TORONTO, June 11 /CNW/ - A Hearing Panel of the Investment Dealers
Association of Canada (IDA), appointed pursuant to By-law 20, has found
Octagon Capital Corporation (Octagon), at all material times a Member of the
IDA, guilty of participating in a distribution of securities which was not in
accordance with the provisions of the Ontario, Alberta, and British Columbia
Securities Acts, thereby engaging in business conduct unbecoming or
detrimental to the public interest, and contrary to IDA By-law 29.1 and
In its liability decision dated April 3, 2007, the Hearing Panel found
that, between July 2002 and June 2003, Octagon facilitated the distribution of
two issues of Bright Star Venture (BSV) debentures by way of private placement
to 97 client accounts. The accounts were opened by Barry (Sai-Kwong) Leung, at
the material time an Approved Person with Octagon (See Bulletin No.3477).
Octagon facilitated the distribution without performing the necessary due
diligence and ensuring that the debentures had been approved for distribution
either by way of a prospectus having been issued, or that the clients were
qualified to invest in the debentures under rules permitting distribution in
the absence of a prospectus.
The Panel found that there was no evidence that Octagon knew that this
distribution was part of an RRSP stripping scheme until May 2003. Octagon took
steps to cease the activity on June 12, 2003.
In addition, the Hearing Panel found that there was insufficient evidence
to support two further sets of allegations, contrary to By-law 29.1,
Regulation 1300.2, and Policy 2. The one allegation referred to that, between
2003 and 2004, Octagon failed to make adequate inquiries into six accounts,
under the name of Benil to ensure that such accounts were not being directed
by someone who they knew, or ought to have known to have, had a history of
securities violations and/or an association with organized crime. The second
allegation alleged that, between 2003 and 2004, Octagon failed to notify
clients that there was a potential conflict of interest involving their
Registered Representative and Musicrypt Inc., a publicly traded company listed
on the TSX Venture Exchange, in which they were investing.
For its misconduct, Octagon has been fined $50,000.
For a complete summary of facts, please see IDA Bulletin 3634 at
www.ida.ca or www.accovam.ca.
The Investment Dealers Association of Canada (IDA) is the national
self-regulatory organization of the securities industry. The IDA's mission is
to protect investors, foster market integrity and enhance the efficiency and
competitiveness of the Canadian capital markets. The IDA enforces rules and
regulations regarding the sales, business and financial practices of its
Member firms and their approved persons. Investigating complaints and
disciplining Members and approved persons is part of the IDA's regulatory
For further information:
For further information: Alex Popovic, Vice President, Enforcement,
(416) 943-6904 or firstname.lastname@example.org; Jeff Kehoe, Director, Enforcement
Litigation, (416) 943-6996 or email@example.com