COR#96/021

John H. Frank, for Commission staff. William Ralph Lloyd.

      On July 17, 1995, notice was given by the Superintendent of Brokers to William Ralph Lloyd that a hearing would be held before the British Columbia Securities Commission on August 22, 1995, to determine whether it is in the public interest to make orders against him under sections 144(1), 144.1 and 154.2 of the Securities Act, S.B.C. 1985, c.83.  The notice alleged that Lloyd failed to file insider reports relating to his direct or indirect beneficial ownership of, or control or direction over, securities of Templar Resources Corporation while he was an officer and director of Templar.

      On August 22, 1995, the hearing was adjourned generally. It was subsequently rescheduled for December 5, 1995.

2.   BACKGROUND

      Templar was a reporting issuer under the Act and its common shares were listed for trading on the Vancouver Stock Exchange.  On July 22, 1993, the regulatory authorities approved a reverse take over of Templar by LJB Canada a manufacturer of jet boats.  Lloyd and Cornelius Giesbrecht were equal owners of LJB Canada.  On July 22, 1993, Lloyd became the president and a director of Templar and Giesbrecht became the secretary and a director of Templar.

      Under the reverse take over 3,680,326 free trading shares and 9,430,341 performance shares were issued. The free trading shares were subject to a one year hold  expiring on July 22, 1994.  Lloyd and Giesbrecht each received in excess of 16% of each of the free trading shares and the performance shares.

      By April 30, 1994, the financial year end of Templar, LJB Canada was insolvent.  Templar's quarterly report for the six months ended October 31, 1994, indicates that Templar's current liabilities of $231,000 were more than double its current assets of $107,000. Templar's only other assets were valued at $12,000. During that period Templar's operations provided gross revenues of $1,800.  Trading in the shares of Templar was halted by the Exchange on October 20, 1994, and on October 28, 1994, a cease trade order issued against Templar for failure to file financial statements.  Lloyd and Giesbrecht were removed as directors of Templar on October 21, 1994.

      On October 4, 1994, under section 70(4) of the Act, Lloyd submitted for filing insider reports regarding changes in his direct ownership of securities of Templar for each of the months of December 1993 and February through August 1994, but did not pay the $400 late filing fee as prescribed under section 183(1) Item 35 of the Securities Regulation, B.C. Reg. 270/86. (since January 1, 1996, section 22(1) Item 41 of the Securities Regulation, B.C. Reg. 478/95)

      In letters dated December 12, 1994 and  January 25, 1995, Commission staff requested Lloyd to amend the insider reports he submitted on October 4, 1994. Lloyd did not respond and on February 13, 1995, the Superintendent ordered, under section 146(1) of the Act, Lloyd to cease trading in the securities of Templar for his failure to file adequate insider reports as required under section 70 of the Act.  Despite the cease trade and a further letter from Commission staff, dated March 31, 1995, requesting Lloyd to bring his insider report filings up to date, Lloyd did not do so and the matter was set for hearing on August 22, 1995.

      On August 22, 1995, the hearing was adjourned generally, by consent, to give Lloyd additional time to file his outstanding insider reports.  By November 23, 1995, Lloyd had not yet filed his outstanding insider reports nor had he responded to Commission staff's correspondence.  As a consequence, the hearing was rescheduled for December 5, 1995.

      On December 4, 1995, the day before the hearing, Lloyd submitted his outstanding insider reports regarding changes in his direct ownership of securities of Templar for each of the months of September and October 1994, and he resubmitted his insider report for December 1993.  Lloyd did not pay the outstanding late filing fee of $400 for the insider reports and he did not pay the late filing fee of $100 for the insider  reports for September and October 1994.  None of the 10 insider reports were filed within 10 days of the of the end of the month in which the transaction took place.

      Lloyd's insider reports show that on December 2, 1993, Lloyd held 200,000 options and 2,245,112 shares and on October 27, 1994, Lloyd held 75,000 options and 2,170,612 shares. For the 10 Month Period Lloyd purchased 520,000 Templar shares and disposed of 820,000 Templar shares in 245 trades for a total market value of $713,640.

      The following table shows, for each month during the period December 1993, and February through October 1994, referred to as the 10 Month Period, the number of Templar shares Lloyd purchased and disposed of, the aggregate of Lloyd's purchases and dispositions and the number of Templar shares traded on the Exchange, together with totals for the 10 Month Period, the percentage of trades on the Exchange participated in by Lloyd as a buyer or seller and the approximate percentage of free trading Templar shares trading on the Exchange:

[Diagram is non-displayable.  Please see paper copy.]

    The following table shows, for each of the months during the 10 Month Period, the high and low prices for the Templar shares traded on the Exchange and the price spread in each month in both cents and as a % of the monthly low.

Date	High	Low	Spread	Spread as %
	Price	Price	in cents	of Low Price

December	.64	.52	12	23%
February	.63	.48	15	31%
March	.56	.33	23	70%
April	.54	.42	12	29%
May	.57	.43	14	33%
June	.55	.41	14	34%
July	1.08	.42	.66	157%
August	.50	.29	21	72%
September	.72	.37	35	95%
October	.65	.42	23	55%

      The relevant provisions of the legislation are as follows:

1(1)		of the Act defines an insider of a reporting issuer to include, inter alia, "a director or senior officer of the issuer".
70(2)		of the Act requires that an insider of a reporting issuer file an insider report within 10 days of becoming an insider disclosing any direct or indirect beneficial ownership of, or control or direction over, securities of the issuer.
70(4)		of the Act requires an insider to file an insider report within 10 days after the end of a month in which there is any change in the insider's holdings, disclosing the changes and disclosing his holdings at the end of the month, so long as he was an insider of the reporting issuer at any time during that month; and
183(1)		Item 35 of the Regulation requires the payment of a $50 filing fee for filing a report outside the time period prescribed in section 70 of the Act.

      Lloyd indicated on his insider reports submitted on October 4, 1994, that he had filed a previous report.  Clearly he was aware of his obligation to file insider reports as he had filed at least one report before.

      Lloyd disregarded Commission staff's attempts to settle the deficiencies when they were brought to his attention. He did not submit his insider reports for eight of the 10 months until the last month when he was not reelected as director of Templar and was no longer an officer. His insider reports for the final 2 months were not submitted for filing  until over a year after they were due.

      We find that Lloyd deliberately did not file his insider reports for the 10 Month Period in accordance with section 70(4) of the Act and that his conduct showed a reckless disregard of his obligations as an insider under the Act.

      During the 10 Month Period, Lloyd was involved as buyer or seller in almost 10% of the trading in Templar shares on the Exchange.  In all but two of those months Lloyd's trading represented a significant percentage of the Templar shares traded on the Exchange in each month.  In April 1994, Lloyd was involved as buyer or seller in 52.1% of the shares traded on the Exchange.  In May 1994, Lloyd was involved as buyer or seller in  27.4% of the shares traded on the Exchange.  We find that Lloyd was a significant buyer and seller of Templar shares on the Exchange during the 10 Month Period.  Similarly the value of the Templar shares traded by Lloyd during the 10 Month Period was a significant amount.

      During the 10 Month Period, over 14 million Templar shares traded.  In each of the 10 months, the trading in Templar shares represented a significant percentage of the Templar shares that were free trading.  In many months that percentage exceeded 1/3 of the Templar shares that were free trading. In July 1994, the percentage was almost 140%.  We find that there was significant trading in Templar shares on the Exchange during the 10 Month Period.

      In each month of the 10 Month Period, the fluctuation in price of Templar shares traded on the Exchange as a percentage of the low price, exceeded 20%.  In five of the months the spread in price as a percentage of the low price exceeded 50%. In July 1994, the fluctuation was 157%.  We find that there was a significant fluctuation in the prices at which Templar shares traded on the Exchange in each month during the 10 Month Period.

      The Commission has noted in several decisions, including In the Matter of Robert Theodore Slavik, (1990) BCSC Weekly Summary, Vol. 90:28, and  In the Matter of Seven Mile High Group Inc. [1991] 47 BCSC Weekly Summary 7, that disclosure of trading by insiders is a key element in the continuous disclosure regime for reporting issuers.  As the Commission stated in the  Seven Mile High decision at page 36:

The information provided by insider reports is important market information, as it discloses to market participants the trading activities of the persons most closely connected to, and therefore in a position to be most knowledgeable about, a reporting issuer.  Timely reporting is particularly important where, as in this case, the insider is an active trader.

      During the period Lloyd was the president and a director of Templar, including the 10 Month Period, Templar was experiencing financial difficulty and by October 1994 was unable to pay  its current liabilities.

      Considering all of the circumstances, the public market was seriously prejudiced by being unaware of Lloyd's extensive trading.  Lloyd's deliberate failure to file his insider reports in accordance with the Act and in the face of Commission staff  reminders and requests to file, compounds the egregious nature of his misconduct.

      We consider Lloyd's conduct to fall considerably below the standard expected of an insider and director of a reporting issuer.

      We consider it to be in the public interest to order:

1.		under section 144(1)(a) of the Act that Lloyd comply with the requirement to pay $500 for filing ten insider reports outside the required time period, as provided in section 183(1) Item 35 of the Securities Regulation, B.C. Reg. 270/86 (since January 1, 1996, section 22(1) Item 41 of the Securities Regulation, B.C. Reg. 478/95);
2.		under section 144(1)(c) of the Act that the exemptions described in sections 30 to 32.1, 55, 58, 80 and 81 of the Act do not apply to Lloyd for a period of five years from the date of this decision;
3.		under section 144(1)(d) of the Act that Lloyd is prohibited from becoming or acting as a director or officer of a reporting issuer

(a)		until he has successfully completed a course of study satisfactory to the Executive Director concerning the duties and responsibilities of directors and officers, and
(b)		a period of five years has elapsed from the date of this decision;

4.		under section 144.1 of the Act that Lloyd pay within 30 days from the date of this decision an administrative penalty of $20,000; and
5.		under section 154.2 of the Act that Lloyd pay prescribed fees and charges for the costs of or related to the hearing incurred by the Commission and the Executive Director, the amounts to be determined following further submissions from the parties.