May 8, 2012
BCSC Executive Director’s Bulletin: Securities regulator issues notice of hearing and temporary order against B.C. man alleging illegal distribution
Vancouver – The executive director of the British Columbia Securities Commission has issued a temporary order and notice of hearing alleging that a British Columbia man engaged in illegal distributions and made materially false statements while promoting an investment on Craigslist.
The executive director issues temporary orders in situations where the length of time required to hold a hearing could be prejudicial to the public interest.
The notice alleges that Paul Lester Stiles promoted an investment in Velocity Entertainment Inc. that he claimed would provide B.C. investors with returns ranging from 12% in one year to 100% within six months. Stiles was the sole director of Velocity, which was dissolved in 2005 and has never filed a prospectus in B.C.
In July and August 2011, commission staff discovered two identical advertisements in the Financial Services section of Vancouver’s Craigslist website that promoted the Velocity investment. A BCSC investigator posing as a potential investor responded to the advertisements, requesting further information. In the ensuing email correspondence, Stiles promoted the investment and sent the investigator an investment agreement claiming, among other things, that the money would be used by Velocity to produce two feature films. Stiles made a number of false statements in promoting the investment, including that it would provide a “totally secure” rate of return of 100% in six months, and provided instructions to transfer funds to his bank account.
In March 2012, BCSC staff discovered a third advertisement on Craigslist promoting Velocity. Again, a BCSC investigator posing as an investor responded to the advertisement, and in the ensuing email correspondence Stiles made numerous claims, including that he would guarantee the investment.
BCSC staff maintain that by promoting the Velocity investment to the undercover investigators, Stiles breached securities laws by making misrepresentations and illegally soliciting persons to purchase securities.
These allegations have not been proven. Counsel for the executive director will apply for final orders against the party. The first hearing into the allegations before a panel of commissioners is set for May 17, 2012 at 9:00am.
The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the notice of hearing on our website www.bcsc.bc.ca by typing Paul Lester Stiles, Velocity Entertainment Inc. or 2012 BCSECCOM 154 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).
For media inquiries, please contact Richard Gilhooley, media relations, 604-899-6713. For public inquiries, please 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