The Ontario Securities Commission found that four men violated securities laws by selling shares in Andromeda Media Capital Corp. with out being registered.

In a decision handed down October 12, the OSC found that Joseph Allen and his employees Abel da Silva, Chateram Ramdhani and Syed Kabir undertook a sales program for the shares in Andromeda Media Capital Corp. through an Offering Memorandum for the sale of shares to accredited investors under Rule 45-501 of the Ontario Securities Act.

They obtained names of potential investors from a purchased list, sent investors a glossy brochure and a summary of the offering, and made follow-up phone calls to potential investors. If a potential investor agreed to make a purchase, they sent the investor an invoice for the purchase price, together with a subscription agreement.

The four men collected and forwarded to Andromeda signed subscription agreements and photocopies of investors’ cheques payable to Andromeda.

Collectively, they sent approximately 30,000 brochures to potential investors and made approximately 1,000 phone calls per week to potential investors. Through their sales effort, the Andromeda securities offering raised $1,080,000 from approximately 240 investors.

Allen was paid $600,624 in total fees or commissions on those sales. In turn, Allen paid a commission to his employees of 20% of the funds collected by them from sales of Andromeda shares.

The OSC found that, in conducting these trading activities without being registered under the Act, the four men violated the registration requirements for market intermediaries. The commission also found that they participated in a distribution of securities to investors without a prospectus or preliminary prospectus being filed and without an exemption being available to them. The OSC further found that Allen did not, at any time, disclose to investors that he or his employees would receive commissions on the sale of Andromeda securities, nor the rate of the commission.

“We are aware that some people are in the business of selling private placements to accredited investors without proper registration under the Act. This decision is a clear message that they are breaking Ontario securities law by doing so” said Michael Watson, director of enforcement.

A hearing in respect of the sanctions to be imposed will be scheduled in the near future.