The Ontario Securities Commission (OSC) has permanently banned an Ontario man from the markets, based on a securities fraud conviction obtained in the United States.

The OSC has issued its decision in its case against New Futures Trading International Corp. and Fernando Honorate Fagundes (also known as Henry Roche), imposing permanent trading, registration, and director and officer bans against both Fagundes and the firm.

The sanctions come in response to convictions in 2012 by the U.S. District Court in New Hampshire for violating securities laws.

The U.S. Securities and Exchange Commission (SEC) alleged that Fagundes and New Futures raised at least $1.3 million selling high-yield promissory notes to at least 14 investors in the U.S. and Canada, promising that their funds would be invested in bonds, treasury notes and/or 10 year Treasury note futures contracts, as well as in New Futures. Instead, the SEC charged that Fagundes used approximately $937,000 of investors’ money to make ‘interest’ payments to prior investors in the scheme, and that he misappropriated another $359,000 to support his lifestyle and to operate a horse breeding ranch in Kendal, Ontario.

In May 2012, the New Hampshire district court convicted them and ordered that Fagundes and New Futures: are liable for disgorgement of $1,242,972, prejudgment interest of $40,917; and, a civil penalty of $150,000.

The OSC then moved to ban them in Ontario. The decision released today notes that neither the firm, nor Fagundes, filed evidence or made submissions in the case.

Ultimately, the commission ruled in favour of OSC staff, deciding to recognize the U.S. court’s decision and impose its own sanctions.

“In my view, the conduct of the respondents… was abusive of the capital markets fully warranting the sanctions imposed by the U.S. court. Had such conduct occurred in Ontario, it would have constituted contraventions of the Act,” it said. “Given the past conduct, the absence of mitigating factors and the failure to provide any rational explanation, it is appropriate to make an order in the public interest to prevent the respondents from accessing the capital markets in Ontario.”