The Ontario Securities Commission (OSC) has ruled that an unregistered firm claiming to offer securities trading was fraudulent.
The OSC ruled today that a firm, Blackwood & Rose Inc., that purported to offer securities trading, its founder, Steven Zetchus, and an employee, Justin Kreller, violated securities laws by trading without registration, and perpetrating a fraud on investors. The accused didn’t participate in the hearing.
According to the decision, Zetchus incorporated Blackwood in August 2012 and began portraying the firm as a “specialized boutique firm” engaged in the business of securities trading. It says that they “held themselves out as engaging in the business of trading in securities and through misrepresentations, deceit and other fraudulent means” soliciting U.S. investors.
Among other things, the decision notes that the respondents in the case solicited U.S. residents to buy securities in several companies including Barrick Gold Corp. and Dundee Precious Metals Inc., claiming that they “had purchased the shares in Dundee and Barrick from a distressed brokerage and offered to sell the shares below their market value.”
While no funds were raised from these solicitations, the OSC says that the scheme came to the regulator’s attention after an examiner in the securities division of the Wisconsin Department of Financial Institutions was solicited by a representative for the firm.
Ultimately, the commission concluded that the respondents traded without registration and perpetrated a fraud on investors. Sanctions will be handed down in the case following a subsequent hearing.