The B.C. Securities Commission has found an Abbotsford-based company guilty of making misrepresentations in soliciting more than $1.3 million from B.C. investors for a proposed private, surgical hospital in Coquitlam.

In its decision, released today, the BCSC ruled that Specialized Surgical Services Inc. made misrepresentations in two offering memorandums used to raise $1,332,000 from investors.

The misrepresentations included failure to include facts that could affect the price of the securities being sold, as well as updated financial statements that called into question the company’s ability to operate as a going concern. The company also failed to disclose conflicts of interest, mention changes in the company’s directors and officers, and provide information about pending litigation against the property bymortgage holder.

The commission panel found that two of Specialized Surgical’s directors — James Swanney and David Steinart — breached their duties as directors by permitting the company to make the misrepresentations.

The commission also found that Swanney perpetrated a fraud on Rosalind Collins, one of the investors in the company: He assisted in a transaction in which Steinart thought he was selling his shares at $0.15 while Collins bought them for $1.00. The panel concluded that Swanney acted dishonestly.

“We are also of the view that Collins suffered deprivation as a result of the transaction. She paid $50,000 for shares that were worth only $7,500 at the time.” The commission settled with several respondents prior to the hearing. The commission will hear further submissions before issuing orders.