The British Columbia Securities Commission (BCSC) has sanctioned the operator of a mortgage investment company after finding that both he and the firm misled investors.
A BCSC hearing panel ordered that Donald Bergman of Salmon Arm, B.C., who ran All Canadian Investment Corporation (ACIC), pay a $130,000 penalty. He was banned 15 years and the company was permanently banned.
The penalties follow a disciplinary hearing last year that concluded ACIC and Bergman made misrepresentations to investors and included false or misleading statements in offering memorandums used to raise $1.6 million from investors.
According to the panel, the business failed and has been in liquidation since 2017.
The BCSC estimated that investors, “many of whom are elderly,” lost between 82% and 96% of their money.
The regulatory hearing panel found that investors were misled because some of the loans ACIC provided were not secured as promised.
The panel noted this wasn’t the only reason for investors’ losses, but “it was clear that ACIC’s failure to register certain of its mortgages impacted the financial recovery of its mortgage investments.”
“Many of the investors were elderly and will have little opportunity to recover the funds they invested in ACIC,” the panel said.
The fact that Bergman was previously registered between 1984 and 2000 (as a mutual fund rep and as a securities rep, among other things) represented an aggravating factor in the case.
“Bergman’s registration in these various capacities should have made him aware of the requirements of the Act and the importance to investors of accurate and complete disclosure in making investment decisions and the effect of a failure to do so on investor confidence necessary for fair and efficient markets,” it said.
The BCSC sought a $200,000 penalty against Bergman and a $20,000 disgorgement order, along with a 15-year ban.
According to the panel’s ruling, Bergman didn’t oppose the ban but did contest the proposed penalty and disgorgement order.
Ultimately, the panel determined that a $130,000 penalty was appropriate. It denied the request for a disgorgement order, ruling that, while Bergman was indirectly enriched by the misconduct, enforcement staff “failed to establish a reasonable approximation of the amounts obtained by Bergman as a result of his contraventions.”