Richmond resident Don Dyer, an unregistered stock salesman closely associated with controversial Langley promoter Rene Branconnier, has been suspended from the B.C. securities market for 10 years and ordered to pay a $65,000 fine.
A B.C. Securities Commission hearing panel assessed the penalties last week after finding that Dyer had illegally raised $836,658 from 83 investors in Canada and the United States from 2005 to 2009.
In an earlier decision on liability, the panel described how Dyer got investors to "lend" money to a private company called Pacific Ocean Resources Corp. As collateral for the loans, Pacific Ocean gave investors shares of Global 8 Environmental Technologies Inc., a money-losing company that trades on the OTC Bulletin Board in the United States.
The loans were payable on demand, but if the company failed to repay the money, the only recourse for investors was to take the shares. "While Pacific Ocean structured the transactions as loans, the scheme was transparently intended to facilitate Pacific Ocean's distribution of Global 8 shares," the panel found.
Under securities rules, nobody can sell shares without being registered as a broker and without filing a prospectus with the commission. Problem is, Dyer was not registered as a broker or adviser, and neither Pacific Ocean nor Global 8 had filed a prospectus.
The panel said Dyer claimed he sold the shares under exemptions from registration and prospectus requirements in the Securities Act. The first was an exemption permitting the sale of shares to friends, family and business associates, but the hearing panel rejected this. It said in most cases, Dyer had never met these investors.
The second was an exemption permitting the sale of shares to accredited investors (investors who meet minimum net worth and income thresholds). However, the panel said Dyer was not able to show that the investors met these requirements. The panel also found that Dyer had telephoned investors from within B.C., which is illegal.
In considering an appropriate penalty, the panel dismissed the loan structure as a "transparent attempt" to avoid having to comply with registration and prospectus requirements. The panel also noted that Dyer claimed he had received legal and accounting advice in structuring the transactions, but failed to provide any evidence of this advice.
Evidence at the hearing was that Branconnier was working behind the scenes.
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