VANCOUVER, Feb. 25, 2015 /CNW/ - A British Columbia Securities Commission panel has fined and ordered bans against two real estate developers for illegally distributing securities. One of them, a former mutual fund salesperson, was also sanctioned for committing fraud and breaching a BCSC order prohibiting him from engaging in certain conduct in B.C.'s capital markets.
In September 2014, a commission panel found that between October 2006 and August 2010, Michael Jerome Knight, Jeffrey Karl Wiegel, 0772835 B.C. Ltd. (835 Ltd.), Local 1661 Building Inc. (Local Inc.), and Almaval Building Inc. (Almaval) sold securities without a prospectus and without being registered. The panel determined that:
- 835 Ltd., Wiegel and Knight illegally raised approximately $1.9 by distributing securities of 0772835 B.C. Ltd. to 31 B.C. residents; and
- Local Inc., Wiegel and Knight illegally raised approximately $1.7 by distributing securities of Local 1661 Building Inc. to 19 people, the majority of whom were B.C. residents.
The panel also found that Knight, a mutual funds registrant between 1992 and 1994, breached an April 5, 2004 order prohibiting him from engaging in acts in furtherance of a trade and investor relation activities for a period of three years. Furthermore, the panel found that Knight committed fraud.
Discussing the harm to investors caused by Knight and Wiegel, the panel wrote, "The respondents' misconduct has resulted in significant harm to investors. The investments in 835 Ltd. and Local 1661 have been lost. The losses for each investor are generally significant in that many of the individual investors lost amounts between $50,000 and $100,000."
Knight was ordered to pay a $300,000 administrative penalty to the commission, and to resign any position he holds as an officer of a director of an issuer or registrant. The panel ordered that Knight be permanently banned from trading in securities, purchasing securities or exchange contracts, and from becoming or acting as a director or officer of any issuer or registrant. He is also permanently prohibited from becoming or acting as a registrant or promoter, from engaging in investor relations activities, and from acting in a management or consultative capacity in connection with the securities market.
Wiegel was ordered to pay a $100,000 administrative penalty to the commission, and to resign any position he holds as an officer of a director of an issuer or registrant. The panel ordered that Wiegel be banned from trading in securities, purchasing securities or exchange contracts, and from becoming or acting as a director or officer of any issuer or registrant for a period of ten years. He is also prohibited, for the same period, from becoming or acting as a registrant or promoter, from engaging in investor relations activities, and from acting in a management or consultative capacity in connection with the securities market.
The panel also ordered the respondents (except Almaval) to disgorge to the commission the monies obtained as a result of their misconduct:
- $1,935,000 (distributions relating to 835 Ltd.) – 835 Ltd., Wiegel and Knight
- $1,690,000 (distributions relating to Local Inc.) – Local Inc., Wiegel and Knight
Knight, Wiegel and the respective corporate respondents are jointly and severally liable for these amounts. All of the corporate respondents have been permanently cease-traded.
In a dissenting sanctions decision, BCSC Vice Chair Nigel Cave found that the evidence did not establish that Knight and Wiegel directly or indirectly received amounts, or the benefit of amounts, obtained through their misconduct. As a result, Cave found that an order against Knight and Wiegel to disgorge these amounts was not appropriate.
You may view the sanctions decision on our website www.bcsc.bc.ca by typing Jeffrey Karl Wiegel, Michael Jerome Knight, Streamline Properties Inc., 0772835 B.C. Ltd., Local 1661 Building Inc., Almaval Building Inc., or 2015 BCSECCOM 66 in the search box. Information regarding disciplinary proceedings can be found in the Enforcement section of the BCSC website.
Please visit the Canadian Securities Administrators' Disciplined Persons List for information relating to persons disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).
About the British Columbia Securities Commission (www.bcsc.bc.ca)
The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:
- A securities market that is fair and warrants public confidence
- A dynamic and competitive securities industry that provides investment opportunities and access to capital
Learn how to protect yourself and become a more informed investor at www.investright.org
SOURCE British Columbia Securities Commission
For further information: Media Contact: Richard Gilhooley, Media Relations, 604-899-6713; Public inquiries: 604-899-6854 or 1-800-373-6393 (toll free)