Notice Of Hearing Issued - Percy Sekora And Laurie Onishenko
ALBERTA SECURITIES COMMISSION ("ALSC-Y") - Notice Of Hearing Issued - Percy Sekora And Laurie Onishenko
The Alberta Securities Commission has issued a notice of hearing naming Percy Sekora and Laurie Onishenko to appear before the Commission in Edmonton on September 17.
The hearing follows an investigation by the Commission into the conduct of Sekora while he was the branch manager of Majendie Charlton Securities Ltd. in Grande Prairie, Alberta in 1996 and 1997.
Allegations against Sekora include the illegal distribution of securities to a number of firm clients and failure to comply with industry standards required as a registrant.
Allegations against Onishenko include the illegal distribution of securities in four companies.
A L B E R T A S E C U R I T I E S C O M M I S S I O N
IN THE MATTER OF The Securities Act
(S.A. 1981, c. S-6.1, as amended) (the "Act")
- and -
IN THE MATTER OF Percy Sekora and Laurie Onishenko,
(the "Respondents")
N O T I C E O F H E A R I N G
(Sections 56, 165 and 167.1)
1. TAKE NOTICE that on Thursday, September 17, 1998 at 9:30 a.m., the Alberta Securities Commission (the "Commission") will convene at its hearing room, 19th Floor, 10025 Jasper Avenue, Edmonton, Alberta in order to arrange a date for a hearing of the allegations in this
Notice of Hearing and to deal with any other preliminary matters. At the hearing of the allegations herein the Commission will consider:
1.1 whether, pursuant to subsection 165(1)(b) of the Act, the Commission should order that the Respondents cease trading in all securities as defined in the Act;
1.2 whether, pursuant to subsection 165(1)(c) of the Act, the Commission should order that any or all of the exemptions contained in sections 65, 66, 66.1, 107, 115, 116, 132, and 133 of the Act or in the regulation under the Act (the "Regulation") shall not apply to the Respondents;
1.3 whether, pursuant to subsections 165(1)(d) and (e), the Commission should order that the Respondents, or either of them, resign from any positions that each may hold as a director or officer of any issuer, and be prohibited from becoming or acting as a director or officer or both of any issuer; and
1.4 such further or other order, ruling or decision as the Commission considers appropriate.
2. AND FURTHER TAKE NOTICE that the Staff of the Alberta Securities Commission (the "Staff") alleges that:
The Parties
2.1 Percy Sekora is a resident of Grande Prairie, Alberta, and at all material times, was registered pursuant to section 54 of the Act and section 43 of the Alberta Securities Commission Rules ("Rules") as a salesman, designated branch manager of the Grande Prairie office and a director of Majendie Charlton Securities Ltd., a registered dealer of securities in Alberta;
2.2 Laurie Onishenko ("Onishenko") is a resident of Grande Prairie, Alberta, and is the wife of Percy Sekora;
The Compression Offerings
2.3 Compression & Encryption Technologies Inc. ("Compression") was incorporated pursuant to the laws of Alberta on November 1, 1994, and has its registered and business office in Edmonton, Alberta. On November 1, 1994, Compression amalgamated with Optical Data Systems, a company originally listed on the Alberta Stock Exchange in January, 1989 and reinstated in September, 1994;
2.4 In or about September, 1996, the Respondents traded in securities of Compression, namely common shares forming part of a special warrant offering, with at least four Alberta residents raising $14,400 where such trades were distributions, without a preliminary prospectus or a prospectus having been filed with the Agency and receipts obtained therefor, contrary to subsection 81(1) of the Act, and in the case of Onishenko, without being registered as required by subsection 54(1) of the Act;
2.5 In or about January, 1997, the Respondents traded in securities of Compression, namely, common shares forming part of a special warrant offering, with ten Alberta residents raising $346,000, where such trades were distributions, without a preliminary prospectus and a prospectus having been filed with the Commission and receipts obtained therefor, contrary to subsection 81(1) of the Act, and in Onishenko's case, also without being registered at the time, contrary to subsection 54(1) of the Act;
2.6 The investors referred to in paragraphs 2.4 and 2.5 above were brokerage clients of Sekora at all material times, and Sekora was actively involved in recruiting these investors and providing information to them in respect of both distributors. The Respondents received and arranged for deposit of the investment funds, depositing them into a personal joint bank account in the name of Sekora and Onishenko;
2.7 The special warrant units referred to in paragraphs 2.4 and 2.5 above were never qualified for sale by way of prospectus, and most of the investors did not receive their shares on a timely basis, or at all;
2.8 Shareholders were not told that a one-year hold period existed in respect of their investment. Furthermore, some investors were not advised that these offerings were in fact made up of units of common shares and warrants, and that it was the Respondents' practice in each instance to purchase the units of the private placement using funds they raised from investors, retain the warrants for themselves, and offer only the common shares for sale;
Xinex Offering:
2.9 In June, 1996, Onishenko participated in a private placement by Xinex Networks Inc. ("Xinex"), a reporting issuer in Alberta, where she purchased 180,000 special warrant units for $252,000, each unit consisting of one common share, a share purchase warrant and an option to buy another unit, this latter unit consisting of a common share and a warrant. The special warrant units were qualified for sale through the receipt of a prospectus on September 19, 1996;
2.10 In June, 1996, the Respondents traded in securities of Xinex, namely, common shares forming part of the special warrant units referred to above, with fourteen Alberta residents (the "Xinex Investors") raising $260,000, where such trades were distributions, without a preliminary prospectus and a prospectus having been filed with the Commission and receipts obtained therefor, contrary to subsection 81(1) of the Act, and in Onishenko's case, also without being registered under the Act, contrary to subsection 54(1);
2.11 The shares referred to above were placed into Onishenko's personal brokerage account and none of the Xinex Investors, save for two, received delivery of their shares. Instead, the Respondents sold the Xinex shares at a loss and used the proceeds to purchase the Falcon units (described below) without the knowledge or consent of the Xinex Investors;
2.12 The Xinex Investors, save for two, were clients of Sekora at all material times, and were not advised that the Xinex special warrant units consisted of warrants and options in addition to the common shares they understood they were purchasing. The remaining two investors received their initial warrants and additional shares upon exercise of the options, but did not receive the warrants available after the exercise of the options;
Falcon Offering:
2.13 In March, 1997, Onishenko participated in a private placement of Falcon Ventures ("Falcon"), a private company incorporated in British Columbia for the purchase of 833,000 units, each unit consisting of one common share and one share purchase warrant. Onishenko filed a report of trade with the Vancouver Stock Exchange indicating she was purchasing these units as principal for her own account;
2.14 In March and April, 1997, the Respondents traded in securities of Falcon, namely, units of common shares and warrants, with thirteen Alberta residents, where such trades were distributions, without a preliminary prospectus and a prospectus having been filed with the Commission and receipts obtained therefor, contrary to subsection 81(1) of the Act, and in Onishenko's case, also without being registered at the time, contrary to subsection 54(1) of the Act;
2.15 None of the investors referred to above have received entire units of Falcon and, furthermore, none of these investors received the shares forming part of the units on a timely basis, or at all;
594532 Alberta Ltd.:
2.16 594532 Alberta Ltd. ("594532") was incorporated under the laws of Alberta as a private company on January 10, 1994. Sekora is president of 594532 and Onishenko, through her private company, is majority shareholder of 594532. The remainder of the directors and shareholders of 594532 were, at all material times, clients of Sekora;
2.17 The Respondents traded in securities of 594532, with at least sixteen Alberta residents (the "594532 Investors") raising at least $1.1 million. These trades were distributions without a preliminary prospectus and a prospectus having been filed with the Commission and receipts obtained therefor, contrary to subsection 81(1) of the Act, and in Onishenko's case, also without being registered under the Act, contrary to subsection 54(1);
2.18 At all material times, the 594532 Investors were clients of Sekora;
Registrant Breaches
2.19 In respect of all of the foregoing allegations, Sekora, as a registered dealer and partner/officer of Majendie Charlton, failed to maintain books and records of all transactions with his clients, failed to keep adequate records of orders and instructions from clients, failed to establish procedures for dealing with his clients in a manner that conformed with prudent business practise, and in particular:
.1) he failed to comply with industry standards contained in the Conduct and Practices Handbook for security industry professionals and, in particular, sections C and D of the Standards of Conduct and Subsection C(I) of the General Rules of Conduct;
.2) he is in breach of the General Bylaw of the Alberta Stock Exchange 8.25 (formerly 8.40) and 16.01;
.3) he has offended Commission Policy 3.1, in particular, items 2.1, 2.4, 2.5, 2.7, 2.8, 3.5, 3.6, 4.4.1.1, 4.4.1.9, and 4.4.1.15.
2.20 By reasons of the matters aforesaid, the Respondents have acted in a manner which is contrary to the Act, the Rules, Commission policy and the public interest.
3. AND FURTHER TAKE NOTICE that at the hearing the Staff may apply for an Order that the Respondents pay:
3.1 The costs of the investigation of the Staff into the affairs of the Respondents which were the subject of the hearing; and
3.2 The costs of or related to the hearing that are incurred by or on behalf of the Executive Director, including the costs of expert witnesses, if any; all pursuant to section 167.1(1) of the Act.
4. AND FURTHER TAKE NOTICE that the Commission may order the Respondents to pay the costs of or related to the hearing that are incurred by or on behalf of the Commission, pursuant to section 167.1(2) of the Act.
5. AND FURTHER TAKE NOTICE that at the hearing the Commission will follow the rules of procedure provided for in section 19 of the Act including:
5.1 the right of the Respondents to be represented by legal counsel;
5.2 that the hearing may be adjourned from time to time and to such place or places as is reasonably necessary in the opinion of the Commission in order to expedite and conclude the hearing, provided that if the hearing is not concluded on the date set out above, the Commission may grant an interim order pursuant to section 21 of the Act with respect to any of the matters set out in paragraphs 1.1, 1.2 and 1.3 thereof, said interim order to remain in effect until the hearing has been concluded; and
5.3 that the laws of evidence applicable to judicial proceedings do not apply.
6. AND FURTHER TAKE NOTICE that the Respondents may obtain further particulars of the facts and allegations contained herein prior to the hearing by contacting Lise M. Houle, Enforcement Counsel, c/o Staff of the Alberta Securities Commission, 4th Floor, 300 - 5th Avenue, S.W., Calgary, Alberta T2P 3C4.
7. AND FINALLY TAKE NOTICE that upon the failure of the Respondents to attend at the said time and place, and upon proof satisfactory to the Commission of service of this Notice upon the Respondents, the hearing may proceed in the absence of the Respondents, and without further notice to them, the Commission may warrant such order, decision or ruling as it deems appropriate. Dated at the City of Calgary
) ALBERTA SECURITIES COMMISSION
) in the Province of ALBERTA this
) 1st day of September, 1998
) H.C. Blakey
) Director, Market Standards TEL: (403) 297-4221
H.C. Blakey, Director, Market Standards TEL: (403) 297-3658
Lise M. Houle, Enforcement Counsel |
