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BCSEC, SEC's Howe Street Kott probe notably broad
Street Wire
by Brent Mudry
The international probe into how far the tentacles of legendary boiler-room
operator Irving Kott extend beyond Howe Street faces a formidable court
challenge. In a petition filed Jan. 19 in the Supreme Court of British
Columbia, Synergy Renewable Resources, an alleged Kott company, and two
directors, Stephen Roth and Michael Rosensweig, claim the British Columbia
Securities Commission and the United States Securities and Exchange
Commission have no right to dig in Vancouver for extensive documents and
records relating to Synergy, a number of other alleged Kott-related public
companies, 53 named individuals and 73 separate corporate entities, mostly
offshore accounts in a raft of secretive enclaves.
The court challenge is strongly supported by Vancouver promoter William
Sharp, a long-time insider Hariston Corp., now known as Midland Holland, a
former favourite of Reynolds Kendrick Stratton, a controversial U.S. penny
stock brokerage closely associated with Mr. Kott.
The Vancouver lawyer fighting the Kott probes is Howard Shapray, whose star
Howe Street client list includes expatriate Vancouver promoter Robert
Friedland. Mr. Shapray recently fought a valiant, but unsuccessful
challenge to the BCSC's Cartaway Resources prosecution, on behalf of former
First Marathon Securities brokers Rob Hartvikson and Blayne Johnson, the
Cartaway engineers.
The petitioners are particularly upset at the broad disclosure demands made
of prominent securities lawyer David Anfield. "The production of records
sought from Mr. Anfield is an intrusive violation of the privacy and
confidentiality of the business records which are in his custody.
Responding to the demand imposes a hardship and very significant expense on
all concerned with the maintenance of these records," states Mr. Sharp in a
Dec. 24, 1999, affidavit, filed in court on Jan. 19.
In its current production demand, dated Sept. 14, the BCSC seeks virtually
every shred of evidence Mr. Anfield might have on Mr. Kott, numerous
associates and other individuals, and scores of offshore companies. On
behalf of the SEC, the BCSC seeks all documents and communications that
pertain to the organization and incorporation of Hariston, Synergy and four
U.S. public companies: Legacy Software, National Insurance Group,
Ophthalmic Imaging Systems and J.B. Oxford Holdings, and all their
affiliates and subsidiaries.
The regulators also seek all corporate documents and communications on one
particular offshore company, Turret Holdings, including everything on its
control, ownership and operations.
The SEC is especially interested in all records Mr. Anfield may have
regarding publc or private financings of the public companies, particular
under Regulation D, which allows private placements without the filing of
registration statements with the SEC, and Regulation S, which allows
offshore private placements without registration statements. In addition,
the U.S. regulator wants all records Mr. Anfield may have regarding the
resale of shares in these issuers, especially the Reg. D And Reg. S shares,
in transactions as low as 1,000 shares.
The SEC further seeks "all documents and communications that pertain to any
documents filed or proposed to be filed with the SEC or any other
securities regulatory authority by any person or entity, including
Sobolewski, Anfield, Barristers & Solicitors, Anfield Sujir Kennedy &
Durno, Barristers & Solicitors, S. David Anfield or Kott, concerning any of
the selected issuers."
The extensive disclosure demand includes all sales and promotional
materials relating to Synergy, Hariston, Legacy, National Insurance,
Ophthalmic Imaging and J.B. Oxford. This includes all sales scripts,
advertising, materials, offering documents, prospectuses, private placement
memoranda and due diligence files that may be in Mr. Anfield's possession.
The SEC also seeks all stock research reports, press releases, news
articles and news releases, and all selling group agreements, underwriting
agreements and selling syndicate agreements for the six public companies
allegedly in Mr. Kott's stable. In addition, the SEC wants every scrap of
information Mr. Anfield may have on amounts paid by, to, or on behalf of
the alleged Kott companies, including any of their officers, directors and
employees, and any amounts received from the public companies.
The SEC has a particularly strong interest in not just Mr. Kott, but
alleged associate Dominique Schittecatte and Turret. The regulator wants
Mr. Anfield to hand over every document, communication and record he might
have regarding any foreign or domestic securities brokerage account, bank
account, credit card account or other financial account either in the name
or under the direct or indirect control of Mr. Kott, Ms. Schittecatte and
Turret. This includes all account statements, all fronts and backs of
cheques for amounts exceeding $10,000 (U.S.), and all deposit slips, money
orders, wire transfers, instructions and confirmations, and cashier's
cheques, bank drafts and cash receipts.
Just to make sure they left nothing out in their extensive shopping list,
the BCSC and the SEC have made an astoundingly broad request of the Howe
Street lawyer. The regulators seek "all calendars, appointment books,
rolodexes, telephone message books, telephone logs, personal organizers or
personal digital assistants maintained by or on behalf of S. David
Anfield."
The list of entities-of-interest to the SEC and the BCSC in their Kott
probe, includes Majoco Group Inc., Manor Investment Fund, Merit Investment
Corp., Monroe Parker Securities Inc., Nacarat Investments Ltd., NCS
Holdings Inc., Neval Management Ltd., Newsham Investments Ltd., Norman
Financial Services S.A., Oakwood Holding(s) Ltd., Oeri Finanz A.G.
(including Oeri Finance Inc. and all foreign and domestic affiliates and
subsidiaries, Olinka S.A. and Oltramare Hochstaetter Eardley Reiser &
Associates.
The corporate records target list also includes Palim Trading Corp.,
Platino Trading Establishment, Polish Life Improvement S.A., Privatim
Finanz A.G., P.Y.A. Investments Ltd., Rivage Ltd., Salcott Holdings Ltd.,
Scorpion Holdings Inc. (including all affiliates and subsidiaries), Societe
Mandataire, Sunmer Securities Inc., Textile Trading Establishment, Titano
Trading Establishment, Triune Investment, Turret Consultants Inc., UU Ltd.,
Vernon Finance Ltd., Woodbury Enterprises Ltd., WSP Marketing, also known
as WSP Marketing International Ltd. and Yorkshire Capital Partners..
(Readers wishing further details of the BCSC and SEC probe into Mr. Kott's
Howe Street dealings may refer to a Streetwire dated Jan. 21, under the
symbol BCSEC.)
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