Decisions
GILL FINANCIAL CORPORATION AND NIRBHIA SINGH GILL [Decision]
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BCSECCOM #:
2001 BCSECCOM 512
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Document Type:
Decision
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Published Date:
2001-05-18
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Effective Date:
2001-05-17
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Details:
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2001 BCSECCOM 512
COR#01/062
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF GILL FINANCIAL CORPORATION AND NIRBHIA SINGH GILL
PANEL
Adrienne R. Salvail-Lopez
Brent W. Aitken
Roy Wares
SUBMISSIONS OF GILL FINANCIAL CORPORATION AND NIRBHIA SINGH GILL RECEIVED FROM
Todd A. McKendrick
SUBMISSIONS OF COMMISSION STAFF RECEIVED FROM
Chilwin C. Cheng
DECISION OF THE COMMISSION
[para 1]
We issued our findings in this matter on March 20, 2001: see 2001 BCSECCOM 331. Since then, we have received written submissions from Commission staff and the respondents respecting orders we should make against the respondents under sections 161 and 162 of the Securities Act, R.S.B.C. 1996, c. 418. This decision should be read together with our findings.
[para 2]
From 1990 until early 1996, Nirbhia Singh Gill was a salesperson with Investors Group Financial Services Inc., a mutual fund dealer. Gill left the securities industry but later in 1996 re-established contact with two of his former clients from Investors – Clifford Moore and Peter Brown. During the next two years, Moore gave Gill a total of $97,000, while Brown gave him $21,000. Gill deposited the money into accounts at Canaccord Capital Corporation and his personal account at a credit union. He used the money to pay his personal expenses and debts. Gill has paid back $10,000 to Moore and $24,000 to Brown.
[para 3]
Gill testified that both men gave him the money as personal loans. Moore’s testimony supported Gill’s and we accepted their characterization of the Moore transactions. Brown, however, denied making a personal loan to Gill. We found that Gill took Brown’s money on the basis that he would invest it in some manner and that, in doing so, Gill perpetrated a fraud on Brown, contrary to section 57 of the Act. We also found that Gill made misrepresentations to Brown in connection with this transaction, contrary to section 50(1)(d) of the Act. Finally, we found that both Gill and his company, Gill Financial Corporation, distributed securities to Moore and Brown without registration and without obtaining a receipt for a prospectus, contrary to sections 34(1) and 61(1) of the Act.
[para 4]
Gill’s conduct in respect of Brown was egregious. Brown was a former client of Gill’s and Gill knew him to be older and unsophisticated. After talking with Gill, Brown closed out his RRSP accounts at Investors, which cost him $350 in fees and $2400 in income taxes. Though Gill actually wrote the letter that Brown sent to Investors closing out the accounts, Gill did not warn Brown of the financial consequences of taking such a step.
[para 5]
Brown gave this money to Gill in March 1997 on the basis that Gill would invest it in some manner and pay him 7% per year in interest. Gill gave Brown a receipt and a financial summary that confirmed Brown’s understanding of the transaction. In fact, Gill, who was in a precarious financial state, used Brown’s money to pay his personal expenses and debts. When Brown asked Gill for his money in March 1998, Gill did not give it to him.
[para 6]
When Gill learned later in 1998 of the Commission investigation, Gill began putting pressure on Brown to tell Commission staff that he had given the money to Gill as a personal loan. Gill actually dictated to Brown three letters to this effect that Brown sent to Commission staff in 1999. These letters were untrue. In the six weeks before Brown’s interview with Commission staff in September 1999, Gill contacted him five or six times about the interview. A few days before the interview, Gill went to Brown’s house with three backdated personal loan agreements; Brown signed them, even though they were untrue, because he was concerned about getting back his money.
[para 7]
Gill took advantage of his prior registrant–client relationship with Brown, and Brown’s lack of investment knowledge, to perpetrate a fraud on Brown. In so doing he also breached other sections of the Act. We believe that Gill’s continued participation in the capital markets would pose a significant threat to investors. Accordingly, we consider it to be in the public interest to order:
1. under section 161(1)(b) of the Act that all persons cease trading in, and are prohibited from purchasing, any securities of Gill Financial;
2. under section 161(1)(c) of the Act that the exemptions described in sections 44 to 47, 74, 75, 98 or 99 do not apply to Gill or Gill Financial for a period of eight years except that Gill may trade solely through a registered dealer and only for his own account under section 45(2)(7) of the Act;
3. under section 161(1)(d)(i) of the Act that Gill resign any position he holds as a director or officer of any issuer;
4. under section 161(1)(d)(ii) of the Act that Gill is prohibited from becoming or acting as a director or officer of any issuer until the later of
a) eight years from the date of this order; and
b) the date he successfully completes a course of study satisfactory to the Executive Director concerning the duties and responsibilities of directors and officers;
5. under section 161(1)(d)(iii) of the Act that Gill is prohibited from engaging in investor relations activities for a period of eight years;
6. under section 162 of the Act that Gill pay an administrative penalty of $10,000; and
7. under section 174 of the Act, and in accordance with section 22(1) Item 38 of the Securities Regulation, B.C. Reg. 196/97, that Gill pay costs of or related to the hearing in the amount of $23,457.
The costs represent:
1. $13,300 for time spent by investigation staff;
2. $4,650 for time spent by litigation staff;
3. $3,000 for administrative costs; and
4. $2,507 for disbursements.
May 17, 2001.
[para 8]
FOR THE COMMISSION
Adrienne Salvail-Lopez, Commissioner
Brent W. Aitken, Commissioner
Roy Wares, Commissioner