On July 17, 1995, notice was given by the Superintendent of Brokers to Cornelius Richard Giesbrecht that a hearing would be held before the Commission to determine whether it is in the public interest to make orders against him under sections 144(1), 144.1 and 154.2 of the Securities Act, S.B.C. 1985, c.83. The notice alleged that Giesbrecht failed to file insider reports relating to his direct or indirect beneficial ownership of, or control or direction over, securities of Templar Resources Corporation while he was an officer and director of Templar. The hearing was held on August 22, 1995.
Templar was a reporting issuer under the Act and its common shares were listed and posted for trading on the Vancouver Stock Exchange.
On July 22, 1993, the regulatory authorities approved a reverse take over of Templar by LJB Canada, a manufacturer of jet boats. William Ralph Lloyd and Giesbrecht were equal owners of LJB Canada. On July 22, 1993, Lloyd became the president and a director of Templar and Giesbrecht became the secretary and a director of Templar. Giesbrecht was not a director or officer of any other reporting issuer.
Under the reverse take over, 3,680,326 free trading shares and 9,430,341 performance shares were issued. The free trading shares were subject to a one year hold expiring on July 22, 1994. Lloyd and Giesbrecht each received in excess of 16% of each of the free trading shares and the performance shares.
By April 30, 1994, the financial year end of Templar, LJB Canada was insolvent. Templar's quarterly report for the six months ended October 31, 1994, indicates that Templar's current liabilities of $231,000 were more than double its current assets of $107,000. Templar's only other assets were valued at $12,000. During that period, Templar's operations provided gross revenues of $1,800. Trading in the shares of Templar was halted by the Exchange on October 20, 1994, and on October 28, 1994, a cease trade order issued against Templar for failure to file financial statements. Lloyd and Giesbrecht were removed as directors of Templar on October 21, 1994.
On October 4, 1994, under section 70(4) of the Act, Giesbrecht submitted insider reports regarding changes in his direct ownership of securities of Templar for each of the months of July 1993 and January, April, May and June through August 1994, but did not pay the $350 late filing fee prescribed under section 183(1) Item 35 of the Securities Regulation, B.C. Reg. 270/86.
In letters dated December 12, 1994, and January 25, 1995, Commission staff requested Giesbrecht to amend the insider reports he submitted on October 4, 1994. Giesbrecht did not respond. On February 13, 1995, the Superintendent ordered, under section 146(1) of the Act, Giesbrecht to cease trading in the securities of Templar for his failure to file adequate insider reports as required under section 70 of the Act.
Despite the cease trade and a further letter from Commission staff, dated March 31, 1995, requesting Giesbrecht to bring his insider report filings up to date, Giesbrecht did not do so until August 22, 1995, the day of the hearing.
During the hearing, Giesbrecht submitted an amended July 1993 insider report and two insider reports disclosing his trading in Templar for the months of September and October 1994. He has not paid the outstanding late filing fee of $350 for the insider reports submitted on October 4, 1994, or the late filing fee of $100 for the two insider reports filed at the hearing. None of Giesbrecht's insider reports were filed within 10 days of the of the end of the month in which the transactions took place.
During the nine months covered by his insider reports, Giesbrecht acquired 1,121,200 Templar shares and disposed of 687,300 Templar shares in 214 market trades. These shares had a total market value of over $1 million. Giesbrecht also held 1,596,724 escrow shares and acquired, and exercised, 600,000 options to purchase shares. The acquisition of 600,000 shares on exercise of the options is included in the 1,121,200 figure above. In July 1993, Giesbrecht held only the 1,596,724 escrow shares. By October 1994, Giesbrecht held 2,042,124 Templar shares, including the escrow shares.
The relevant provisions of the legislation are as follows:
Giesbrecht did not attempt to file his first seven insider reports until October 1994, the month he ceased to be an officer and director of Templar. After submitting those reports, he disregarded Commission staff's attempts to settle the deficiencies when they were brought to his attention. His insider reports for the final two months were not submitted until nearly a year after they were due.
The Commission has noted in several decisions, including In the Matter of Robert Theodore Slavik, (1990) BCSC Weekly Summary, Vol. 90:28, and In the Matter of Seven Mile High Group Inc.  47 BCSC Weekly Summary 7, that disclosure of trading by insiders is a key element in the continuous disclosure regime for reporting issuers. As the Commission stated in the Seven Mile High decision at page 36:
In all of the circumstances, we are of the view that the public market was seriously prejudiced by being unaware of Giesbrecht's extensive trading and that his conduct showed a reckless disregard of his obligations as an insider.
We therefore consider it to be in the public interest to order: