VANCOUVER, Nov. 5, 2014 /CNW/ - A British Columbia Securities Commission panel has fined David Michael Michaels $17.5 million for illegally advising clients, making misrepresentations, and perpetrating a fraud on hundreds of people, many of them seniors. The panel also ordered that Michaels be permanently banned from participating in B.C.'s capital markets.
In August 2014, a panel found that between June 2007 and December 2010, Michaels, a former mutual fund salesperson, illegally and fraudulently advised 484 clients to purchase over $65 million of exempt market securities (exempt market securities are securities sold under exemptions from prospectus requirements). The panel found that at least $40 million of the $65 million his clients invested is lost, and most of the rest remains at risk. Michaels was paid $5.8 million in fees and commissions for these activities.
In its sanctions decision, the panel noted that, "Michaels' business model was highly predatory in nature," and that he instilled trust in his clients and then betrayed that trust. The majority of his victims "have little or no opportunity to earn income from work or otherwise financially recover lost amounts".
The panel ordered that Michaels pay to the commission the $5.8 million in commissions he obtained as a result of his misconduct, as well as a fine of $17.5 million.
The panel also ordered that Michaels resign any position he holds as a director or officer of an issuer or registrant. He is permanently prohibited from trading in securities, purchasing securities or exchange contracts (with limited exceptions), 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.
You may view the sanctions decision on our website www.bcsc.bc.ca by typing David Michael Michaels, Michaels Wealth Management Group, or 2014 BCSECCOM 457 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
SOURCE: British Columbia Securities Commission
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