Vancouver Stock Exchange -
Approved persons disciplined
Vancouver Stock Exchange
VSE
Shares issued 0
1899-12-30 close $0
Thursday Sep 3 1998
By way of an offer of settlement, George Stubos, at the time of the infraction an approved person
employed by Canaccord Capital has agreed to the imposition of the following penalties by the exchange
for violation of Exchange Rule F.2.22(2): a fine in the amount of $15,000; withdrawal of exchange
approval for a period of one year; disgorgement of net commissions in the amount of $1,800; an
assessment of investigative costs in the amount of $1,000; and, should the respondent return to the
industry, a requirement to be on strict supervision for a period of one year and to re-write and pass the
examination based on the Conduct and Practices Handbook for Security and Industry Professionals.
Rule F.2.22(2) states in part, that an investment adviser shall not, subject to Rule F.3.04, handle a
discretionary order or exercise any discretion in the handling of an account of a client of a member.
During the period of September 1994 to August 1995, Stubos exercised discretion in a client account,
executing 70 trades in four exchange listed securities valued at approximately $291,582. The client had
not given written authorization for Stubos to exercise discretion over the account and Canaccord had not
accepted the account as discretionary. Stubos thereby violated Exchange Rule F. 2.22(2)(a).
No fault was attributed to the member firm, who reported Stubos' conduct to the exchange and
terminated his employment.
By way of an offer of settlement, Michael Kevin Patterson, an approved person employed by Pacific
International Securities, has agreed to the imposition of the following penalties by the exchange for
violation of Exchange Rules C.1.38 and Rule C.1.39: a fine in the amount of $3,000; and, an
assessment of investigative costs in the amount of $1,200.
Rule C.1.38 states in part that no one shall make a short sale of any security listed on the exchange
through the facilities of the exchange at or below the price at which the last sale of a board lot of such
security was made on the exchange unless the sale price is on an uptick.
Rule C.1.39 states in part that a member that knows or is informed that an order to sell is a short sale for
the purposes of Rule C.1.38, shall mark the order as short or S and enter the order as such, and must
ensure that the provisions of Rule C.1.38 have been observed.
On July 25, 1995, Patterson participated in a non-brokered private placement in the shares of exchange
listed Yukon Gold Corp. Patterson purchased 5,309 units at 26 cents. Each unit consisted on one share
and one warrant, which when exercised totalled 10,618 Yukon Gold shares.
On July 30, 1995, the private placement closed and a share certificate representing 5,309 units of Yukon
Gold was issued to Patterson. The shares where subject to a hold period of one year and could not be
traded in British Columbia until the expiry of the hold period, July 30, 1996.
On July 29, 1996, Patterson exercised the Yukon Gold warrants increasing his position of Yukon Gold
to 10,618 shares (the restricted shares), the restricted shares were subject to the hold period. Patterson's
sole security position in the shares of Yukon Gold, were the restricted shares.
Patterson could not sell the restricted shares from a long position until the expiration of the hold period
on July 30, 1996. Patterson had however, between July 23, 1996 and July 26, 1996, sold the restricted
shares prior to the expiration of the hold period. Patterson inadvertently was of the belief that the hold
period expired on July 23, 1996.
As a result, Patterson's sell transactions in the shares of Yukon Gold prior to and including July 30,
1996, were then sales from a short position. Patterson conducted a total of seven short sale, four of
which were executed on a downtick. Patterson further failed to designate the orders as short or S and
enter the orders as such.
Patterson thereby violated Rules C.1.38 and C.1.39. No fault was attributed to the member firm.
(c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com
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