Came across this old News story. I wonder if the client might be BIDS?
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Yorkton under OSC investigation
By RICHARD BLACKWELL and KAREN HOWLETT
21:52 EST Friday, November 24, 2000
Yorkton Securities Inc. said last night that it is under investigation by the Ontario Securities Commission for alleged
conflicts of interest relating to the multiple roles the firm's executives played in underwriting stock issues.
Yorkton said the OSC was forcing it to disclose the investigation in a prospectus for an unnamed client. And it made clear
it was unhappy with the regulator's action.
"Yorkton does not consider the mere existence of the informal OSC investigation to be material," Yorkton's statement said.
Despite its objection, Yorkton said it would abide by the OSC decision "in order to avoid a penalty payable by a client."
It said it acknowledges the value of a debate over disclosure of the potential conflicts a dealer faces when investing in
companies it underwrites.
However, by being forced to disclose the OSC investigation, which it said is "apparently based on conjecture and
speculation in media reports," investors will be misled, public confidence will be eroded, and this will impede access to
capital for emerging companies.
In a series of stories earlier this year, The Globe and Mail revealed how Yorkton chief executive officer Scott Paterson
had built a fortune for himself and a close group of associates by privately investing in stocks ahead of the firm's clients.
The Globe's investigation revealed that Mr. Paterson, other Yorkton officials including research director Roger Dent,
family, friends and an assortment of influential businessmen began privately buying stock in shell companies for
pennies a share in the mid-1990s.
Each of the seven companies tracked by The Globe were named after Mr. Paterson or a family member.
Mr. Paterson's aggressive promotion of a company, in which he played multiple roles as investor, investment adviser
and corporate insider, brought him under regulatory scrutiny.
There is nothing in securities law that prevents a broker from playing these mutiple roles.
Yorkton's statement yesterday was the first official confirmation that the OSC's enforcement arm is investigating the
firm's activities.
An OSC spokesman declined to comment on the Yorkton release.
The company did not reveal what client company had to include the revelation of the OSC investigation in its prospectus.
Yorkton said that it has complied with all applicable securities laws in financings where it was the lead, or only,
underwriter. The OSC has made no allegations against the company or its staff, it added.
In addition, it said, the OSC hasn't given it any details about the informal investigation, despite repeated requests.
"Yorkton strongly refutes any suggestion that it has undertaken any improper activity in connection with its role as
underwriter in financings in which it has acted as sole or lead underwriter," the company's release said. |
