News Release

BCSC alleges that dealer and two directors sold securities without proper disclosure

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Vancouver – The Executive Director of the British Columbia Securities Commission has issued a notice of hearing alleging that a B.C. corporation and its two directors promoted the sale of a Real Estate Investment Trust (REIT) without proper disclosure.

The notice alleges that between September 2010 and June 2012, League Investment Services Inc. (LISI), a B.C. corporation registered in all provinces as an exempt market dealer, promoted the sale of IGW Real Estate Investment Trust (IGW REIT) securities through its website, brochures and its Blue Book of Real Estate Syndication. IGW REIT owns commercial properties in Ottawa, Cornwall, Hamilton, Prince Albert, and Victoria. IGW REIT has about 2,200 investors, who as of June 19, 2013 had invested approximately $290 million. 

Adam Gant and Emanuel Arruda, both of whom are B.C. residents, through their family trusts, own 100% of LISI. They are also its officers and sole directors. Gant is LISI’s Ultimate Designated Person, and Arruda is in charge of LISI’s investor relations activities. Gant and Arruda are also trustees of IGW REIT, and Gant is the President of IGW REIT.

IGW REIT is managed by League Assets Corporation (LAC), which earns management fees based on the sale of IGW REIT securities by LISI.  In 2010, IGW REIT paid management fees of $7.8 million to LAC. 

Gant and Arruda, through their family trusts, also own 100% of LAC and are its officers and sole directors.  Gant is CEO and Arruda is President and Co-Chairman of LAC. 

BCSC staff contends that while promoting the sale of IGW REIT securities through its website, brochures, and Blue Book, LISI failed to disclose that its owners and sole directors—Gant and Arruda—are also trustees of the issuer IGW REIT (whose securities LISI sells) and are the owners, officers, and the sole directors of LAC, IGW REIT’s management company.

The notice alleges that by recommending an investment in IGW REIT securities without disclosing its relationship or connection to IGW REIT and LAC, LISI breached securities laws that prohibit a registered firm from recommending a security of a connected issuer. Gant and Arruda, as the sole directors of LISI, authorized, permitted or acquiesced in LISI’s contraventions, and therefore also breached securities laws.

These allegations have not been proven. Counsel for the Executive Director will apply to set dates for a hearing into the allegations before a panel of commissioners on September 17, 2013 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 Adam Gant, Emanuel Arruda, League Investment Services Inc. or 2013 BCSECCOM 169 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 

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