Settlements

FRANK ALBERT JOHNSON [Sec. 161 & Agreed Stmnt]

BCSECCOM #:
Document Type:
Sec. 161 & Agreed Stmnt
Published Date:
1999-02-26
Effective Date:
1999-02-25
Details:


IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418

AND

IN THE MATTER OF FRANK ALBERT JOHNSON



Orders Under Section 161


WHEREAS an Agreed Statement of Facts and Undertaking (the “Agreement”) was executed by Frank Albert Johnson (“Johnson”) and the Executive Director, a copy of which is attached hereto as Schedule “A”:

NOW THEREFORE, the Executive Director, considering that it would be in the public interest to do so, orders (the “Order”), by consent, that:

1. under section 161(1)(d)(ii) of the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”), Johnson is prohibited from becoming or acting as a director or officer of any issuer for a period ending eight (8) years from the date of the Order;

2. subject to paragraph 3, under section 161(1)(c) of the Act, all of the exemptions described in sections 44-47, 74, 75, 98 and 99 of the Act do not apply to Johnson for a period ending eight (8) years from the date of the Order;

3. notwithstanding the order in paragraph 2, Johnson may trade in securities through one RRSP and one non-RRSP account in his own name with one broker or dealer, provided that the securities traded are not those of exchange issuers, except as set out in paragraph 4. Johnson undertakes to keep the Executive Director advised at all times of the location of these accounts; and

4. with respect to securities of exchange issuers presently owned by Johnson, Johnson may dispose of these securities only in an orderly manner, only through the non-RRSP account referred to in paragraph 3, only with the permission of the Executive Director, and only on terms approved by the Executive Director.


DATED at Vancouver, British Columbia, on February 25, 1999.





Michael J. Watson
Executive Director






IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418

AND

IN THE MATTER OF FRANK ALBERT JOHNSON


Agreed Statement of Facts and Undertaking


The following agreement has been reached between Frank Albert Johnson (“Johnson”) and the Executive Director:

1. As the basis for the undertakings and consents referred to in paragraphs 2, 3 and 4 of this agreement, Johnson acknowledges the following facts as correct:
      (a) Corum Resource Corp. (“Corum”) is incorporated in British Columbia pursuant to the Company Act, R.S.B.C. 1996, c. 62, and became a reporting issuer under the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”) by filing a Limited Prospectus on August 16, 1989. Corum’s shares are listed on the Vancouver Stock Exchange;

      (b) Johnson has been a director and insider of Corum since 1995;

      (c) Numerous trades (the “Trades”) in shares of Corum occurred in accounts in Johnson’s name at Union Securities Ltd. during January, February and March, 1997. Johnson takes the position that he did not order the trades. Johnson acknowledges that he did not adequately monitor his accounts;

      (d) The Trades were not reported by Johnson to the Commission in breach of section 87 of the Act;

      (e) Sterling Pacific Resources Inc. (“Sterling Pacific”) is incorporated in British Columbia pursuant to the Company Act, R.S.B.C. 1996, c. 62, and became a reporting issuer under the Securities Act on May 26, 1988. Sterling Pacific’s shares are listed on the Vancouver Stock Exchange.

      (f) Johnson has been a director and insider of Sterling Pacific since September 5, 1996;

      (g) On or about September 11, 1996, Sterling Pacific made a distribution of 2,500,000 shares and warrants (the “Private Placement”). A report of the Private Placement was not filed as required by section 139 of the Securities Rules, R.B.C. Reg. 194/97. Johnson takes the position that he gave instructions to file the report, but acknowledges his responsibility for the failure to file;

      (h) Johnson took ownership or control of at least 1,250,000 shares of Sterling Pacific in the Private Placement (the “Johnson Shares”). The ownership or control of the Johnson Shares was not reported by Johnson to the Commission in breach of section 87 of the Act;

      (i) the Johnson Shares were not paid for in a manner that gave Sterling Pacific the full use and benefit of the proceeds. Rather Johnson, in October 1996,
          (i) borrowed the purchase funds;
          (ii) deposited the funds in Sterling Pacific’s bank account;
          (iii) withdrew the funds immediately, by means of a cheque payable to him signed by other directors;
          (iv) placed the funds in trust with the original lender of the funds; and
          (v) requested transfers from the lender/trustee to Sterling Pacific from time to time.

          In the result, Sterling Pacific only received a portion of the proceeds of the Private Placement. In so handling the purchase funds for the Johnson Shares, Johnson acted contrary to the best interests of Sterling Pacific, and contrary to section 43 of the Company Act, R.S.B.C. 1996, c. 62;
      j) Johnson was a signatory to Sterling Pacific financial statements for both the 1996-97 and 1997-98 fiscal years that did not set out the circumstances described in subparagraph (i), above, and that were therefore misleading contrary to section 155 (1)(c) of the Act; and

      k) In February 1997, Sterling Pacific, over Johnson’s signature on behalf of the board of directors, issued and filed two press releases (the “Press Releases”) concerning activities by Sterling Pacific in the Philippines. The Press Releases, at the time and in light of the circumstances under which they were made, were misrepresentations contrary to section 155(1)(c) of the Act, in that they announced a “major advanced property acquisition” by Sterling Pacific where, in reality, Sterling Pacific had acquired only the exclusive right to negotiate an option. In the result, Sterling Pacific never obtained an option on the property referred to in the Press Releases. Johnson takes the position that the Press Releases were duly authorized by the board of Sterling Pacific.

2. Johnson consents to an Order by the Executive Director pursuant to section 161(1)(d)(ii) of the Act that Johnson is prohibited from becoming or acting as a director or officer of any issuer for a period ending eight (8) years from the date of the Order;

3. Subject to paragraph 4, Johnson consents to an Order by the Executive Director pursuant to section 161(1)(c) of the Act that the exemptions described in sections 44-47, 74, 75, 98 and 99 of the Act do not apply to Johnson for a period ending eight (8) years from the date of the Order;

4. Notwithstanding the Order referred to in paragraph 3, Johnson may trade in securities through one RRSP and one non-RRSP account in his own name with one broker or dealer, provided that the securities traded are not those of exchange issuers, except as set out in paragraph 5. Johnson undertakes to keep the Executive Director advised at all times of the location of these accounts;

5. With respect to securities of exchange issuers presently owned by Johnson, Johnson may dispose of these securities only in an orderly manner, only through the non-RRSP account referred to in paragraph 4, only with the permission of the Executive Director, and only on terms approved by the Executive Director.

6. Johnson undertakes and consents to pay $15,000 to the Commission, $10,000 of which represents the costs of the investigation and the remainder a penalty; and

7. Johnson waives any right he may have, under the Act or otherwise, to a hearing and review, judicial review or appeal related to, in connection with or incidental to this agreement.


DATED at Vancouver, British Columbia, on January 11, 1999.


_________________________)
Witness )
Bea Macdonald____________)_______________________
Witness Name (Please print))FRANK ALBERT JOHNSON
________________________)
Address)
________________________)
Occupation)

DATED at Vancouver, British Columbia, on February 18, 1999.





Michael Watson
Executive Director
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