An Ontario Securities Commission (OSC) panel has handed a 15-year trading ban and almost $2.6 million in monetary penalties to a man it found traded without registration and illegally distributed securities.

Back in August 2011, the OSC ruled that Joe Feng Deng and his firm, MP Global Financial Ltd., traded without registration and distributed securities without a prospectus or an exemption.

On Tuesday, the OSC handed down its penalty decision in the case, including a 15-year ban on trading, from registration and from serving as a director or officer; a $250,000 administrative penalty; $2.2 million in disgorgement; and, $150,000 in costs.

According to the decision, MP raised more than $25 million from investors, which was to be used to fund currency trading, largely from the Chinese-Canadian community in Toronto. However, of the $8.2 million that was deposited into the MP Group trading accounts, $7.75 million was lost through unprofitable trades by March 2009, and redemptions were suspended at that time.

The panel noted that this was not a case of deliberate fraud. “In my view, the respondents’ behaviour was not predatory or rapacious, however it is conduct of serious concern where Mr. Deng took large amounts of funds from investors and then was not forthcoming with said investors when all of their funds were lost,” the decision notes, adding that this is unacceptable for anyone, particularly a former registrant.

Nevertheless, the panel handed down softer penalties than OSC staff sought. They asked for permanent bans, a penalty of $500,000 to $750,000, almost $8 million in disgorgement, and over $300,000 in costs.

In explaining its lesser disgorgement order, the panel said in its decision, “This was not a case that involved an allegation of fraud or a sham investment scheme of any kind, and therefore a 100% disgorgement would verge on the punitive side. In my view, it is appropriate that a disgorgement order in these circumstances relate to the amount obtained by Mr. Deng that he used for his own personal benefit.”

Regardless of the penalties handed down, it appears unlikely they will be paid. The decision indicates that MP lost its business and has no assets, and that Deng lost his marriage, home, has no meaningful assets or employment prospects, and has gone back to live with his family in China who are supporting him.