An Ontario man is facing both criminal charges and an administrative hearing into securities fraud allegations brought by the Ontario Securities Commission (OSC).

The OSC announced Monday that Keith Summers of Kitchener, Ont. has been charged with one count of fraud and one count of uttering a forged document, following an investigation by the OSC’s Joint Serious Offences Team (JSOT), which is a collaborative effort of the OSC, the RCMP and the OPP. He also faces regulatory allegations in the case.

The allegations have not been proven in either venue. His first court appearance concerning the criminal allegations is scheduled for March 6 at the Ontario Court of Justice in Toronto. The first date for the regulatory proceedings is March 27.

According to the commission, an investigation into the activities of Summers and his investment fund companies, Tricoastal Capital Partners LLC and Tricoastal Capital Management Ltd., was launched in July last year. It says that inquiry found that he “allegedly sold Tricoastal securities and defrauded investors through fraudulent use of their funds, and fraudulently hid trading losses.” It also alleges that the firms issued financial statements as part of the scheme.

According to the OSC’s allegations, the firm raised about US$4.7 million from nine investors in order to generate returns from an exchange traded fund (ETF) investment strategy. It alleges that when the strategy began experiencing volatility in August 2011, “Summers began significantly under-stating [its] poor performance”; that he later switched the strategy, without informing the investors; and, that it suffered heavy trading losses with the new strategy.

“To conceal these losses, Summers continued to produce false monthly statements that did not accurately reflect the actual investor holdings by reporting gains each month when the fund sustained losses or was not trading,” it says in its regulatory allegations.

The OSC also claims that after one of the investors requested audited financial statements in early 2013, “Summers created a false set of audited financial statements for the year ended December 31, 2012 on the letterhead of a fictitious auditor.”; which were then sent to investors.

As a result, the OSC alleges that the respondents in the case engaged in fraud, made prohibited representations, and provided information to investors that was false, inaccurate and misleading. It also alleges that they traded without registration and distributed securities without a prospectus.

The commission says that investors have lost approximately US$2.1 million in the case. It reports that approximately US$572,000 was paid back to investors, and that another US$1.4 million is being held in brokerage accounts that are frozen by regulators. The OSC also notes that Summers has cooperated with its staff throughout the course of this investigation.