The Ontario Securities Commission (OSC) has settled allegations of unregistered trading and illegal distribution against a two people who are also facing criminal fraud charges in the case.
The OSC said Friday that it has reached a settlement agreement with April Vuong and Hao Quach concerning allegations that they breached securities laws in raising $12.4 million from investors for their software consulting firm, Systematech Solutions Inc., in exchange for promissory notes that promised guaranteed annual returns.
According to the settlement, approximately $8 million of the money raised was repaid to investors, $3.6 million was lost in trading accounts, and approximately $691,000 was used for personal expenses by Vuong and Quach. In the settlement, they admit to breaching securities laws by trading without registration and carrying out an illegal distribution.
As part of the deal, Vuong and Systematech are cease traded for 15 years, while Quach agreed to a 10 year ban. The bans also apply to registration and serving as a director or officer, with the exception that they are allowed to remains as directors or officers of Vectorspace Game Studios Inc. They also agreed to an administrative penalty of $300,000, and to pay $5.6 million in disgorgement.
According to the settlement, the deal with the OSC does not address any allegations of fraud or misrepresentation, as they also face criminal charges in the case. The deal notes that on Oct. 16, Vuong and Quach were criminally charged with fraud over $5,000. It also says that they maintain that they did not commit fraud, and that they intend to vigorously defend against the criminal charges.
In the meantime, they have agreed to settle with the OSC in an agreement that “does not include any alleged misrepresentations or fraud on the basis that, depending on the outcome of the criminal charges, staff will be entitled to commence a new proceeding,” it notes.