News Release
Commission issues penalties against individuals involved in mutual fund dealer’s sale of "highly risky" securities
-
Date:
2002-11-26 -
Number:
2002/69
Vancouver – The B.C. Securities Commission issued sanctions against four individuals that include trading bans and administrative penalties for their part in a mutual fund dealer’s sale of “speculative, illiquid and highly risky” securities to conservative clients.
In its decision, the BCSC imposed sanctions against Lindy Arnot, George Price, Donald Brian Gordon-Carmichael and Leonard William Friesen for their involvement in Canadian Global Investments Corp. and related companies. Danny Francis Bilinski was a principal and the directing mind of the Canadian Global Financial group of companies, which included Canadian Global Investments, a Langley-based mutual fund dealer.
In January 2002, a commission panel ruled that the mutual fund dealer, its principals and some salespeople violated the “conflict of interest”, “fair dealing”, “know your client” and “suitability of investment” rules in selling speculative, illiquid and highly risky securities to clients. The high-risk securities included securities in a bowling alley development and an ostrich farm operation.
Almost 200 clients of the mutual fund dealer invested $20 million in the high-risk securities. Many of the clients were conservative and risk adverse investors and many lost most of the money they invested. Bilinski and Robert Pierre Lamblin, Bilinski’s partner, sold more than 80 per cent of the high-risk securities. The commission found that their conduct violated the “fair dealing” rule and was particularly abusive because the securities sold were in companies in which they held an interest and participated in management.
The panel ruled that the dealer and its principals failed to establish and apply proper compliance and supervision procedures. They also failed to comply with conflict of interest rules in selling the high-risk securities.
The commission ordered the following:
· Price is barred from trading for five years. He is prohibited from acting as a director or officer of any issuer for at least five years and he must pay an administrative penalty of $20,000. Price was a director of one of the related companies that sold securities contrary to the Act.
· Gordon-Carmichael is banned from trading for two years. He is prohibited from becoming a registrant under the Act until he meets certain proficiency requirements. Upon registration he is required to be under strict supervision for one year. Gordon-Carmichael was a mutual fund salesperson who sold some of the high-risk securities.
· Friesen is banned from trading for two years and is prohibited from becoming a registrant for at least two years. He must also pay a $20,000 penalty. Friesen was a mutual fund salesperson who sold some of the high-risk securities.
· The cease trade order imposed on Columbia Ostrich VCC securities will remain in effect until it has filed and obtained a receipt for a prospectus.
Bilinski and Lamblin could not appear before the commission for the submissions on sanctions because of medical reasons. The panel will reconvene at a later date to hear submissions from the pair and the companies that they controlled.
Bilinski and Lamblin are no longer registrants and temporary orders banning them from trading in securities will remain in effect until a decision is made on their sanctions.
The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts within the province. Copies of the decision can be viewed in the documents database of the commission’s website www.bcsc.bc.ca or by contacting Andrew Poon, Media Relations, 604-899-6880.