Stacked white books on rules and regulations

Securities regulators are accusing a real estate firm and its owners of violating securities rules in connection with the sale of $25 million in mortgage securities, which the regulators allege involved registration, prospectus and know-your-client (KYC) violations.

The Ontario Securities Commission (OSC) announced on Monday that it will hold a hearing on March 28 to consider a possible settlement with a real estate firm, Clifton Blake Asset Management Ltd. (CBAM), and the firm’s owners, concerning allegations that they violated securities rules when selling investments in a pooled mortgage fund, the Clifton Blake Mortgage Fund Trust.

The allegations have not been proven, and the terms of the settlement will only be released if the agreement is approved by the commission.

The OSC alleges the various respondents in the case breached securities rules when selling approximately $25 million worth of units in CBMF Trust to 144 investors without proper registration.

Among other things, the OSC charges that the respondents relied on certain prospectus exemptions, such as the accredited investor and friends and family exemptions, in distributing units of the trust, but they didn’t always comply with the requirements for those exemptions.

It also alleges that the respondents didn’t have proper KYC procedures in place to ensure that the trades were suitable, under securities rules.