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News Release

Securities Commission Confirms Freeze Order Against Harris McLean and Jimenez

  • Date:

    1997-10-10

  • Number:

    97/31

Released: October 8, 1997  Contact: Barbara Barry  660-4800 or (BC only) 1-800-373-6393

Following a hearing on October 2, 1997, the British Columbia Securities Commission has confirmed a freeze order issued last week in connection with the investigation of trading in shares of H&R Enterprises on the NASDAQ over-the-counter bulletin board in the United States. The order, issued on October 1, 1997, by Commission Vice Chair Joyce Maykut, freezes the accounts of Harris McLean Financial Group Ltd. and Ana Jimenez at Georgia Pacific Securities Corporation in Vancouver.

Harris McLean is a broker dealer based in the Cayman Islands. Its principals are Richard Harris and Rod McLean. Ana Jimenez is the mother of Richard Harris.

H&R Enterprises Inc. is incorporated in British Columbia. Its registered office is in Burnaby and it appears to operate from an office in Abbotsford.

In late September 1997, trading in H&R shares accelerated and the share price increased sharply. This was followed by a sudden collapse in trading volume and price, which led to the failure of a U.S. broker dealer named Saperston Financial Incorporated. The accounts of Harris McLean and Jimenez at Georgia Pacific were actively trading H&R shares during that period. They were frozen on October 1, along with a number of accounts at another Vancouver securities dealer, Wolverton Securities Ltd.

Harris McLean and Jimenez applied on October 2 to have a Commission panel review the freeze order. A hearing was held later on October 2 and the decision of the panel, confirming the freeze order, was issued today.

The Commission said:

The investigation into this matter has just begun with the issuance of investigation and freeze orders. It will no doubt be difficult and complex, involving authorities in both Canada and the United States. We are not in a position at this point to make any final determination as to the involvement of the applicants, if any, in the apparent fraud. However, given the suspicious nature of the trading in the applicants’ accounts, and the connections among the applicants and H&R, we consider it in the public interest to maintain the freeze order to preserve the property in the accounts for persons who may have legitimate claims on it.

..…

It is likely that, if we removed or varied the freeze order, the funds released would quickly be transferred to the Cayman Islands and hidden behind the veil of bank secrecy laws. When we weigh the public interest in protecting the integrity of the capital markets from those who would profit from fraudulent trading, against the uncertain harm to the applicants of maintaining the freeze order, we are compelled to come down in favour of the public interest.

The British Columbia Securities Commission is a provincial government agency responsible for regulating trading in securities and exchange contracts.

Copies of the Commission decision (10 pages) may be obtained in person at 1100 - 865 Hornby Street, Vancouver, British Columbia.