Ontario Securities Commission (C-*OSC) - Street Wire
SEC seeks to banish Hayton of Howe Street from pennies
Ontario Securities Commission *OSC
Friday March 14 2003 Street Wire
See Securities and Exchange Commission (U-*SEC) Street Wire
by Brent Mudry
The U.S. Securities and Exchange Commission, North America's top penny stock regulator, has launched a new action against notorious Los Angeles promoter Pattinson Hayton. The SEC announced Thursday that it seeks a lifetime penny stock ban on the expatriate Australian financial rogue, stemming from his promotion of Tradamax Corp. The company was previously based in West Vancouver, just a few blocks and a bridge ride from Vancouver's financial area known as Howe Street.
The SEC issued an order instituting administrative proceedings against Mr. Hayton on Wednesday, stemming from a default judgment in December in United States District Court for the Central District of California, in which he was fined $328,516 in disgorgement and permanently banned from serving as an officer or director of a public company. (All figures are in U.S. dollars.) Mr. Hayton's main known alias is Pat Leslie-Hayton.
In a hearing before an administrative law judge, in which Mr. Hayton can dispute the SEC's allegations, the judge will determine whether a penny stock bar is appropriate and in the public interest. Such bans are generally quite broad. Targeted violators are generally banned from participating in any offering of a penny stock, including acting as a promoter, finder, consultant, agent, or other person who engages in any activities with a broker, dealer, or issuer for the purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock.
Tradamax players are believed to have had significant dealings on Howe Street, the centre of dealings for the former Vancouver Stock Exchange, dubbed Scam Capital of the World by Forbes magazine a decade ago, and in Ontario. The SEC credits staff of the Ontario and British Columbia securities commissions for providing investigatory assistance in the Tradamax case. Among his many accounts, Mr. Hayton used offshore accounts in at least one unidentified Toronto brokerage.
Until the spring of 2001, Mr. Hayton's Tradamax had its head office in a tower next to the Park Royal Shopping Centre in West Vancouver. A few years earlier, Mr. Hayton used a different Vancouver address in another of his public company promotions, Advanced Services Co. A major shareholder was Asian Trust Corp. Ltd., a company registered offshore in Ireland but using an address in Three Bentall Centre in downtown Vancouver.
"The company has been advised that Netvest and ATC are not under common ownership control but that they are advised, in certain matters, by Mr. Pattinson Hayton, a financial adviser. The company has been advised by Mr. Hayton that he holds no ownership interest in ATC and does not exercise dispositive control over the Investor Preferred held by ATC," stated Advanced Services in a regulatory filing. (A related Netvest company, Netvest (Ontario) Ltd., was also named in the SEC's Tradamax case.)
In its civil complaint, filed June 21, 2001, in federal court in California, the SEC alleges that Mr. Hayton, Tradamax and Conrad Diaz, a former officer and director, made numerous fraudulent public statements relating to the control of Tradamax by Mr. Hayton, a repeat securities violator, the identity of its chief executive officer, its Internet coffee bean trading site, its purported business relationships and its projected revenues and income. The false statements were made in numerous press releases, Internet Web sites and investor bulletin boards, spam E-mail messages, and regulator filings.
"Hayton has an extensive history of securities violations and encounters with domestic and foreign regulatory authorities," states the SEC in court filings. Mr. Hayton's regulatory record dates back to at least 1987, when Palmer Financial Corp., a company he controlled, bought a controlling stake in a British investment firm, London & Norwich, which was later ordered into receivership by British officials on the grounds that Mr. Hayton and his business partner failed to safeguard investors' funds.
The next year, the SEC won an injunction against Mr. Hayton, stemming from alleged violations of reporting rules relating to Palmer. He was later found in contempt of court and fined $60,000 for failing to follow a U.S. District Court order to file complete and accurate Form 4 filings detailing his beneficial ownership of Palmer.
In 1992, Mr. Hayton ran afoul of banking regulators in California, when Rally Ventures Ltd., a public investment company he controlled, tried to buy a Bank of Beverly Hills unit with $500-million in retirement funds under management. The California Superintendent of Banks issued an order denying permission for the deal, noting that Rally's assets were unsubstantiated and Mr. Hayton's "integrity ... is subject to question." The regulator also noted Mr. Hayton was ordered shipped back to Australia, but he disregarded a 1991 Immigration and Naturalization Service deportation warrant.
In the three years preceding the Tradamax promotion, Mr. Hayton was also featured on civil court dockets in several U.S. jurisdictions.
bmudry@stockwatch.com
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