Investors that lost money to an unregistered, offshore binary options trading scheme that was the target of enforcement action from the Ontario Securities Commission (OSC) can now make a claim for a share of the $300,000 recovered by the regulator.
In 2020, the OSC brought enforcement action against three Israeli brothers (David, Jonathan and Joshua Cartu) that operated a pair of binary options trading platforms — known as Beeoptions and Glenridge Capital. The platforms, the regulator alleged, illegally sold binary options to investors in Ontario between 2013 and 2017, taking in over $1.4 million from approximately 700 investors.
In a settlement with the OSC in 2021, David Cartu admitted to breaching Ontario securities law and agreed to pay a $300,000 administrative penalty to resolve the action against him.
After David Cartu settled with regulators, the case continued against his brothers. In 2022, the Capital Markets Tribunal ordered $3.3 million worth of sanctions against them, including $1.5 million in penalties, $1.4 million in disgorgement and $400,000 of costs.
According to the court filings, the sanctions ordered against Jonathan and Joshua Cartu still haven’t been paid, and the OSC isn’t expecting that they will pay anything, as their whereabouts “are unknown and any realizable assets have not been identified.”
However, the money that David Cartu agreed to pay under his settlement with the regulator has been received — and the Ontario Superior Court of Justice has appointed BDO Canada Ltd. to administer claims from investors that are eligible to share in those funds.
The receivership order appoints BDO to implement a claim process for investors that paid money to a pair of companies that were set up by Cartu to receive investors’ deposits into their binary options trading accounts, UKTVM Ltd. and Greymountain Management Ltd.
According to regulatory filings, UKTVM ceased operations in December 2014, and only processed $132,000 in binary options payments for Ontario investors; while Greymountain operated from 2014 until 2017, and processed $1.2 million before it entered liquidation.
Shortly after Greymountain closed up shop, the Canadian Securities Administrators (CSA) introduced a proposed ban on the sale of binary options to retail investors.
Under the court-ordered process, claims from investors must be received by March 6, and the funds will be paid out by June 15.