the additional one million shares issued by Arakis under the Revised Purchase Agreement were being issued to the State shareholders, due to the value of State’s interest in the concessions exceeding both the company’s and State’s expectations.
5.5 The representations above (at paragraph 5.4) were incomplete and, therefore, inaccurate in that said representations failed to disclose Seifert’s understanding that the Anthem Issuance was made to accommodate a group of European financiers. This was a material fact with respect to Arakis, which material fact had not been generally disclosed;
5.6 Further, in order to facilitate the Anthem Issuance, Seifert:
- 5.6.1 made arrangements with RYCO/Integro and prepared necessary documentation on behalf of Arakis to enable one million shares to be issued to Anthem, along with the remaining five million shares to be issued to other State shareholders;
5.6.2 acted, on occasion, as the spokesman and instructing party for Anthem, in respect of its affairs in British Columbia; and
5.6.3 gave, on occasion, instructions to RYCO/Integro on behalf of Anthem;
contrary the public interest and that, with respect to Arakis, material facts had not been properly disclosed;
6. Trading in Arakis with Knowledge of Undisclosed Material Facts
- 6.1 Between January, 1994, and July 26, 1995, under Seifert’s control or direction, Insco, through accounts maintained at Pacific:
- 6.1.1 purchased, in two trades, on August 25 and 29, 1994, 26,500 Arakis shares, at a total cost of $163,000;
6.1.2 sold out of one account, in 15 trades,
- 6.1.2.1 on January 25, 1994, 3,000 Arakis shares,
6.1.2.2 on July 27 and 28, 1994, 10,000 Arakis shares, and
6.1.2.3 between February 10 and 24, 1995, 26,500 Arakis shares,
6.1.3 in addition, Insco received into the accounts 10,000 Arakis shares;
- 6.2.1 sold, in 12 trades, 34,979 shares of Arakis for proceeds, net of commission, of $331,259.60 and US$366,319.63;
6.2.2 delivered out of the accounts 2,000 shares of Arakis; and
6.2.3 received into the accounts 36,979 shares of Arakis; and
- 7.1 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 Seifert in respect of the trading of securities of any reporting issuer or any issuer that provides management, administrative, promotional or consulting services to a reporting issuer for a period of 12 years from the date of the Order;
7.2 notwithstanding paragraph 7.1, Seifert may trade securities of any reporting issuer or any issuer that provides management, administrative, promotional or consulting services to a reporting issuer beneficially owned by him at the date of the Order, subject to the following conditions:
- 7.2.1 that before any trade takes place, Seifert must deliver a sworn declaration to the Executive Director listing all of the securities beneficially owned by him at the date of the Order;
7.2.2 that any such trade must take place within one year of the date of the Order through a single registered dealer (the “registered dealer”) designated in writing by Seifert and approved by the Executive Director;
7.2.3 that before any such trade takes place, Seifert must deliver to the registered dealer a copy of the Order; and
7.2.4 that Seifert will instruct the 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;
7.4 under section 161(l)(d)(iii) of the Act, Seifert is prohibited from engaging in investor relations activities for a period of 12 years from the date of the Order.
7.5 Seifert has paid to the British Columbia Securities Commission the sum of $75,000, and has promised to pay the further sum of $75,000 on each of April 30, and November 30, 2000, April 30, and November 30, 2001 and April 30, 2002, for a total of $450,000, of which $200,000 represents a portion of the costs of the investigation.
7.6 Seifert undertakes not to act as a filing solicitor, with respect to any filings customarily made with the British Columbia Securities Commission or the Canadian Venture Exchange or its successors, for a period of 12 years from the date of this agreement.
7.7 Seifert undertakes to comply with the Act and the Securities Rules, B.C. Reg. 194/97 and all-applicable regulations, policies and guidelines, from the date of this agreement.
7.8 Seifert 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 related orders. Notwithstanding the foregoing, Seifert does not waive any right he may have under section 171 of the Act (or any successor section) to apply for an order revoking in whole or in part or varying the terms of the Order in respect of the matters dealt with in sub-paragraph 7.2.2 above.
______________________________ )
Witness Signature )
)
R. S. Abrams )
Witness Name (please print) ) _______________________
) Michael Lee Seifert
______________________________ )
Address )
200 – 865 Hornby Street )
Manager, Investigations )
Occupation
DATED at Vancouver, British Columbia, on December 9th, 1999.
Steve Wilson
Executive Director