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by Mike Caswell

West Vancouver resident Justin Liu has agreed to pay $950,000 and to serve a 10-year ban for improperly obtaining shares in Canadian Securities Exchange companies. The B.C. Securities Commission claimed that Mr. Liu was part of a scheme involving nine listings and $50.8-million worth of shares. He and others obtained stock in part through sham consulting agreements, according to the BCSC.

The penalties for Mr. Liu are contained in a settlement agreement that the BCSC released on Thursday, Feb. 22. The agreement specifies that Mr. Liu is banned from trading, except in limited circumstances, for 10 years. He is also barred from promoting stocks, serving as an officer or director, and from acting in a "management or consultative capacity in connection with activities in the securities or derivatives markets." The $950,000 he must pay constitutes an administrative penalty, payable immediately.

The penalties arise from a scheme from 2018 in which Mr. Liu and others arranged consulting agreements with CSE companies. The agreements saw the consultants perform little or no work, and served as a way to extract tradable shares from the companies, according to the BCSC. The way the scheme operated was that the companies would raise money through private placements, with the consultants purchasing shares in the placements, the BCSC says. The companies would then use the proceeds of the placements to pay the consultants. The end result was that the consultants received their money back along with tradable shares, which they sold shortly after receiving them, the BCSC claims.

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