The British Columbia Securities Commission has fined a B.C. couple $60,000 for selling exempt market securities to more than 100 clients without being properly registered.

Jacob Friesen and his wife Irene Friesen agreed to the penalties plus other restrictions in a settlement. A $50,000 penalty was imposed on Jacob Friesen, of which $15,000 represents investigation costs. Irene Friesen was assessed a sanction of $10,000, half of which are investigation costs.

The two, who were principals of Friesen Securities and Friesen Financial Services of White Rock, B.C., were also prohibited from serving as compliance officers for any registrant for 10 years.

Jacob Friesen is prohibited from serving as a partner, director or officer of any registrant for at least five years and until he enrols in a course for partners, directors and officers. Irene Friesen is prohibited from serving as a partner, director or officer of any registrant for at least two years and until she enrols in a course for partners, directors and officers.

Thee Friesens came under scrutiny during a routine examination by commission staff in 1997. BCSC staff described most of the securities as highly risky and speculative and subject to restrictions that made them difficult if not impossible for the clients to resell. Despite warnings from BCSC staff, Jacob Friesen, who was restricted to selling only mutual funds, continued to advise clients to buy the securities.

“Some of the trades in exempt securities by Friesen for his clients were not suitable for those clients based upon the risk tolerance, level of investment knowledge, age and stated investment objectives of those clients,” staff said.

Evidence showed the couple hosted a number of seminars and sales presentations for their clients and distributed a newsletter to clients and other investors called the Friesen Financial Voice, which contained promotional ads of the exempt securities. Some of the clients who bought the securities have suffered financial losses or devaluation of their investment portfolios.

Commission staff found several other violations of the Securities Act including improper reporting of the sale of securities, record-keeping deficiencies and missing or deficient know your client forms. The couple have been subject to restrictions on their registration to sell securities since 1999.

In the settlement, Jacob Friesen was prohibited from selling exempt market securities for at least five years and Irene Friesen for at least two years. If they become fully registered, they are to be subject to strict supervision by their employer for six months.