Wade D. Nesmith for Commission Staff;

   Philip Lieberman on his own behalf.

   The facts are simple and straightforward.

   On March 4, 1988, after a hearing, the Superintendent of Brokers made an order that the exemptions contained in sections 30 to 32, 55, 58 and 81 of the Act did not apply to Lieberman for a period of ten years.  The effect of the order was to prohibit Lieberman from trading in securities in British Columbia until March 4, 1998.  At the request of Lieberman, the Commission conducted a hearing and review of the order.  On July 24, 1989, the Commission confirmed the order.

   The order was made in relation to Lieberman's activities in promoting three companies that he controlled, Marco Resources Ltd., Philco Resources Ltd. and Peppa Resources Ltd.  The Commission's decision of July 24, 1989, concluded as follows:

	Lieberman's conduct as shown in the evidence, his demeanour in testifying at the hearing, and the many contradictions in his story have convinced us that we cannot believe his version of events.
	The April 10, 1987, letter to shareholders was clearly false and misleading, and was consistent with a pattern of behaviour going back many years, in which Lieberman chose to ignore reality and put forward a rosy and distorted picture of the mineral prospects of the Property.
	The resulting damage to investors and the market is revealed by the subsequent rapid escalation of share prices and trading volumes of the three companies.
	Marco's continuing misrepresentations regarding the Property were clearly prejudicial to the public interest.  As Lieberman controlled Marco, he must shoulder the responsibility for the serious violations of securities law.
	Counsel for Lieberman, Mr. Anderson, argued exhaustively that Lieberman was really a lamb among wolves, and was ill-served by his professional advisers and the regulatory authorities.
	Our conclusion, however, is that Lieberman is an experienced business man, and not the innocent he and his counsel would have us believe.  We find that Lieberman deliberately and knowingly made false and misleading statements in his public disclosures.
	Accordingly, we confirm the Superintendent's order of March 4, 1988 that the exemptions contained in Sections 30 to 32, 55, 58 and 81 of the Securities Act do not apply to Lieberman for ten years.

   American Oil Reserve Inc. ("AOR") is a private California company incorporated by Lieberman in 1985.  At all material times, Lieberman was the president, chairman of the board, a director and the majority shareholder of AOR.  Most of the shares not owned by Lieberman were owned by members of his family.  The remaining shares were owned by one or two business associates including his attorney in Los Angeles.  At various times there were one or two other directors appointed by Lieberman, including his son Mark Lieberman and his attorney in Los Angeles.  AOR was considered by Lieberman, his son and his attorney to be owned, financed and managed by Lieberman.  On the evidence, it is clear that AOR was, in effect, Lieberman's personal company.

   Liquest International Marketing Corp. (now Massey Mercantile Ltd.) is a reporting issuer under the Act and was incorporated in British Columbia under the Company Act, R.S.B.C. 1979, c. 59.  Its common shares were listed on the Vancouver Stock Exchange on March 13, 1984.

   In March 1991, Liquest was a shell company, having no active business.  Harry Au, then a director of Liquest, responded to an advertisement in the Vancouver Sun seeking a shell company listed on the Exchange.  Au met with Donald Buckner, who said his under had some oil and gas properties and was interested in financing their development.  (Au later learned that Buckner's "uncle" was Lieberman, who had been a business associate of Buckner's late father.)  After a few meetings, Buckner became president of Liquest.

   Subsequently, on April 9, 1991, Liquest agreed to acquire from AOR a 50 per cent interest in an oil well on one of AOR's properties in California.  As partial consideration, AOR was to acquire 100,000 shares of Liquest upon execution of the agreement.  The agreement was subject to regulatory approval by the Exchange.  On execution of the agreement, Liquest issued the 100,000 shares, registered in AOR's name and represented by 10 certificates of 10,000 shares each.  Au delivered the Liquest shares to Buckner on the condition that the shares would be held by him until after receipt of regulatory approval.  Regulatory approval was never received and Liquest never acquired the interest in the oil well.

   After signing the agreement for Liquest, Au consulted a lawyer, who told him the agreement should contain more details of the arrangement between Liquest and AOR.  Au discussed this with Buckner, who later returned saying his uncle refused to enter a more detailed agreement.  Au then met on two occasions with Lieberman to discuss the agreement.  Lieberman told him the agreement was detailed enough and said that the price of Liquest shares would increase.  Lieberman also told Au that he had the 100,000 Liquest shares in a safe in his office.

   During the period from April 10, 1991, to June 13, 1991, Lieberman delivered the 100,000 Liquest shares to a Vancouver branch of the Toronto Dominion Bank.  On Lieberman's instructions, the bank manager, Charles Molnar, sold 60,000 of the shares through the facilities of the Exchange.  Molnar was not aware of the 1988 order against Lieberman.  Proceeds of the sales totalled $7,380, of which $6,360 was deposited in AOR's account.  The balance of $1,020 was held by the bank's dealer subsidiary because of a stop transfer order against the shares.

   After the first 10,000 Liquest shares were traded on April 10, 1991, Au learned of the trade from Liquest's transfer agent.  Au confronted Lieberman and reminded him that regulatory approval had not been received for the agreement. Lieberman told Au that he had not sold any of the Liquest shares but had placed them as collateral with a bank in Los Angeles.  On April 29, 1991, Au and another director requested the transfer agent to place a notice of stop transfer on the remaining certificates issued to AOR.

   Commission staff argue that the sale of the Liquest shares by Lieberman, acting through AOR, a company controlled by him, contravened the order.

   Lieberman argues that the Liquest shares were placed with the bank as collateral for a loan and that the bank sold them.  He presents no evidence to support this argument.  Molnar's evidence was that the shares were not taken as collateral for a loan.  Lieberman's primary argument is that the 1988 order should not have been made in the first place.

   Section 20(1) of the Act provides that "No person shall ... trade in a security unless he is registered ... in accordance with the regulations."  Sections 31 and 32 of the Act provide exemptions from the requirement to be registered for certain trades and for trades in certain securities.  Lieberman is not registered under the Act and, as a result of the 1988 order, may not rely on the exemptions from registration in sections 31 and 32 of the Act.  Consequently, the 1988 order prohibits Lieberman from trading in securities in the province until March 4, 1998.

   On Lieberman's instructions, 60,000 Liquest shares were traded through the Exchange.  The shares were registered in the name of AOR, which was Lieberman's personal company. Commission staff addressed these circumstances, in a notice (NIN 89/21) published in 1989, as follows:  "The staff of the Commission takes the position that given the broad scope of [the definition of "trade" in the Act], a person subject to an order pursuant to Section 145 [now section 144(1)(d)] cannot escape the effect of that order by trading indirectly through nominees or intermediaries, such as a company or an account controlled by him."  We agree.  In our view, the trades by AOR were trades by Lieberman and we find that Lieberman made the trades in contravention of section 20 of the Act and the 1988 order.

   In our view, where Lieberman was subject to the 1988 order removing his exemptions, trading the 60,000 Liquest shares indirectly through AOR was contrary to the public interest.

   It is interesting to note that Lieberman traded the Liquest shares through a bank rather than a registered dealer.  In all likelihood, a dealer would have known of the order and would have refused to execute the trades.  A bank manager, being less familiar with securities regulation, would not likely, and in this case did not, know of the order.

   In addition to contravening the 1988 order, Lieberman knowingly sold shares that had been issued to AOR on the condition that they not be sold until regulatory approval had been obtained for the transaction.  Furthermore, although the agreement appears not to contemplate this situation, the shares would have been returned to Liquest for cancellation when the agreement did not receive regulatory approval.

   In all of the circumstances, we consider it in the public interest to remove Lieberman completely from participation in the market and to assess an administrative penalty against him.

   We order

1.		under section 144(1)(c) of the act, that the exemptions described in sections 30 to 32, 55, 58, 80 and 81 of the Act do not apply to Lieberman for a period of 8 years from the date of this order;
2.		under section 144(1)(d) of the Act, that Lieberman is prohibited from becoming or acting as a director or an officer of any reporting issuer for a period of 8 years from the date of this order;
3.		under section 144.1 of the Act, that Lieberman pay an administrative penalty of $10,000; and
4.		under section 154.2 of the Act, that Lieberman pay prescribed fees or charges for the costs of or related to the hearing incurred by the Commission in the amount of $1,000.

D.M. HYNDMAN
Chair
H.D. BROWNE
Member
E. LIEN
Member