Regulators in B.C. have fined and banned a former corporate director for signing off on improper exemption distributions.

A hearing panel of the B.C. Securities Commission (BCSC) ordered that Daniel Grant McGee be banned for five years, must pay a $10,000 penalty, and disgorge $21,500, after it found that he breached securities laws. Specifically, last month, the panel ruled that when he was a director of Cinnabar Explorations Ltd., McGee signed exempt distribution reports for the sale of shares to seven investors when there was no prospectus exemption available.

“As a director of Cinnabar, McGee was responsible for ensuring that the claimed exemptions from prospectus requirements were in fact available. But he made no effort to do so. He admitted to signing the exempt distribution reports filed by Cinnabar without looking into whether the exemptions were available,” it said; adding that, “McGee’s misconduct is inherently serious and damages the integrity of the capital markets in British Columbia.”

The commission notes that the company claimed that the seven investors fell under the family, friends and business associates and accredited investor exemptions, but in fact they did not.

While the panel noted that McGee didn’t benefit financially from the violations, it says that investors were harmed. And, the panel says “McGee still does not grasp the requirements of the Act and his responsibilities as the director of an issuer raising capital. His carelessness in ensuring regulatory compliance, despite what he should have learned from past experience, indicates that he presents a risk to our capital market if he were allowed to continue in that market without restrictions. Further education and a market ban are warranted to protect the public.”

The panel ordered that he be banned from trading, acting as a director or officer of any issuer or registrant, acting as a promoter, and from engaging in investor relations, for five years. It also ordered that he pay the commission the $21,500 obtained as a result of the illegal activity, along with an administrative penalty of $10,000.