Settlements

ROGER OLLENBERGER, et. al. [Sec. 161 & Settlement Agrmnt]

BCSECCOM #:
2001 BCSECCOM 874, 2001 BCSECCOM 875
Document Type:
Sec. 161 & Settlement Agrmnt
Published Date:
2001-08-29
Effective Date:
2001-08-21
Details:


2001 BCSECCOM 874


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

AND

ROGER OLLENBERGER, GORDON PATERSON, ROD ALBERS, ALASTAIR SANDERSON, MICHAEL FLYNN, PETER JAMES AND DEBBIE HANRAHAN
(collectively, the Respondents)

Order Under Section 161

[para 1]
The Executive Director has entered into a Settlement Agreement with the Respondents, a copy of which is attached as Schedule “A”.

[para 2]
The Executive Director, considering it to be in the public interest to do so, orders, by consent, that:
    2.1 under section 161(1)(c) of the Securities Act, the exemptions described in sections 44 to 47, 74, 75, 98 and 99 of the Securities Act do not apply to each Respondent for the period indicated beside his or her name:

    · Roger Ollenberger, Alastair Sanderson, Rod Albers and Michael Flynn – 8 years; and
      · Gordon Paterson, Peter James and Debbie Hanrahan – 5 years;
        except that:
          2.1.1 each Respondent may rely on the exemption under subsection 45(2)(7) of the Securities Act, solely to allow him or her to trade for his or her personal account; and

          2.1.2 if registered under the Securities Act and employed by a member of the Investment Dealers Association or the Mutual Fund Dealers Association, a Respondent may rely on the exemptions under:

          · subsections 45(2)(5) and 45(2)(8) of the Securities Act to trade in common or preferred shares and rights to them, but not other securities; and

          · subsections 45(2)(4), 45(2)(6), 45(2)(9), 45(2)(11), 45(2)(12), 45(2)(14), 45(2)(24) and 45(2)(28) and subsections 46(a) and (b) of the Securities Act to trade in securities; and,

          2.2 under section 161(1)(d) of the Securities Act, each Respondent is prohibited from engaging in investor relations activities for the period indicated beside his or her name:
            · Roger Ollenberger, Alastair Sanderson, Rod Albers and Michael Flynn – 8 years;
              · Gordon Paterson, Peter James and Debbie Hanrahan – 5 years.


              August 21, 2001.





              Steve Wilson
              Executive Director


              2001 BCSECCOM 875


              Schedule “A”
              IN THE MATTER OF THE SECURITIES ACT
              R.S.B.C. 1996, c. 418

              AND

              ROGER OLLENBERGER, GORDON PATERSON, ROD ALBERS, ALASTAIR SANDERSON, MICHAEL FLYNN, PETER JAMES AND DEBBIE HANRAHAN
              (collectively, the Respondents)

              Settlement Agreement

              [para 1]
              1. The Executive Director has settled the following issues with the Respondents.

              Agreed Statement of Facts

              [para 2]
              2. Solely for securities regulatory purposes in British Columbia and elsewhere, and as the basis for the undertakings and order referred to in paragraphs 4 to 8 of this settlement agreement, each Respondent acknowledges the following facts as correct.


              The Parties
              2.1 IDF Financial Services Incorporated (IDF) was incorporated in British Columbia on March 28, 1990, and was a securities dealer registered under the Securities Act, R.S.B.C. 1996, c.418 (the Securities Act) at all relevant times.

              2.2 Each of the Respondents was a registered representative and employed by IDF at all relevant times.

              2.3 Each of the following non-reporting issuers (collectively, the Issuers) have filed offering memoranda with the Commission:

              2.3.1 River Ranch Resort (VCC) Corp. (Ranch VCC)
              2.3.2 River Ranch Resort (VCC II) Corp. (Ranch #2 VCC)
              2.3.3 River Ranch Limited Partnership (Cow-Calf LP)
              2.3.4 River Ranch Financial Corp. (FinCorp)
              2.3.5 River Ranch Capital Corp. (CapCorp)
              2.3.6 Strategic Concepts Investment Trust (Strategic Trust)
              2.3.7 Quantum Value Ventrues (VCC) Corp. (Quantum VCC)


              Ranch VCC and Ranch #2 VCC Offerings
              2.4 Under three offering memoranda dated July 15, 1997, May 19, 1998, and April 19, 1999, respectively, Ranch VCC issued common shares and raised a total of $4,805,000.

              2.5 Under an offering memorandum dated January 24, 2000, Ranch #2 VCC issued common shares and raised a total of $144,000 as of July 30, 2000.

              2.6 Under the Ranch VCC and Ranch #2 VCC offering memoranda, securities were offered for sale in reliance upon the prospectus exemptions contained in subsections 128(a) and 128(b) of the Securities Rules, B.C. Reg. 194/97 (the Rules). Some of the securities of Ranch VCC and Ranch #2 VCC were distributed in amounts of less than $25,000 to persons who were not sophisticated purchasers, as defined under the Rules. Those securities were distributed in contravention of section 61 of the Securities Act, because none of the exemptions under section 128 of the Rules applied to those distributions.


              Cow-Calf Offering
              2.7 Under a joint offering memorandum dated January 20, 1999, Cow-Calf LP issued units and FinCorp and CapCorp each issued bonds, raising a total of $4,917,500 as of December 29, 2000.

              2.8 In connection with this offering, Cow-Calf LP, FinCorp and CapCorp purported to rely upon the prospectus exemptions contained in subsection 74(2)(4) of the Securities Act and subsections 128(a), 128(b), and 128(c) of the Rules. Some of the securities of Cow-Calf LP, FinCorp, and CapCorp were distributed in amounts of less than $25,000 to persons who were not sophisticated purchasers, as defined under the Rules. Those securities were distributed in contravention of section 61 of the Securities Act, because none of the exemptions under subsection 74(2) of the Securities Act or section 128 of the Rules applied to those distributions.


              Strategic Trust Offerings
              2.9 Under an offering memorandum dated February 11, 1999, Strategic Trust issued securities and raised a total of $636,500.

              2.10 Under an updated offering memorandum dated March 8, 2000, Strategic Trust issued additional securities in the amount of $2,645,000 as of December 31, 2000.

              2.11 In connection with these offerings, Strategic Trust purported to rely upon the prospectus exemptions contained in subsection 74(2)(4) of the Securities Act and subsections 128(a), 128(b), and 128(c) of the Rules. Some of the securities of Strategic Trust were distributed in amounts of less than $25,000 to persons who were not sophisticated purchasers, as defined under the Rules. Those securities were distributed in contravention of section 61 of the Securities Act, because none of the exemptions under subsection 74(2)(4) of the Securities Act or section 128 of the Rules applied to those distributions.

              2.12 Neither of the Strategic Trust offering memoranda properly disclosed the nature of Strategic Trust’s business, the projects to be financed or the use of proceeds, as required by the form specified under section 133(1)(c) of the Rules. The securities issued under each offering memorandum were therefore distributed in contravention of section 61 of the Securities Act.

              Quantum VCC Offering
              2.13 Under an offering memorandum dated August 31, 2000, Quantum VCC issued securities and raised a total of $832,000 as of December 31, 2000.

              2.14 In connection with this offering, Quantum VCC purported to rely upon the prospectus exemptions contained in subsections 128(a) and 128(b) of the Rules. Some of the securities of Quantum VCC were distributed in amounts of less than $25,000 to persons who were not sophisticated purchasers, as defined under the Rules. Those securities were distributed in contravention of section 61 of the Securities Act, because none of the exemptions under section 128 of the Rules applied to those distributions.

              2.15 The Quantum VCC offering memorandum did not properly disclose the nature of Quantum VCC’s business, the projects to be financed or the use of proceeds, as required by the form specified by section 133(1)(c) of the Rules. The securities issued under the offering memorandum were therefore distributed in contravention of section 61 of the Securities Act.

              Respondent Involvement
              2.16 All of the Respondents traded securities of each of the Issuers to their clients, except that Michael Flynn and Debbie Hanrahan did not trade securities of Quantum VCC.

              2.17 Each of the Respondents traded securities of one or more of the Issuers in amounts of less than $25,000 to persons who were not sophisticated purchasers, as defined under the Rules. Accordingly, each of the Respondents participated in an illegal distribution that contravened section 61 of the Securities Act.

              2.18 None of the Strategic Trust or Quantum VCC offering memoranda were in the form required by the Rules, because they failed to properly furnish required information. The Respondents who traded securities of these Issuers participated in an illegal distribution that contravened section 61 of the Securities Act.

              2.19 In many instances, the securities of the Issuers traded by the Respondents to their clients were not suitable for their investment needs and objectives. As a result, each Respondent breached sections 14 and 48 of the Rules.

              2.20 As part of their sales commissions for selling securities of Strategic Trust, the Respondents each earned a small number of shares in 599768 B.C. Ltd. (Numberco). Strategic Trust owns 49% of Numberco, is its single largest shareholder and funded the acquisition of a plywood veneer mill of which Numberco is the beneficial owner. The Respondents’ holdings in Numberco, in the aggregate, amount to approximately .003% of its Class “D” Common Shares.

              2.21 Each Respondent has terminated his or her employment with IDF and has surrendered his or her registration to the Commission.

              Mitigating Factors

              [para 3]
              3. The Executive Director has taken into account the following facts as mitigating the sanctions that otherwise would have applied in the public interest:

              3.1 None of the Respondents had any significant experience as a registered representative before obtaining employment with IDF, except for Debbie Hanrahan who was registered as a mutual fund salesperson.

              3.2 In the course of their employment with IDF, the Respondents each received training and instruction from the principals of IDF that materially contributed to their breaching the securities legislation of British Columbia.

              3.3 Each Respondent paid between $15,000 and $35,000 for the essentially valueless training he or she received from the principals of IDF.

              3.4 In making the trades referred to in paragraphs 2.17, 2.18, and 2.19, the Respondents to some extent relied upon IDF’s compliance department, which vetted and approved each trade. IDF’s branch manager also reviewed some of those trades and specifically instructed the relevant Respondent that the security involved was suitable for the client.

              3.5 None of the Respondents had or has any beneficial interest in, was or is a director or officer of, or exercised any management functions for:

              3.5.1 any of the Issuers or any entities related to or affiliated with the Issuers, except that:

              3.5.1.1. each Respondent has a minor shareholding in Numberco;
              3.5.1.2. Rod Albers was a member of an advisory committee for Strategic Trust; and
              3.5.1.3. Michael Flynn was for a time a director of the company that operates the plywood veneer mill;

              3.5.2 any entity that has entered into a contract or business relationship with any of the Issuers or any entities related to or affiliated with the Issuers.

              3.6 Each of the Respondents has experienced significant financial losses as a result of their employment with IDF.

              3.7 Each of the Respondents has co-operated with the staff of the Commission in its investigation into the matters referred to in this settlement agreement.

              3.8 Each of the Respondents acknowledged his or her breaches at an early date and settled the issues referred to in this settlement agreement without undue delay.

              Order

              [para 4]
              4. Each of the Respondents consents to an order by the Executive Director that:

              4.1 under section 161(1)(c) of the Securities Act, the exemptions described in sections 44 to 47, 74, 75, 98 and 99 of the Securities Act will not apply for the period indicated beside his or her name:

              · Roger Ollenberger, Alastair Sanderson, Rod Albers and Michael Flynn - 8 years;

              · Gordon Paterson, Peter James and Debbie Hanrahan - 5 years;

              4.1.1 except that:

              4.1.1.1. he or she may rely on the exemption under subsection 45(2)(7) of the Securities Act, solely to allow him or her to trade for his or her personal account; and

              4.1.1.2. if registered under the Securities Act and employed by a member of the Investment Dealers Association (IDA) or the Mutual Fund Dealers Association (MFDA), he or she may rely on the exemptions under:

              · subsections 45(2)(5) and 45(2)(8) to trade in common or preferred shares and rights to them, but not other securities; and

              · subsections 45(2)(4), 45(2)(6), 45(2)(9), 45(2)(11), 45(2)(12), 45(2)(14), 45(2)(24) and 45(2)(28) and subsections 46(a) and (b) to trade in securities; and,

              4.2 under section 161(1)(d) of the Securities Act, he or she will be prohibited from engaging in investor relations activities for the period indicated beside his or her name:

              · Roger Ollenberger, Alastair Sanderson, Rod Albers and Michael Flynn - 8 years;

              · Gordon Paterson, Peter James and Debbie Hanrahan - 5 years.

              Undertakings: Registration

              [para 5]
              5. Each Respondent undertakes that if he or she seeks registration under the Securities Act, the Respondent will do so only by applying for employment with a member of the IDA or MFDA and that his or her registration will be:

              5.1 restricted to trading and advising in mutual fund securities sold under a prospectus until the Respondent has successfully completed:

              5.1.1 the Conduct and Practices Handbook course offered by the Canadian Securities Institute (the CSI) with a 70% passing grade; and

              5.1.2 any mandatory training program sponsored by the Respondent’s employer;

              5.2 subject to the agreement by the Respondent’s employer to strictly supervise the Respondent for 12 months, with the period commencing on the date the courses described in paragraph 5.1 have been successfully completed, by having a compliance officer:

              5.3.1 Approve the opening of all new client accounts by the Respondent.

              5.3.2 Ensure that the Respondent has learned the essential facts of every client.

              5.3.3 Supervise the transactions the Respondent makes on behalf of his or her clients. This will include ensuring that the Respondent has determined the clients’ general investment needs and objectives, the appropriateness of the Respondent’s recommendations, and the suitability of any proposed purchases or sales to be made by them.

              5.3.4 Initial and date new client account forms prepared by the Respondent for his or her clients and any trade tickets relating to trades made on their behalf and, for any trades to be effected through a system that does not involve the use of trade tickets, make an equivalent notation.

              5.3.5 Prepare and keep a monthly report within 15 days after the end of each month. The report will identify any problems in the performance of the Respondent’s duties and also outline his or her trading activity for the preceding month, including:

              5.3.5.1. each trade
              5.3.5.2. the value of each trade
              5.3.5.3. the name of the client for whom each trade was made, and
              5.3.5.4. whether the Respondent handled client funds and accounts in compliance with the Securities Act and Rules.

              5.3.6 Inform the Registration Branch of the IDA or the MFDA, as the case may be, in writing and within five days of becoming aware of any change, matter, change in employment status or problem in the Respondent’s conduct that may affect his or her strict supervision; and

              5.3 subject to the Respondent successfully completing the Canadian Securities Course offered by the CSI within two years of becoming registered.

              Undertakings: Payments

              [para 6]
              6. Roger Ollenberger, Alastair Sanderson, Rod Albers and Michael Flynn each undertakes to pay the Commission the sum of $2,400, at a rate of $200 per month, with the first payment due on September 3, 2001 and the remaining payments due on the first business day of each month thereafter.

              [para 7]
              7. Gordon Paterson, Peter James and Debbie Hanrahan each undertakes to pay the Commission the sum of $1,400, at a rate of $200 per month, with the first payment due on September 3, 2001 and the remaining payments due on the first business day of each month thereafter.

              [para 8]
              8. Each of the Respondents undertakes to execute a promissory note in the form attached as Appendix 1 immediately upon the execution by him or her of this settlement agreement.

              Waiver

              [para 9]
              9. The Respondents each waive any right any of them may have, under the Securities Act or otherwise, to a hearing, hearing and review, judicial review or appeal related to, in connection with, or incidental to this settlement agreement.

              [para 10]
              August 20, 2001



              “Gordon Paterson”
              Gordon Paterson


              “Ashley Wray” )
              Witness Signature )
              )
              Ashley Wray )
              Witness Name (please print) )
              )
              c/o 1100 - 595 Burrard St. )
              )
              Vancouver, BC V7X 1C4 )
              Address )
              )
              Office Manager )
              Occupation


              August 18, 2001.


              “R. Albers”

              Rod Albers


              “Gina Albers” )
              Witness Signature )
              )
              Gina Albers )
              Witness Name (please print) )
              )
              160 McDermid Drive )
              )
              Pr. George, BC V2M 4T7 )
              Address )
              )
              Homeowner )
              Occupation
              August 20, 2001.



              “A. Sanderson”
              Alastair Sanderson



              “Shelly Perreault” )
              Witness Signature )
              )
              Shelly Perreault )
              Witness Name (please print) )
              )
              #205, 8 Hooper Crescent )
              )
              Edmonton, AB T5A 4K7 )
              Address )
              )
              Secretary )
              Occupation


              August , 2001.




              “M. Flynn”
              Michael Flynn



              “R. Ollenberger” )
              Witness Signature )
              )
              Roger Ollenberger )
              Witness Name (please print) )
              )
              #5 - 2237 Redwood St. )
              )
              Pr. George, B.C. )
              Address )
              )
              Electrician )
              Occupation



              August , 2001.




              “R. Ollenberger”
              Roger Ollenberger



              “M. Flynn” )
              Witness Signature )
              )
              Michael Flynn )
              Witness Name (please print) )
              )
              7736 St. Mathew Pl. )
              )
              Prince George, BC )
              Address )
              )
              Investment Advisor )
              Occupation


              August 19, 2001.



              “Dr. Peter James”
              Peter James



              “E.D. Lalonde” )
              Witness Signature )
              )
              Edwin Lalonde )
              Witness Name (please print) )
              )
              P.O. Box 43 )
              )
              Forest Grove, B.C. V0K 1M0 )
              Address )
              )
              Self Employed )
              Occupation


              August 20, 2001.



              “Debbie Hanrahan”
              Debbie Hanrahan



              “B. Bachmeier” )
              Witness Signature )
              )
              Barbara J. Bachmeier )
              Witness Name (please print) )
              )
              2356 Norwood Rd. )
              )
              Quesnel, BC V2J 7G6 )
              Address )
              )
              Investment Advisor )
              Occupation


              August 21, 2001.





              Steve Wilson
              Executive Director