The Ontario Securities Commission (OSC) is accusing a pair of scholarship plan firms, and a couple of executives, of several securities law violations.
The OSC has set a hearing for January 28, to consider its recently released allegations against scholarship plan dealer, Global RESP Corp.; the plan’s investment manager, Global Growth Assets Inc. (GGAI); the ultimate designated person of both companies, Issam El-Bouji; and Global RESP’s chief compliance officer, Margaret Singh. The allegations have not been proven.
According to the allegations against them, OSC staff claim that Bouji and GGAI directed that over $30 million in funds received from plan subscribers be used to purchase subordinated notes of Pacific and Western Bank of Canada, and that Global Maxfin Capital Inc., another company owned by Bouji, received $2 million in finders’ fees/commissions as a result of these transactions. In doing so, the commission charges that Bouji and GGAI engaged in advising without registration; and it says that these transactions gave rise to conflicts of interest that were not referred to the plan’s independent review committee, nor were they disclosed in its prospectus.
The OSC also alleges that a compliance review of Global RESP found, among other things, that the scholarship plan dealer: failed to establish and maintain systems of control and supervision, failed to meet its suitability obligations, and failed to deal fairly, honestly and in good faith with its clients. As a result, the commission alleges that Bouji and Singh breached their supervisory obligations.
The OSC is alleging specific prospectus disclosure violations, registration violations; that GGAI failed to refer conflicts to its independent review committee, and that it failed to recognize the mandatory obligation to repay enrollment fees; that Global RESP failed to comply with suitability obligations, failed to deal fairly and honestly, and failed to establish and maintain systems of control and supervision. It also claims that Singh and Bouji breached their supervisory obligations.