The Ontario Securities Commission (OSC) has permanently a Burlington, Ont.-based fund manager who pled guilty to fraud earlier this year in connection with a failed investment scheme.
The OSC Friday approved a settlement with Keith Summers, and his firms, Tricoastal Capital Partners LLC and Tricoastal Capital Management Ltd., agreeing to permanent trading and registration bans, after he admitted to one count of fraud over $5,000 and one count of uttering a forged document in a parallel criminal proceeding back in June. A sentencing hearing in that case is scheduled for September 22.
According to an agreed statement of facts with the commission, and facts contained in his guilty plea, Summers raised US$4,690,000 from investors in the TCP Fund to trade index-linked ETFs. He lost almost US$1.6 million in trading, and fraudulently withdrew over US$900,000 from the fund; US$572,341 was repaid in redemptions to investors; and the fund had a balance of US$1.4 million when the fraud was discovered. To conceal the losses, he falsified monthly statements and tax forms, and forged an audited financial statement.
After the fraud was discovered by one of the investors, Summers self-reported his illegal activities to the OSC in the summer of 2013. He then cooperated with the subsequent investigation that was launched by the OSC’s Joint Serious Offences Team (JSOT), along with the RCMP.
In settling with the OSC, Summers admitted that he violated securities laws and acted contrary to the public interest by trading without registration, a prospectus, or exemption, making misrepresentations to investors, and misappropriating investor funds. The settlement cites several mitigating factors in the case, including the self reporting, that he cooperated with the investigation, and the guilty plea, among other things.
The settlement notes that if a restitution order is not made in the criminal case, the OSC may apply to amend the agreement to secure disgorgement for investors.
In August, the U.S. Securities and Exchange Commission permanently banned Summers for fraudulently raising funds from investors. (See SEC bans Canadian fund manager, investmentexecutive.com, August 14, 2014.)