News Release

Released: December 23, 1999 Contact: Michael Bernard
899-6500 or
(BC only) 1-800-373-6393

Vancouver -- The British Columbia Securities Commission has dismissed Jean-Claude Hauchecorne’s application to set aside or vary the findings and penalties issued by a Vancouver Stock Exchange hearing panel that he claims was biased.

The exchange hearing panel had found Hauchecorne, a former Pacific International Securities branch manager, liable for 21 infractions against the exchange’s by-laws and rules. The infractions related to Hauchecorne’s handling of eight offshore accounts and his dealings with several individuals connected with organized crime in the United States.

At the same time, the commission granted an application by its Executive Director to vary the Exchange hearing panel’s decision. The commission found Hauchecorne liable for four additional infractions, which the hearing panel had dismissed, relating to Hauchecorne’s failure to learn the identities of the beneficial owners of the accounts.

The commission confirmed the penalty imposed by the hearing panel, which was:

· a fine in the amount of $200,000;
· disgorgement of commissions in the amount of $95,000;
· permanent withdrawal of Exchange approval;
· costs of the hearing.

Hauchecorne had cited three grounds of appeal for his argument that the commission should set aside the hearing panel’s decision and order a new hearing. These were:

· Comments made by the hearing panel chair in the hearing, as well as certain subsequent events, gave rise to a reasonable apprehension that the panel chair was biased against him.
· The hearing panel improperly admitted into evidence a transcript of oral evidence given in a court proceeding.
· The reasons given by the hearing panel for its decision were inadequate.

In the alternative, Hauchecorne argued that the penalty ordered by the hearing panel was excessive and unwarranted. He submitted that the commission should reduce the penalty.

The chair of the exchange hearing panel had commented during the hearing that "Of course an offshore account is only offshore because it is intended to cheat the tax department, money launder or insider trading."

Hauchecorne argued that these comments indicated a predisposition to find that Hauchecorne should have known the accounts would be used for illegal purposes. After evaluating the comment in the context of the circumstances in which it was made and in light of the whole proceeding, the commission concluded that "the panel chair had not predetermined the matters before the panel but was inquiring and open to persuasion as to the purpose of offshore accounts."

The commission found that the transcript of evidence was properly admitted and that the hearing panel’s reasons, although poorly drafted though they may be, explain adequately how it arrived at its decision.

The commission found no basis to interfere with the penalty imposed by the hearing panel, concluding it was not unreasonable.

In reversing the hearing panel’s dismissal of four infractions, the commission emphasized the importance of a broker’s learning the identity of a client and looking "behind any corporate veil to determine who has a financial interest in the account."

"The events of this case demonstrate very clearly the risks that can be encountered by a broker and his firm when the broker fails to learn the identity of his client," the commission said.

Copies of the decision can be found on the commission’s Web site (www.bcsc.bc.ca) or by contacting Communications Manager Michael Bernard.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts within the province.