A hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) has banned a Toronto broker for “manipulative and deceptive trading” and ordered him to pay $100,000 in fines and costs.

On February 22, the panel accepted a settlement agreement between IIROC staff and David Francis Shep.

The Investment Dealers Association of Canada formally initiated the investigation into Shep’s conduct on Aug. 12, 2004.

The violations occurred when Shep was a registered representative with the Toronto branch of Desjardins Securities Inc.

In the settlement agreement, Shep admitted that between Nov. 4, 2002 and May 4, 2005, he failed to disclose that he was actively and closely involved in the affairs of Second Stage Ventures Inc. (SSVT), subsequently called Dermisonics Inc, a Nevada company whose shares were traded on the National Association of Securities Dealers’ Over-the-Counter Bulletin Board (OTC:BB).

Shep also admitted that he facilitating trading creating a misleading appearance of increased price and volume constituting manipulative and deceptive trading in SSVT/Dermisonics.

In addition, Shep provided account information to a person who was not authorized in writing to receive such information for an account in the name of Caledonia Corporate Management Group Ltd. (Caledonia); and failing to carry out his duties as gatekeeper and facilitating questionable activities in Caledonia’s account.

Shep also admitted that he violated Investment Dealers Association of Canada by-laws by answering questions untruthfully or incompletely that were asked by IDA staff investigators with respect to the extent of his involvement in SSVT/Dermisonics.

The hearing panel imposed a permanent ban on Shep from receiving registration approval in any capacity with any dealer member of IIROC. It also ordered him to pay a fine of $80,000 and costs of $20,000.

Shep is no longer a registrant with an IIROC-regulated firm.

The hearing panel will issue its reasons and decision at a later date.

IE