Closeup of mallet being hit on stacked coins at table in courtroom

An Ontario Securities Commission (OSC) hearing panel ordered more than $5 million in sanctions, along with industry bans, on Wednesday in connection with a fraud involving exempt-market dealer Quadrexx Hedge Capital Management Inc. (QHCM), Quadrexx Secured Assets Inc., and two former executives of the firms, Miklos Nagy and Tony Sanfelice.

Last year, the panel found that Quadrexx and the two men perpetrated a fraud on investors, along with other violations.

The sanctions announced Wednesday include:

  • permanent trading and registration bans;
  • monetary sanctions of approximately $5.35 million, including almost $2.5 million in disgorgement;
  • administrative penalties of $600,000 against each of the executives;
  • a $300,000 penalty against QHCM;
  • $800,000 in disgorgement ordered against Nagy and Sanfelice; and
  • $550,000 in costs.

The hearing panel, in its reasons and decision on sanctions, noted that the respondents intend to appeal the OSC’s merits decision of Feb. 6, 2017, which found that they violated securities law. The respondents also argued against the characterization of their actions as fraud.

However, the “Commission’s findings of multiple frauds cannot be dismissed as mere ‘labels’, or disregarded. Those findings reflect a determination that the respondents engaged in dishonest activity that placed investors at risk and resulted in significant losses,” the hearing panel says in its decision on sanctions.