News Release
Pacific International Securities Inc. - Backgrounder
-
Date:
2001-07-10 -
Number:
2001/28
Released: 07/10/01 Contact: Michael Bernard
(604) 899-6524 or
(BC only) 1-800-373-6393
The B.C. Securities Commission will hear allegations that a Vancouver-based investment dealer and its directors ignored their duty as market "gatekeepers" and failed to investigate questionable client trades.
From July 1, 1995 to December 31, 1999, BCSC staff allege that Pacific International Securities Inc. and its directors failed to take proper compliance action on account activity that "would have caused a reasonable registrant to investigate the owners and operations" of several accounts for illegal conduct such as money laundering and share manipulation.
The set date hearing is scheduled for Sept. 19 at 10 a.m. in the Commission hearing room at 701 West Georgia St.
The directors named in the notice are: Max Meier, Lawrence Hugh McQuid, Jean-Paul Philippe Bachellerie, Robert Herbert Blades, Germain Carriere, John Todd Eymann, Alberto John Quattrociocchi, Martin J. Reynolds, and Theresa Mary Sheehan.
BCSC staff allege several violations of the B.C. Securities Act including failure to:
- adhere to the know-your-client rule (Section 48);
- establish and apply written prudent business procedures for dealing with clients (Section 44).
In the notice, Commission staff cite several events to which Pacific International and its senior officers and directors should have responded by ensuring the firm fulfilled its duty to get proper client information. Those events included:
- The United States Dept. of Justice filing indictments citing several Pacific International clients for alleged breaches of American securities laws.
- The U.S. Securities and Exchange Commission naming Pacific International clients in several civil complaints.
- the Vancouver Stock Exchange (now Canadian Venture Exchange) issuing on July 11, 1998, a citation against J.C. Hauchecorne, a registered representative of Pacific International, for activity related to indictments.
Commission staff also allege that Pacific International should have been tipped to the possibility of illegal conduct by certain activity in several client accounts:
- Foreign stocks were traded in B.C. in large accounts by non-residents of the province.
- Some accounts were owned and operated by people with criminal or regulatory histories.
- Sale proceeds in some accounts were frequently distributed to third parties.
- Some clients frequently paid significant fees so that they could receive cash from sales before the settlement date.
- Cash was transferred in and out of some accounts with little or no trading activity between the receipt and transfer of cash.
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 notice of hearing can be viewed in the documents database of the commission’s website www.bcsc.bc.ca or by contacting Communications Manager Michael Bernard at 899-6524.