Mr. Brian Kladko reports
BCSC REACHES SETTLEMENTS IN ILLEGAL DISTRIBUTION CASES
The British Columbia Securities Commission (BCSC) has reached settlement agreements with three British Columbia men and one man from Alberta who were involved in companies that were illegally selling shares.
Chung-Shen Johnson Kao, Gagan Deep Bachra, Chi Kay Dixon Wong and Meng Cher Phillip Tsai were nominee directors of three companies that raised a total of $19.6-million between 2016 and 2017:
- FS Financial Services (Alberta) Inc., of which Mr. Kao was a director, raised $12.6-million from 72 investors in British Columbia.
- Verico FS Capital Inc., of which Mr. Bachra was a director, raised $5.38-million from 35 investors.
- FS Financial Systems Inc., of which Mr. Wong and Mr. Tsai were directors, raised $1.62-million from 15 investors.
All of the money was raised without a prospectus, a formal document that explains the details of an investment and the risks involved. None of the investors qualified for an exemption from the prospectus requirements under the Securities Act.
Mr. Kao, an Alberta resident, admitted that, by acting as a nominee director, he engaged in conduct abusive to the capital market. The other three admitted to allowing an illegal distribution of securities.
As part of the settlement, Mr. Wong has agreed to pay $15,000 and Mr. Tsai and Mr. Bachra have agreed to each pay $7,500 to the BCSC. All four men are required to take a course on the duties and responsibilities of corporate officers and directors.
Mr. Wong, Mr. Bachra and Mr. Tsai are prohibited for two years and Mr. Kao is prohibited for one year from:
- Trading in or purchasing securities or exchange contracts (with some limited exceptions);
- Relying on any exemption under the Securities Act;
- Being a director or officer of any issuer or registrant;
- Being or acting as a registrant or promoter;
- Acting in a management or consultative capacity in connection with the securities market;
- Engaging in investor relations activities.
None of the men have any history of securities misconduct and all of them invested their own funds into their respective companies.
About British Columbia Securities Commission
The BCSC is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act.
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