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by Mike Caswell
The U.S. Securities and Exchange Commission has won penalties totalling $8.8-million against Montreal's Hans Peter Black and his company, Interinvest Corporation Inc. (All figures are in U.S. dollars.) A federal judge imposed the sanctions on Tuesday, after finding that Mr. Black improperly placed money from clients of his Boston-area investment advisory service into four TSX Venture Exchange listings. Client losses amounted to $12-million.
The sanctions are contained in a pair of orders released on Tuesday, Dec. 27, by U.S. District Judge Mark L. Wolf. He described Mr. Black's conduct in far from flattering terms. "The defendants breached their fiduciary duty to their clients by engaging in a prolonged, fraudulent scheme to channel investors' money into high-risk penny stock companies," he wrote. During the scheme, Mr. Black failed to disclose that he was a board member of each of the companies and that he received substantial fees.
The penalties include disgorgement of $5.2-million in gains plus interest. In addition, the judge imposed a $1.5-million civil penalty on Interinvest and a $2-million civil penalty on Mr. Black. The penalties are by default, as Mr. Black and Interinvest failed to participate in the matter. (Mr. Black initially defended the case and denied any wrongdoing, but just two months into the litigation his lawyer withdrew. The lawyer cited a lack of communication with Mr. Black.)
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