A Victoria mortgage broker is facing fines and possible expulsion from the security markets after a B.C. Securities Commission panel found he illegally distributed securities.
Lance Sanford Cook and CBM Canada’s Best Mortgage Corp. were found to have convinced four investors to invest money with him or with CBM in exchange for unsecured interest bearing promissory notes.
Cook, whose company was dissolved in 2014 for failing to file annual reports, faces administrative penalties of up to $1 million per contravention, market prohibition and having to pay back money obtained by contravening the Securities Act.
The BCSC said Cook and CBM have never been registered under the Securities Act, nor have they ever filed a prospectus under the act.
The panel found Cook and CBM engaged in illegal distributions between June and December 2010.
It found Cook was responsible for six distributions of securities to four investors for total proceeds of $380,000 and that CBM was responsible for three distributions of securities to two investors for total proceeds of $180,000.
The panel determined Cook was liable for CBM’s distributions.
“The evidence is clear that Cook was the controlling mind and management of CBM,” the panel wrote in its findings. “He clearly authorized, permitted, or acquiesced to CBM’s contraventions.”
In written submissions to the panel, Cook argued the promissory notes were not securities and that the investors were either close personal friends or close business associates and therefore he did not have to file a prospectus.
Both of those assertions were dismissed by the panel, and in its findings it noted the investors “categorically denied being close personal friends or close business associates of Cook.”
Sanctions are still being determined.
