The B.C. Securities Commission has stayed penalties of more than $35 million on nine cases as a result of a related B.C. Court of Appeal decision on a pump-and-dump stock scheme case.
It wipes the penalties off the books for now, as they will only be re-visited, according to the securities commission, if a party makes an application to do so.
The decision to stay the penalties comes as the province’s market regulator is under scrutiny for its poor penalty collection record.
The orders to vary the penalties — one dating back to 2009 — was not made public through any announcement. Documents outlining the measures were posted on the securities commission website in mid-January.
In the variance orders, signed by BCSC chair Brenda Leong and vice-chair Nigel Cave, the commission said it is “in the public interest” to stay the penalty orders.
If a party makes an application to lift the stay, the commission “will consider whether the order is consistent with the [Appeal Court] judgment,” said the BCSC decision.
BCSC officials said they could not respond to questions Monday, and that included whether the commission had taken stay measures such as these in the past.
The decision to stay the penalties stems from a March 2017 B.C. Court of Appeal ruling that set aside a BCSC tribunal decision that ordered several B.C. residents who had orchestrated a pump-and-dump scheme to jointly pay back $7.3 million in fraudulent earnings.
Husband and wife Thalbinder and Shailu Poonian from Surrey and husband and wife Manjit and Perminder Sihota from Vancouver had appealed, arguing the BCSC tribunal had not established whether each had obtained a profit from the scheme and therefore could not make them jointly liable to pay back the $7.3 million.
The Appeal Court decided that the commission had not found what amount each of the Poonians and Sihotas had obtained from the pump-and-dump scheme and sent the decision back to the BCSC to make “factual findings” on who profited how much and determine if they should be made to pay back the $7.3 million.
A securities commission tribunal re-examined the issue in a hearing on Feb. 14 to determine who profited from the pump-and dump scheme, reserving its decision until a later date.
The mid-January decision to stay penalties in the wake of the Poonian/Sihota ruling included a $16-million order to pay back the proceeds of a Ponzi scheme perpetrated by Hal (Mick) Allan McLeod (who has since changed his name to Michael Smith), David John Vaughan, Kenneth Robert McMordie (also known as Byrun Fox) and Dianne Sharon Rosiek, outlined in a 2009 B.C. Securities Commission tribunal decision.
Another order that was stayed was for $5.433 million obtained by Theodore Ralph Everett, Robert H. Duke, Micron Systems Inc., and Independent Academies Canada as a result of securities misconduct, according to a 2014 BCSC tribunal decision.
The 2017 Appeal Court decision did not affect separate administrative penalties that were owed by the Poonians and Sihotas totalling $18 million. They have not paid those fines, according to sanction payment status reports.
Millions in BCSC administrative fines owed by the others — including McLeod, Vaughan, McMordie and Rosiek — also remain in place. None of these penalties have been collected either, among more than half a billion in unpaid B.C. Securities Commission penalties, according to a Postmedia investigation published last November.
The B.C. Securities Commission has acknowledged its poor collection rate, but said that is the nature of fraudulent activity. The perpetrators make collection difficult because they have usually spent or hidden the money, or fled. The province has told the commission to improve its penalty collections and bring forward proposals on how the province can modernize enforcement under the B.C. Securities Act
