Following a hearing, the executive director of the British Columbia Securities Commission (BCSC) reduced the administrative penalty imposed on a corporate director for failing to comply with insider reporting requirements, after concluding that the original penalty was excessive.
In June, the BCSC imposed a $70,000 penalty on Michael Derek Townsend — who was a director for four reporting issuers — for failing to file insider reports on time between October 2020 and June 2024 involving 528 transactions in $1.6 million worth of securities.
Townsend appealed the sanction, arguing in written submissions that the penalty was too high, and that a penalty of $35,000 to $40,000 would be more appropriate, according to the regulator’s order.
Among other things, he argued that the breaches were inadvertent, that they didn’t harm other investors or benefit him financially and that the penalty was disproportionate.
BCSC staff maintained that the original $70,000 penalty was appropriate in the case, and that cutting the penalty to the range suggested by Townsend wouldn’t properly reflect the fact that he previously (in 2007) settled allegations involving insider reporting failures.
Ultimately, the executive director agreed that the penalty was excessive, but declined to adopt Townsend’s recommended sanction, ruling that he must pay a $60,000 penalty. He also paid $10,300 in late fees.
“I acknowledge that $70,000 is a substantial sum for inadvertent late filings and that Townsend paid his late fees. On the other hand, this is a repeat contravention,” the executive director noted in his decision.
Citing the sanctions imposed in other similar cases, the BCSC found that a $10,000 reduction from the original penalty is “in the public interest,” it said.