News Release

Vancouver – As part of a settlement agreement in an illegal insider trading case, a B.C. man has agreed to pay $79,429 to the British Columbia Securities Commission.

The agreement states that Jerome John Rak, a resident of West Vancouver, breached securities laws when he purchased securities in Velo Energy Inc, an Alberta company that was planning to hire a new president and CEO. Rak had advanced knowledge of Velo’s plan to hire Arthur Millholland, the former president and CEO of Oilexco Inc, when he purchased 172,000 shares in the company.

As part of the settlement, Rak agreed that between August 5 and August 7, 2009, he was in a special relationship with Velo and knew that there was a reasonable likelihood that Millholland would become its new president and CEO before it was generally disclosed.

Notwithstanding the fact that Rak did not sell the shares on August 10, 2009, he agreed that if he had sold them on that date he could have realized a profit of up to $52,951.

In the four months prior to the relevant period, and before he was in a special relationship with Velo, Rak acquired over 2.7 million shares. Rak continued to hold all these shares until November, and still holds the majority of his position in the company. 

In addition to paying $79,429, Rak is also subject to several restrictions under the Securities Act.  The Executive Director of the BCSC has ordered that Rak is prohibited from purchasing or trading securities or exchange contracts of any reporting issuer with whom he is in a special relationship for ten years, and that he is prohibited from acting as a director or officer of any reporting issuer for five years.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the settlement agreement on our website www.bcsc.bc.ca by typing Rak or 2011 BCSECCOM 544 in the search box.  Information regarding disciplinary proceedings can be found in the Enforcement section of the BCSC website.

Please visit the Canadian Securities Administrators’ disciplined persons list for information relating to persons disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).

If you have questions, contact Richard Gilhooley, media relations, 604-899-6713. For public inquiries, call 604 899 6854 or 1 800 373 6393 (toll free).

Learn how to protect yourself and become a more informed investor at www.investright.org