IIROC orders hearing for First Leaside founder, sales rep

The regulator alleges that the pair “misrepresented the risk level of certain securities, issued and distributed misleading marketing materials, failed to ensure that recommendations were made and orders accepted in accordance with clients’ risk tolerances, and preferred their own interests ahead of their clients’ interests in soliciting sales of certain securities.” It also charges that Phillips failed to address a conflict of interest with his clients in the best interests of his clients.

None of the allegations have been proven.

Earlier this year, the Ontario Securities Commission (OSC) also leveled allegations against Phillips and Wilson, charging that they raised almost $19 million from investors without disclosing that the company was in financial peril. Those allegations haven’t been proven either.

The firm was cease traded in November of last year; and, in February of this year, a court-supervised wind-up began.

Separately, an Ontario court released its decision granting a motion on behalf of the bankrupt First Leaside firms against Phillips, blocking the sale of his home.

Ontario’s Superior Court of Justice ruled in favour of the firms in their effort to have a Certificate of Pending Litigation (CPL) issued against Phillips’ home — a move that prevents it from being sold until litigation is resolved.

According to the decision, Phillips’ wife, who owns the home, had agreed to sell the property for $2.235 million, in a deal that was scheduled to close on Oct. 1. It says they are seeking to sell the property to fund their living expenses.

However, the firms are suing Phillips and his wife claiming that they caused them to make improper payments for renovations, maintenance and improvements, and rent, on the property (which also served as its head office). That case has yet to be heard, so the firms were seeking to ensure that the property can’t be sold in the meantime.

Without ruling on the merits of the case, the court found that the firm established that there is “a triable issue”, and notes that if the plaintiffs were to win, there’s a “strong possibility” that they “would effectively be without any practical remedy” if a CPL is not granted.