An Ontario Securities Commission (OSC) panel has ruled that Juniper Fund Management Corp. (JFM), and its president and CEO, Roy Brown, violated securities laws.

The OSC issued the panel’s decision Friday, which finds that Juniper and Brown violated securities laws by failing to keep proper books and records, acting as a fund dealer without registration, failed to provide full disclosure in a fund prospectus, that its fund provided prohibited loans and held prohibited investments, and that they breached their statutory duty of care.

A sanctions hearing is scheduled for June 14.

The panel ruled that OSC staff met their burden for proving the alleged violations against the firm, its funds, and Brown. “Many of the respondents’ failures to comply with Ontario securities law began with the poor recording of the funds’ activities. The respondents’ failure to maintain proper books and records led to the very lack of transparency that this commission is wary of and led to breaches of the Act,” it said in its reasons.

It found that Brown and JFM “engaged in improper encumbrances” by permitting one of its funds to guarantee JFM’s balances in its margin accounts, and that they “diverted funds by using the margin available in the [funds’] custodial account for their personal benefit”; thereby placing the fund’s assets at risk.

The panel also noted that there were mitigating factors in the case, including that, amid concerns that the funds might not be able to meet redemption requests, Brown contacted his counsel and the commission in an effort to resolve its issues. And when the commission indicated that its books and records were insufficient, he had his accountant audit the funds and create a reconciliation spreadsheet. And, it says he also attended four days of voluntary interviews at the commission, “which provided a significant amount of helpful information.”

“Ultimately, however, the respondents were not competent to participate in the capital markets and, as a result, caused financial harm to the funds’ unitholders,” it concludes.