Notices of Hearing & Temporary Orders

DOUGLAS LAURENCE MASON [Sec. 161]

BCSECCOM #:
2000 BCSECCOM 200
Document Type:
Sec. 161
Published Date:
2000-10-31
Effective Date:
2000-10-30
Details:


2000 BCSECCOM 200




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

AND

IN THE MATTER OF DOUGLAS LAURENCE MASON


Notice of Hearing Under Section 161

[para 1]
1. TAKE NOTICE that a hearing will be held to give Douglas Laurence Mason (“Mason”) an opportunity to be heard before the British Columbia Securities Commission before it determines whether it is in the public interest to make the following orders that:

1.1 pursuant to section 161(1)(c) of the Securities Act R.S.B.C. 1996, c. 418 (the “Act”) any or all of the trading exemptions described in section 44 to 47, 74, 75, 98 and 99 of the Act do not apply to Mason;

1.2 Mason resign any position that he holds as a director or officer of any issuer, pursuant to section 161(1)(d)(i) of the Act;

1.3 Mason be prohibited from acting as a director or officer of any issuer, pursuant to section 161(1)(d)(ii) of the Act;

1.4 Mason be prohibited from engaging in investor relations activities, pursuant to section 161(1)(d)(iii) of the Act;

1.5 Mason pay an administrative penalty, pursuant to section 162 of the Act; and

1.6 Mason pay prescribed fees or charges for the costs of or related to the hearing, pursuant to section 174 of the Act.

[para 2]
AND TAKE NOTICE that the Commission will be asked to consider the following facts and allegations in making its determinations:

2.1 By virtue of holding the office of President or Chairman, and being a member of the Board of Directors in each issuer, Mason is an insider of reporting issuers in British Columbia as follows:

2.1.1 Clearly Canadian Beverage Corp. (“Clearly Canadian”) from December, 1987, to the present date;

2.1.2 Consolidated Venturex Holdings Ltd. (“Consolidated Venturex”) from June, 1990, to the present date;

2.1.3 SWI Steelworks Inc. (formerly known as ESC Envirotech Systems Corp. and hereinafter referred to as “ESC Envirotech”) from January, 1991, to the present date;

2.1.4 Waterfront Capital Corp. (“Waterfront Capital”) from August, 1996, to the present date; and

2.1.5 Columbia Yukon Explorations Inc. (“Columbia Yukon”) from January, 1997, to the present date.

2.2 At all material times, securities of Clearly Canadian, Consolidated Venturex, ESC Envirotech, Waterfront Capital and Columbia Yukon were listed for trading on the Vancouver Stock Exchange (the “Exchange”).

2.3 On March 12, 1991, Mason purported to settle, declare or establish a trust named The Piper Trust. Ryco Trust Executor & Trustee Company Limited, of 2 Bond Street, St. Helier, Jersey, U.K., was the first named trustee of The Piper Trust.

2.4 Also, in or about March, 1991, Ryco Trust Executor & Trustee Company Limited, as trustee for The Piper Trust, acquired all of the issued and outstanding shares of Forthdale Investments Limited (“Forthdale”), a company incorporated pursuant to the laws of the Republic of Ireland.

2.5 On or about January 14, 1994, the Ryco Trust Group of companies was sold to Integro Societe de Finance. Thereafter, the name of Ryco Trust Executor & and Trustee Company Limited was changed to Integro Trust (Jersey) Ltd. (hereinafter, the administrators of The Piper Trust shall be referred to as “Integro”).

2.6 At all times material to this Notice, Mason gave instructions or directions to Integro (either directly or indirectly) as trustees of the Piper Trust respecting the trading activities of Forthdale and had control or direction over the shares held by Forthdale from time to time in reporting issuers in British Columbia.

2.7 Further, or in the alternative, the purported settlement, declaration or establishment of the Piper Trust failed to create a valid trust and Mason at all times retained the beneficial ownership of the assets purportedly held by The Piper Trust and Forthdale.

2.8 Alternatively, at all material times the beneficiaries of The Piper Trust were nominees for and on behalf of Mason and Mason retained a direct or indirect beneficial interest in the assets of The Piper Trust and Forthdale.
    Failure to File Insider Reports Re: Trading in Shares of Clearly Canadian

    2.9 Between November 1, 1994, and December 29, 1994, Forthdale held and traded, through an account maintained at Pacific International Securities Inc. numbered 12-9638-3 (the “Pacific International Account”), shares of Clearly Canadian as follows: 150,000 shares were purchased privately for $309,000.00 from Mason and then sold in 18 trades for proceeds after commissions of $296,550.81.

    2.10 Between January 14, 1997, and the present date, Forthdale held and traded, through an account maintained at Haywood Securities Inc. numbered 15-1215-1, previously numbered 20-1169-0 (the “Haywood Account”), shares of Clearly Canadian as follows: 200,000 shares were purchased privately for $460,000 from Centrum Bank of Liechtenstein, and 89,353 shares were sold in 16 trades for proceeds after commissions of $172,229.20.

    2.11 Mason failed to file insider reports disclosing his ownership, control or direction over, or his change in ownership of, the shares of Clearly Canadian held and traded by Forthdale as set out in paragraphs 2.9 and 2.10, contrary to section 87 of the Act.

    Failure to File Insider Reports Re: Trading in Shares of Consolidated Venturex

    2.12 Between February 29, 1996, and the present date, Forthdale held and traded, through the Haywood Account, shares of Consolidated Venturex as follows: 550,000 shares (all but 20,000 from Mason) were purchased through the Exchange in three trades for $230,530.50, and 33,000 shares were sold in 5 trades for proceeds after commissions of $14,964.00.

    2.13 Mason failed to file insider reports disclosing his ownership, control or direction over, or his change in ownership of, the shares of Consolidated Venturex held and traded by Forthdale as set out in paragraph 2.12, contrary to section 87 of the Act.

    Failure to File Insider Reports Re: Trading in Shares of ESC Envirotech

    2.14 Between January 17, 1995, and the present date, Forthdale held and traded, through the Pacific International Account, shares of ESC Envirotech as follows: 180,000 shares were purchased privately for $147,000.00 from Mason, 120,000 shares were received into said account from a business associate of Mason, and 24,000 were sold in two trades for proceeds after commissions of $11,980.00.

    2.15 Between November 10, 1995, and the present date, Forthdale held and traded, through the Haywood Account, shares of ESC Envirotech as follows: 1,550,000 shares were purchased through the Exchange in four trades for $397,078.50 from Mason, 5,000 shares were received and 55,000 shares were sold in three trades for proceeds after commissions of $17,658.15.

    2.16 Mason failed to file insider reports disclosing his ownership, control or direction over, or his change in ownership of, the shares of ESC Envirotech held and traded by Forthdale as set out in paragraphs 2.14 and 2.15, contrary to section 87 of the Act.

    Failure to File Insider Reports Re: Trading in Shares of Waterfront Capital

    2.17 Between November 21, 1996, and the present date, Forthdale held and traded, through the Haywood Account, shares of Waterfront Capital as follows: 229,000 shares were purchased through the Exchange in 12 trades for $58,872.75.

    2.18 Mason failed to file insider reports disclosing his ownership, control or direction over, or his change in ownership of, the shares of Waterfront Capital held and traded by Forthdale as set out in paragraph 2.17, contrary to section 87 of the Act.

    Failure to File Insider Reports Re: Trading in Shares of Columbia Yukon

    2.19 Between March 10, 1997, and the present date, Forthdale held and traded, through the Haywood Account, shares of Columbia Yukon as follows: 300,000 shares were purchased through the Exchange for $209,005.00 from Mason.

    2.20 Mason failed to file insider reports disclosing his ownership, control or direction over, or his change in ownership of, the shares of Columbia Yukon held and traded by Forthdale as set out in paragraph 2.19, contrary to section 87 of the Act.

    Sale of Shares on the Exchange Without Change of Beneficial Ownership, Control or Direction

    2.21 On February 29, 1996, Mason sold, through an account in his own name maintained at Yorkton Securities Inc. numbered 8M-1248-8 (the “Yorkton Account”), 100,000 shares of Consolidated Venturex at a price of $0.52 per share. The shares were purchased by Forthdale through the Exchange as part of the trading described in paragraph 2.12. As set out in paragraphs 2.6 through 2.8, Mason had ownership, control or direction over Forthdale, such that the trading referred to in this paragraph, and in paragraphs 2.22 through 2.28, was effectively trading between Mason and himself.

    2.22 On November 27, 1996, Mason sold, through the Yorkton Account, 230,000 shares of Consolidated Venturex at a price of $0.39 per share. Said shares were purchased by Forthdale through the Exchange as part of the trading described in paragraph 2.12.

    2.23 On November 28, 1996, Mason sold, through an account in his own name maintained at Brink, Hudson & Lefever Ltd. numbered 24-8214-9, 200,000 shares of Consolidated Venturex at a price of $0.39 per share. Said shares were purchased by Forthdale through the Exchange as part of the trading described in paragraph 2.12.

    2.24 On November 10, 1995, Mason sold, through the Yorkton Account, 500,000 shares of ESC Envirotech at a price of $0.37 per share. Said shares were purchased by Forthdale through the Exchange as part of the trading described in paragraph 2.15.

    2.25 On December 1, 1995, Mason sold, through the Yorkton Account, 150,000 shares of ESC Envirotech at a price of $0.41 per share. Said shares were purchased by Forthdale through the Exchange as part of the trading described in paragraph 2.15.

    2.26 On September 17, 1996, Mason sold, through an account in the name of Waterfront Capital Corp. maintained at Global Securities Corp. numbered 19-7772-7, 500,000 shares of ESC Envirotech at a price of $0.17. Said shares were purchased by Forthdale through the Exchange as part of the trading described in paragraph 2.15.

    2.27 On October 9, 1996, Mason sold, through an account in his own name maintained at Pacific International Securities Inc. numbered 14-8964-0, 400,000 shares of ESC Envirotech at a price of $0.15 per share. Said shares were purchased by Forthdale through the Exchange as part of the trading described in paragraph 2.15.

    2.28 On March 10, 1997, Mason sold, through an account in his own name maintained at Haywood numbered 50-5673-4, 300,000 shares of Columbia Yukon at a price of $0.69 per share. Said shares were purchased by Forthdale as part of the trading described in paragraph 2.19.

    2.29 The purchases and sales of shares described in paragraphs 2.21 through 2.28 (the “Trades”) were trades through the facilities of a stock exchange that did not involve a change of beneficial ownership, resulting in or contributing to a misleading appearance of trading activity in securities traded in British Columbia, contrary to section 57(a) of the Act:

    2.29.1 Alternatively, the Trades were trades that had the effect of artificially maintaining the price of securities traded in British Columbia, contrary to section 57(a) of the Act.

    2.29.2 In the further alternative, the Trades were prearranged transactions through the facilities of a stock exchange that had the effect of improperly excluding other market participants from transactions in securities traded in British Columbia, contrary to section 57(a) of the Act.

    2.29.3 Mason directly or indirectly engaged in or participated in the Trades when he knew or ought reasonably to have known that the Trades contravened section 57(a) of the Act in one or more of the manners described.

    Unreported Distribution from a Control Position

    2.30 On October 31, 1996, Mason directly or indirectly owned, controlled or directed 4,192,949 shares of ESC Envirotech in his own name, in the name of companies controlled by him, and in the name of Forthdale. This figure represented at the time 21.95% of the issued and outstanding shares of ESC Envirotech. In the period from November 1, 1996 to November 19, 1996, Mason sold 631,500 shares of ESC Envirotech in 14 trades.

    2.31 As a result of his control over 21.95% of the issued and outstanding shares of ESC Envirotech, Mason was deemed at the relevant time to be a “control person” as defined in section 1 of the Act. Mason failed to file a notice by control person of an intent to sell with respect to the trades referred to in paragraph 2.30. Mason also failed to file a report of distribution after the trades referred to in paragraph 2.30. Mason therefore contravened Securities Rules 136 and 137, and the trades referred to in paragraph 2.30 were a distribution without exemption contrary to section 61 of the Act.

    [para 3]
    3. AND TAKE NOTICE that Mason may be represented by counsel at the hearing and make representations and lead evidence. Mason is requested to advise the Commission of his intention to attend by contacting the Secretary of the Commission at 12th floor, 865 Hornby Street, Vancouver, British Columbia.

    [para 4]
    4. AND TAKE NOTICE that the Mason or his counsel are required to attend at the 12th Floor, 701 West Georgia Street, Vancouver, BC, on Wednesday, December 6, 2000, at 10:00 a.m., if they wish to be heard before the Commission fixes a date for the hearing.

    [para 5]
    5. And take noticethat determinations may be made in this matter if Mason or his counsel does not appear at the hearing.

    [para 6]
    Dated at Vancouver, British Columbia on October 30, 2000.





    Steve Wilson
    Executive Director