Quinto Directors Punished by Vancouver Exchange
(ed. I think same may have happened to me - I'll report my circumstances to Vancouver Exchange - Dave)
Tue 16 Mar 99 News
Release
See B.C. Securities Commission (BCSEC) News Release
Mr. Wayne Redwick reports
IN THE MATTER OF PAUL SCHILLER AND BETTY SCHILLER
A hearing will be held to give Paul Schiller and Betty Schiller an opportunity to be heard before the British Columbia Securities Commission considers whether it is in the public interest:
1.1 To make an order under section 161(1)(c) of the Securities
Act,R.S.B.C. 1996, c. 418 that any or all of the exemptions described in sections 44 to 47, 74, 75, 98 or 99 of the act do not apply to the respondents;
1.2 To make an order under section 161(1)(d) of the act that the respondents are prohibited from becoming or acting as a director or officer of any reporting issuer;
1.3 To make an order under section 161(1)(d) of the act that the respondents are prohibited from engaging in investor relations activities;
1.4 To make an order under section 162 of the act that the respondents pay an administrative penalty;
1.5 To make an order under section 174 of the act that the respondents pay the prescribed fees or charges related to the hearing; and
1.6 To make any other orders as may be appropriate in the circumstances;
2. The commission will be asked to consider the following facts and allegations in making its determinations:
2.1 Quinto Mining Corp. is, and was at all material times, an
exchange issuer and is a company incorporated under the laws of the province of British Columbia;
2.2 During the period from March 1, 1993 to July 1994 Mr. Schiller was a director and the president of Quinto;
2.3 During the relevant period, Betty Schiller was an employee of
Quinto and Paul Schiller's wife;
2.4 On or about March 22, 1993, Quinto issued a news release announcing its intention to enter into a private placement involving the issuance of 150,000 units, including one share and one share purchase warrant, of Quinto at 81 cents per unit with Mrs. Schiller as placee, with the proceeds to be used for working capital;
2.5 In May 1993, Quinto filed with the Vancouver Stock Exchange,
pursuant to listings policy 11, documents relating to the private placement including:
2.5.1 A declaration of certified filing signed by Mr. Schiller on behalf of Quinto;
2.5.2 A private placement questionnaire and undertaking signed by
Mrs.Schiller; and
2.5.3 A private placement subscription agreement signed by Mrs.
Schiller and by Mr. Schiller on behalf of Quinto;All, collectively, the filing documents;
2.6 In the filing documents, the following representations and
undertakings were made by Mr. Schiller on behalf of Quinto and Mrs. Schiller as placee:
2.6.1 The private placement was in compliance with listings policy 11;
2.6.2 Mrs. Schiller was purchasing 150,000 units of Quinto at 84 cents for total proceeds to Quinto of $126,000 and that she was purchasing as principal, not on behalf of others and that no one else had a beneficial interest in the securities which were the subject of the privateplacement; and
2.6.3 The private placement securities would be held by Mrs. Schiller
for a period of 12 months from the payment date, stated to be March 22, 1993,and that she would not sell or otherwise dispose of any of those securities during that period without the approval of the exchange;
2.7 On or about May 25, 1993, the exchange issued a letter to counsel for Quinto indicating that the exchange had accepted for filing, certain to closing, the documentation relating to the private placement;
2.8 On or about May 27, 1993, Quinto delivered to its transfer agent a treasury order, signed by Mr. Schiller, requesting the issuance of the private placement shares and warrants to Mrs. Schiller and that the certificates be legended as non-transferable until March 23, 1994.Pursuant to the terms of the treasury order, the transfer agent issued the private placement shares and warrants on May 27, 1993;
2.9 On or about June 3, 1993, counsel for Quinto filed with the
commission a Form 20 report of exempt distribution, signed on May 27, 1993 by Mr.Schiller;
2.10 The Form 20, certified by Mr. Schiller on behalf of Quinto,
stated that:
2.10.1 Mrs. Schiller had purchased 150,000 units, consisting of one
share and one warrant, of Quinto at 84 cents per share for total proceeds received by Quinto of $126,000; and
2.10.2 Quinto was relying upon the prospectus and registration
exemptions contained in sections 45(2)(5) and 74(2)(4) of the act (then sections 31(2)(5) and 55(2)(4) of the former act), to make the distribution to Mrs.Schiller;
2.11 In fact, Mrs. Schiller was not the placee for the private
placement.The placees actually included several other persons who provided the funds for the total $126,000 private placement proceeds as follows:
INVESTOR AMOUNT
(U.S. dollars)
Giles Kavanagh 34,000
Robert Ness 3,000
Charlie Pingle 6,000
Robert and
Kathleen Ovies 15,000
Wallis Wood 6,000
Charles Howell 7,000
David and
Gail MacInnes 5,000
Philip Kratzer 15,000
Douglas Mazzotta 12,000
David Cree 2,000
_________
TOTAL** 105,000
_________
**Canadian exchange
rate 1.2% 126,000
as at March 1993 (Canadian)
2.12 None of the placees met the requirements for the private
placement exemption since all of the individual placees invested less than the prescribed amount of $97,000;
2.13 The placees were introduced to Quinto through Giles Kavanagh, who made the arrangements for the placees' investment in the private placement with Mr. Schiller. As part of the agreement reached with Kavanagh and the placees, Mr. Schiller agreed to personally exchange half of the private placement shares and warrants issued to the placees with his own free trading shares of Quinto. The effect of this arrangement was the circumvention of the 12 month hold period which applied to the private placement;
2-14 on or about July 13, 1993, Mr. Schiller and Mrs. Schiller
delivered written authorizations to Quinto's transfer agent to effect the transfer of the private placement shares and warrants and of Mr. Schiller's free trading shares of Quinto, to the placees. Pursuant to the terms of the treasury order, the transfer agent issued shares and warrants of Quinto to the placees on July 14, 1993;
2.15 on or about March 22, 1994, Quinto delivered to its transfer agent a treasury order, signed by Mr. Schiller, requesting the issuance of shares of Quinto to the placees, with the exception of Wallis Wood, as a result of the exercise of the warrants relating to the private placement, pursuant to the terms of the treasury order, the transfer agent issued the additional shares of Quinto to the placees on March 23, 1994;
2.16 Mr. Wood, a resident of California, did not exercise his portion of the private placement warrant by the exercise date due, he says,to misinformation received from Mr. Schiller. Instead Mrs. Schiller exercised Mr. Wood's portion of the private placement warrant on or about March 22,1994, which resulted in a potential gain to the person exercising the warrants of approximately $30,000. Mr. Wood received repayment of the $30,000 from Quinto in July 1994;
2.17 By certifying in the Form 20 filed with the commission that
Mrs.Schiller was the purchaser of the private placement and that the private placement exemption was available to Quinto, Mr. Schiller made a statement in a record required to be filed under the act that, at the time and in light of the circumstances under which it was made, was false and misleading and, as a result, was not in the public interest;
2.18 Mrs. Schiller was not entitled to exercise the private
placement warrants and, in so doing, she received a personal benefit of some $30,000 and perpetrated a fraud upon Mr. Wood in connection with the securities of Quinto, a reporting issuer, contrary to section 57(c) of the act;
2.19 Mr. Wood received a payment of $30,000 in July 1994 to compensate for his loss of opportunity with respect to the private placement warrants. The funds to repay Mr. Wood came from Quinto, not from Mrs. Schiller, and accordingly a fraud was perpetrated upon Quinto, contrary to section 57 of the act; and
2.20 As a result of their actions relating to the private placement as outlined above, Mr. Schiller and Mrs. Schiller caused Quinto to be in breach of exchange listings policy 11 and of its listing agreement with the exchange, thereby jeopardizing the continued trading of the securities of Quinto on the exchange.
3. The respondents may be represented by counsel at the hearing and may make presentations and lead evidence. The respondents are requested to advise the commission of their intention to attend the hearing by contacting the secretary to the commission at 1200 - 965 Homby Street,Vancouver, B.C. V6Z 2H4;
4. The respondents are required to attend at the 7th floor hearing
room,865 Hornby Street, Vancouver, B.C., on April 1, 1999, at 10 a.m., if they wish to be heard before the commission fixes a date for the hearing;
5. Determinations may be made in this matter if the respondents or
their counsel do not appear at the hearing.(c) Copyright 1999 Canjex Publishing Ltd.http://www.canada-stockwatch.com
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