An Ontario Securities Commission (OSC) hearing panel has ordered permanent bans and more than $2.65 million in financial sanctions against the perpetrators of an illegal distribution.
The panel handed down its decision on sanctions on Thursday in a case involving Portfolio Capital Inc. and two individuals, David Rogerson, president of the company, and Amy Hanna-Rogerson, the sole director of the firm. The three parties allegedly raised approximately US$980,000 and $544,000 from more than 200 investors for shares in PlusPetro Inc. (Panama), a purported startup company. At an earlier hearing, an OSC hearing panel found that the three parties violated securities law by engaging in unlawful trading, distributing securities illegally and that Rogerson made misleading statements to investors.
Now, the hearing panel has ordered that all three parties be banned permanently from the markets and that they must disgorge $1.7 million combined. Rogerson was also ordered to pay a $500,000 penalty while Hanna-Rogerson received a $150,000 penalty. In addition, the OSC hearing panel ordered the parties to cover costs of $309,812, with $150,000 of that payable by all three respondents and the remaining $159,812 payable by Rogerson and the firm.
The decision notes that Rogerson and Hanna-Rogerson accepted the market bans levied against them at the earlier hearing, but contested the monetary sanctions sought by OSC staff, arguing that they were so large that they amounted to punishment, which regulatory proceedings are not supposed to deliver.
However, the OSC panel found that the amounts were not punitive. In addition to ordering disgorgement, it said that a $500,000 penalty is appropriate for Rogerson, who, it said, “defrauded approximately 200 investors of at least $1.7 million and, in doing so, demonstrated indifference amounting to contempt for Ontario’s securities laws. The administrative penalty that staff seeks is reasonable and consistent with previous cases involving similarly sized frauds.”
The OSC panel also levied a penalty against Hanna-Rogerson, noting that “it is entirely appropriate that an administrative penalty be imposed on Hanna-Rogerson as a signal to her and to like-minded individuals that the [OSC] views fraudulent activity as one of the most serious breaches of the [Securities] Act, which will result in serious consequences.”