By James Langton

(November 28 – 12:20 ET) – Canada Stockwatch reports that the Canadian Venture Exchange has filed suit against Jean-Claude Hauchecorne in the British Columbia Supreme Court to collect the penalties levied against him 18 months ago.

Hauchecorne, the former branch manager of Pacific International Securities’ Calgary office, was sanctioned for his role with eight offshore accounts and his dealings with organized crime in the United States. The case focused industry attention on determining beneficial ownership of trading accounts.

According to Stockwatch, Hauchecorne has yet to pay any of the $432,484.82 he owes in penalties to the CDNX. On June 2, 1999, the Vancouver Stock Exchange, the predecessor to CDNX predecessor, fined Hauchecorne $200,000. It also ordered him to pay disgorgement of $95,000, and the costs of the hearing. The VSE hearing panel found Hauchecorne liable for 21 infractions against its rules.

The collection suit allegations filed by the CNDX have not yet been proven in court and no statement of defence has yet been filed.

Hauchecorne appealed the VSE’s verdict to the B.C. Securities Commission, and last December the commission ruled against him. Not only did the BCSC reject his claim that the VSE hearing panel was biased, it added four counts to the VSE’s charges. In rejecting Hauchecorne’s bias claim, the BCSC found him liable for four additional infractions, which the hearing panel had dismissed.

Hauchecorne had argued that comments made by the hearing panel chairman revealed the chairman was biased against him. He also argued that the hearing panel improperly admitted into evidence a transcript of evidence given against him in court, and that the VSE’s reasons for its decision were inadequate. Hauchecorne also argued that the penalty was excessive.

The BCSC dismissed all these arguments and reversed the decision on four infractions to do with KYC rules. The commission emphasized the importance of a broker’s learning the identity of a client and looking “behind any corporate veil to determine who has a financial interest in the account.” It also noted, “The events of this case demonstrate very clearly the risks that can be encountered by a broker and his firm when the broker fails to learn the identity of his client.”