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Mortgage broker, firm fined by securities commission

A Victoria mortgage broker has been ordered to pay fines totalling $243,500 and is temporarily barred from trading in securities under a B.C. Securities Commission panel order released Thursday.
Photo - B.C. Securities Commission
B.C. Securities Commission office in Vancouver

A Victoria mortgage broker has been ordered to pay fines totalling $243,500 and is temporarily barred from trading in securities under a B.C. Securities Commission panel order released Thursday.

Lance Sanford Cook and his now-disbanded firm, CBM Canada’s Best Mortgage Corp., were found to have illegally distributed securities between June and December 2010.

Investors handed over money in exchange for unsecured interest-bearing promissory notes, the panel said. A total of $380,000 was raised from four investors, in contravention of a section of the Securities Act requiring a prospectus to be filed with the commission.

There was no evidence that Cook or CBM attempted to comply with securities laws, the panel said. They were not registered under the Securities Act and did not file a prospectus.

“We have found the respondents’ misconduct to be serious,” it said. “They were careless or reckless with respect to compliance with security laws. For that reason, we believe that they represent a serious risk to our capital markets and that significant market prohibitions are appropriate in the circumstances.”

Some investors were either retired or close to retirement, the panel said. Some refinanced their mortgages to borrow money to invest. “These investors have little opportunity to recover their losses,” the panel said in its decision.

Investors received only interest totalling $161,500, the panel said. That means the respondents were enriched by $218,500.

Cook and CBM have been ordered to pay $218,500 to the commission. That money, if paid, could then be returned to investors via a claims process. The panel also imposed a $25,000 administrative penalty.

Breaches of the act by Cook and CBM are especially serious because they promoted themselves as a mortgage brokerage, but instead convinced investors to put money into a completely different product, the panel said.

Cook is also banned from trading in securities (with limited exceptions), serving as a director, officer, or promoter, or serving as a consultant or manager in securities markets and in investor relations activities.

The bans are in effect for five years or until Cook pays the fines.

CBM is also barred for five years for the same activities.

Cook and CBM sent the panel emails which disagreed with some of the facts cited in its findings. The emails said Cook, who went through bankruptcy in late 2014, is impecunious and can’t pay financial sanctions, the panel reported.

The securities commission, Cook said, should not act as a “bill collector” for investors who had their claims against him expunged under the bankruptcy proceeding, according to the panel’s report.

Cook also maintained that his actions did not fall under the Act’s jurisdiction.

cjwilson@timescolonist.com