2004 BCSECCOM 81

Distributing the shares Harris McLean received to a number of promoters who used the shares both to assist in the manipulation and as payment for their role in manipulating the price of the shares, including:

transferring 1,744,000 shares to Alexander Troy Consultants Ltd., whose principal was David Heredia (Heredia); and

transferring 180,000 shares to OTC BB Ltd., whose principal was Jerome Rosen (Rosen).

Heredia and Rosen actively assisted Mitton in the manipulation of the price of the shares of H&R.

Allowing Harris McLean to act as a nominee for Mitton by operating brokerage accounts at three brokerage firms in British Columbia, one brokerage firm in the United States and by allowing Mitton to operate an account directly with Harris McLean (together, the Accounts). All trading in the shares of H&R in the Accounts was done on the instructions of, and for the benefit of, Mitton.


As a result of heavy trading in the shares of H&R, the Commission, on October 1, 1997, issued directions to freeze property (the Freeze Order) in several brokerage accounts, including accounts in the name of Harris McLean and Ana Jimenez (Jimenez) at Georgia Pacific Securities Corporation (Georgia Pacific). Jimenez is the mother of Harris. On October 2, 1997, Harris McLean and Jimenez applied to vary the Freeze Order, which application was unsuccessful. On June 27, 2000, Harris settled with the Commission for misrepresentations he made to the Commission in the application of Harris McLean and Jimenez to vary the Freeze Order. As part of the settlement, Harris agreed that, for a period of ten years:

(a) the exemptions described in sections 44 - 47, 74, 75, 98 or 99 of the Act would not apply to him;

(b) he would be prohibited from becoming or acting as a director or officer of any issuer; and

(c) he would be prohibited from engaging in investor relations activities.

Breaches of the Act and the Securities Rules
Harris breached section 57(a) of the Act and section 41.1 of the Securities Act, SBC 1985, c. 83 (the Former Act) by participating in transactions that he knew or ought to have known contributed to a misleading appearance of trading activity or artificial price for the shares of H&R.

Harris breached section section 34 of the Act and section 20 of the Former Act by acting as an unregistered dealer when distributing shares without being registered to do so.

Public Interest
Harris acted contrary to the public interest by breaching the Cease Trade Order by allowing Mitton to trade through Harris McLean and by acting as a nominee for Mitton.

Mitigating Factors
¶ 3 The Executive Director has taken into account the following facts as factors mitigating the sanctions which would otherwise have applied in the public interest:

Harris and Harris McLean have each suffered substantial losses as a result of Harris’ involvement with Mitton and, as a consequence, Harris McLean was placed into voluntary liquidation by the courts of the Cayman Islands;

Although Harris agrees that a large monetary sanction would be appropriate in this case, the Executive Director has taken into account as factors mitigating the monetary sanction that is in the public interest, the liquidation of Harris McLean, resulting in severe adverse financial consequences to Harris and his inability to pay a penalty.

Undertaking
¶ 4 Harris agrees and undertakes as follows:

7. to comply fully with the Act, the Rules, and any applicable regulations, policies and guidelines, from the date of this agreement; and

8. to not say anything, in writing or orally, which may contradict the terms of this settlement or call those terms into question.

Order
¶ 5 Harris consents to an order by the Executive Director (the Order) that:

9. under section 161(1)(c) of the Act, the exemptions described in sections 44-47, 74, 75, 98 or 99 of the Act do not apply to Harris;

10. under section 161(1)(d)(i) of the Act, Harris resigns any positions he holds as a director or officer of any issuer by February 1, 2004;

11. under section 161(1)(d)(ii) of the Act, Harris is prohibited from becoming or acting as a director or officer of any issuer; and

12. under section 161(1)(d)(iii) of the Act, Harris is prohibited from engaging in investor relations activities.


Waiver
¶ 6 Harris 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 settlement.

¶ 7 January 30, 2004



“Richard C. Harris”
¶ 8 Richard Harris


“J. Alberto” )
Witness Signature )
Jose Alberto )
Witness Name (please print) )
Apto. #1386-1250 )
Escazu, Costa Rica )
Address )
Retired )
Occupation

¶ 9 January 30, 2004





¶ 10 Brenda Leong
A/Executive Director