2012 BCSECCOM 90

Background
1. Midas Group Holdings Ltd. (Midas) is a British Columbia (BC) company incorporated on November 5, 2010.

2. Gaia Equity Investments (Gaia) purports to be a company that guarantees BC investors a risk free monthly rate of return of up to 9.83% by offering investments in renewable energy projects in developing countries (the Investment), and is a subsidiary of Midas.

3. Samuel Richard Allaby (Allaby) is a BC resident, the incorporator and sole director of Midas, and an agent of Gaia.
4. In December 2010, Allaby opened a bank account in Midas’ name and designated himself as its sole signatory (the Account).

The Gaia/Midas Investment
5. In March 2011, Commission staff discovered an advertisement in the Financial Services section of Vancouver’s “Craigslist” webpage that promoted the Investment (the Advertisement).

6. On March 7, 2011, a Commission investigator posing as an investor contacted Gaia through its website (the Website). Gaia responded by emailing the investigator a Gaia investment agreement form (the Investment Agreement).

7. The Investment Agreement included banking information for depositing money into the Account.

Misconduct
False statements
8. Allaby, Gaia, and Midas made the following promotional statements concerning the Investment, in the Advertisement, the Website and the Investment Agreement:

(a) “leading Wall Street investment firms, hedge funds, and multinational insurance companies have trusted Gaia to manage their assets”;

(b) “investors have committed over $4.2 billion to Gaia and enjoyed returns averaging 257% per annum since 2008”;

(c) Gaia raises investor capital for green energy projects, “maintaining direct involvement and partial oversight” in those projects;

(d) Gaia’s office is located in Vancouver, British Columbia, and it maintains additional offices in Montreal, New York City, Paris and London;

(e) an investment would be safer than it would be in any FDIC-insured bank, and there would be “absolutely no risk”; and

(f) a risk-free monthly rate of return of 5.74% to 9.83%, guaranteed by the World Bank and the International Monetary Fund.

9. These statements were false:

(a) Gaia does not have any clients;

(b) Gaia does not have any funds under management;

(c) Gaia has not invested in any kind of project or business;

(d) Gaia’s Vancouver office address corresponds to a mailbox rented by Allaby for three months at a cost of approximately $60, and Gaia has no other offices;

(e) Gaia’s claimed rate of return is impossible without risk. Very high rates of return can never be achieved without risk of loss;

(f) Gaia does not have partnerships with the World Bank or the International Monetary Fund.

10. The Respondents, with the intention of effecting a trade in a security, made statements that they knew were misrepresentations, contrary to section 50(1)(d) of the Act, and that created the misleading appearance that Gaia had engaged in trading activity in securities that had brought over $4.2 billion under its management, contrary to section 57(a) of the Act.

11. Allaby, as the sole director of Midas and as an agent of Gaia, authorized, permitted, or acquiesced in the foregoing breaches of the Act, and therefore contravened the same provisions under section 168.2 of the Act.

Public Interest

Hearing Process