An Ontario Securities Commission (OSC) hearing panel has ruled that monetary sanctions are not necessary against a woman who admits to violating securities laws by selling securities in what later turned out to be Ponzi scheme.

According to a transcript of oral reasons that was released Monday, the commission held a hearing to consider the appropriate sanctions for Sandra Gale, who admitted to breaching securities laws and violating the public interest in selling securities in Gold-Quest International, which later turned out to be a Ponzi scheme. The only question was whether she should face monetary penalties or not.

The decision indicates that OSC staff sought to require her to disgorge the $200,000 in commissions she generated by selling the illicit securities, and that she be ordered to pay a $50,000 penalty. She agreed to a 15 year trading and registration ban, but argued against further monetary sanctions.

In the circumstances, the panel agreed. It stressed that it would typically order disgorgement. “I want to make it crystal clear that in ordinary circumstances, disgorgement should be ordered in order to remove from a respondent that has been found to have breached the Act or acted contrary to the public interest, any gain resulting from those breaches,” the panel said, adding that “in vast majority of situations, an administrative penalty of this magnitude is appropriate” too.

However, it noted that there are mitigating factors in this case, including that “Gale was not the initiator of the investment products or the designer of those products. She did not know that this was a Ponzi scheme and that it was fraudulent. Gale had a genuine belief in the investments that not only she made, but that she encouraged others to make.”

It also noted that she is remorseful. “She has also not blamed anyone for her predicament, and has accepted responsibility for her misconduct,” it said, adding that she has cooperated too.

The panel also said that she will never be able to pay these amounts, adding that she owes more than $220,000 to the Canada Revenue Agency, four chartered banks, and other credit agencies. “She is not likely to get credit from anyone again. I believe that having an order for payment over her head will only complicate her life, and will not achieve any meaningful deterrence for others,” it said.

“Gale is now 71 years of age, she does not intend, and could not in any event, engage in the capital markets. She has no assets to her name and no realistic likelihood of gaining meaningful employment. Further, Gale lives on government pensions of about $1,500 dollars a month. In my view, asking her to disgorge $207,641.00 and pay $50,000 administrative penalty would be, for her, punitive,” it said.

It also reciprocated an order of the Alberta Securities Commission (ASC) against Gold-Quest, which has imposed a permanent ban on the trading of its securities; ordering that trading cease permanently in Ontario, too.