The Ontario Securities Commission (OSC) has handed down 10 year trading and director and officer bans, along with monetary sanctions, in an illegal distribution case.
The OSC Thursday issued its decision on sanctions in its case against MRS Sciences Inc. (MRS), and several individuals who were found to have traded without registration and distributed securities in the company without a prospectus. It ordered that the company cease trade permanently, and it imposed 10-year trading bans and director and officer bans on the individuals involved.
In handing down the trading bans, the OSC said, “There were three MRS offerings and each one was found to be an illegal distribution. This is repetitive misconduct.”
It also ordered a total of $580,000 in administrative penalties against the four men, noting that there are a number of aggravating factors in the case which support the imposition of administrative penalties, including the fact that the conduct took place over a prolonged period of time; and, that they did not properly determine whether prospective investors were accredited investors.
However, the commission declined to order disgorgement in the case, saying that this would be “inappropriate”, as it found “there is too much uncertainty concerning the amounts obtained by … non-compliance with Ontario securities law.”
According to the decision, the respondents in the case argued that the penalties sought by OSC staff were disproportionate to the alleged misconduct. They argued that they did not intend to violate securities law, that they built a legitimate business, and that their violations don’t merit financial penalties or trading bans.
The panel disagreed, except on the question of disgorgement. In addition to the sanctions, it also ordered over $125,000 in costs against the respondents in the case, noting that the costs bill has been discounted as some of the OSC’s original allegations were not proven.