Settlements

PREM CHAND BHALLA [Agreed Stmnt.]

BCSECCOM #:
Document Type:
Agreed Stmnt.
Published Date:
2000-01-07
Effective Date:
1999-12-22
Details:


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

AND

IN THE MATTER OF PREM CHAND BHALLA


Agreed Statement of Facts and Undertaking


The following agreement has been reached between Prem Chand Bhalla (“Bhalla”) and the Executive Director:

1. As the basis for the undertakings referred to in paragraph 2 of this agreement, Bhalla acknowledges the following facts as correct:
      1.1 Bhalla was registered as a mutual fund salesperson under the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”) and the Securities Act, S.B.C. 1985, c. 83 (the “Prior Act”), with W.H. Stuart Mutuals Ltd. (“WHSM”), during the period from September 1, 1992 to June 20, 1997;

      1.2 during the period from December 1993 to October 1995, Bhalla introduced to one of his clients (the “Client”) three different securities, which were being offered for sale through offering memoranda, pursuant to a registration and prospectus exemption in the Prior Act that required an investor to be qualified as a sophisticated purchaser (collectively, the “Investments”);

      1.3 the term “sophisticated purchaser” was set out in each of the offering memoranda for the Investments, and was defined as being, “a purchaser that by virtue of his net worth and investment experience or his consultation with or advice from a person who is not an insider of the issuer, but who is a registered adviser or a registered dealer, is able to evaluate the prospective investment on the basis of information respecting the investment provided by the issuer”;

      1.4 prior to introducing the Investments to the Client, Bhalla failed to make enquiries concerning the Client in order to learn the essential facts relative to the Client, and to determine the general investment needs and objectives of the Client, the appropriateness of the recommendations made to the Client, and the Client’s risk tolerance;

      1.5 Bhalla had no basis on which to determine that the Investments were suitable for the Client or that the Client qualified as a sophisticated purchaser and, thus, failed to follow the know your client and suitability rules set out in section 43 of the Securities Regulation, B.C. Reg. 270/86, now section 48 of the Securities Rules, R.B.C. 194/97;

      1.6 the Client purchased the Investments through Bhalla, who received the related commission payments; and

      1.7 Bhalla acknowledges that only one of the Investments purchased by the Client was approved by WHSM for sale by its mutual fund salespersons, and, as such, he sold two of the Investments without the knowledge and approval of WHSM.
2. Bhalla undertakes:
      2.1 not to engage, except for his own account, in any purchases or sales of any securities offered under a registration and prospectus exemption in the Act, while he is registered under the Act, for a two-year period beginning on the date of this agreement;

      2.2 not to make an application for an upgrade of his registration under the Act, for a six-month period beginning on the date of this agreement, during which time he will be subject to strict supervision by any registrant with which he is employed; and

      2.3 to pay to the British Columbia Securities Commission the sum of $3,000, $1,000 of which represents the costs of the investigation and the remainder a penalty, which will be paid into the Industry Education Fund, in accordance with the terms set out in a Promissory Note, executed by Bhalla in favour of the British Columbia Securities Commission, with the following payment schedule:
          2.3.1 $500 upon the execution of this agreement; and

          2.3.2 an additional $500 on or before March 1, 2000, June 1, 2000, September 1, 2000, December 1, 2000, and March 1, 2001.
3. Bhalla waives any right he may have, under the Act or otherwise, to a hearing, hearing and review, judicial review or appeal related to, in connection with, or incidental to this agreement.

DATED at Vancouver, British Columbia, on December 16th, 1999.

D.J. Oaks______________________ )
Witness Signature )
)
D.J. Oaks )
Witness Name (please print) ) _______________________
#53, 8763 Ash Grove Crescent ) Prem Chand Bhalla
Burnaby, BC )
Address )
)
Retired )
Occupation
      DATED at Vancouver, British Columbia, on December 22nd, 1999.







Steve Wilson
Executive Director
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