|By PR Newswire||
|August 1, 2014 04:45 PM EDT||
VANCOUVER, Aug. 1, 2014 /CNW/ - The Executive Director of the British Columbia Securities Commission has issued a notice of hearing alleging that a lawyer in Victoria, B.C. and a resident of Lumby, B.C. engaged in conduct contrary to the public interest when they created and sold a shell company.
The notice alleges that Robert Scott Morrice and Donald Gordon Byrne harmed the reputation and credibility of B.C.'s securities markets. BCSC staff maintains that Morrice and Byrne worked together to create and sell shell companies, and were purportedly involved with three mining companies that were shell companies with minimal assets and no active business:
- Edgemont Mining Inc.(Edgemont);
- Interfac Mining Inc. (Interfac); and
- Jupiter Resources Inc. (Jupiter)
According to the notice, Morrice created and maintained the shells by facilitating their incorporation, opening their bank accounts and getting them quoted on the U.S. Over-the-Counter (OTC) Bulletin Board. Morrice was also responsible for the shells' filings with the U.S. Securities and Exchange Commission (SEC). He instructed the transfer agents, auditors, and oversaw the payment of expenses for the shells. Byrne, although not officially listed as a director and officer, was actively running Edgemont from its incorporation onwards. Byrne only became involved with Interfac and Jupiter in August 2008.
The notice states that in July 2008, staff sent a letter to each shell informing them that because they had significant connections to B.C., a new rule governing OTC companies with connections to BC would deem them an OTC reporting issuer as of September 15, 2008. Staff is now alleging that Morrice and Byrne took steps to circumvent the OTC rule, such as appointing nominee directors from Saskatchewan whose role was limited to signing documents at the request of Morrice and Byrne, and filing false documents with the SEC indicating that the shell companies no longer had connections to B.C.
In May 2009, Morrice sold Jupiter to a British Virgin Islands company, after which it was renamed Rineon Group Inc. Morrice ignored the resale instructions in the new OTC rule. The notice states that in 2010, Rineon was used in an allegedly fraudulent scheme by a U.S. resident.
Staff contend that by disguising who was controlling the shells through the appointment of nominee directors, deceiving the SEC through the filing of false statements claiming the shells had moved to Saskatchewan, evading the application of the OTC Rule restricting the resale of OTC securities, and creating and selling a shell that was subsequently used in an alleged securities fraud, Morrice and Byrne harmed the reputation and credibility of BC's securities markets.
These allegations have not been proven. Counsel for the Executive Director will apply to set dates for a hearing into the allegations before a panel of commissioners on September 30, 2014, at 9:00 a.m.
You may view the notice of hearing on our website, www.bcsc.bc.ca, by typing Robert Scott Morrice, Donald Gordon Byrne, or BCSECCOM 312 in the search box. Information about disciplinary proceedings can be found in the Enforcement section of the BCSC website.
Please visit the Canadian Securities Administrators' Disciplined Persons List for information relating to persons disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA).
About the British Columbia Securities Commission (www.bcsc.bc.ca)
The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:
- A securities market that is fair and warrants public confidence
- A dynamic and competitive securities industry that provides investment opportunities and access to capital
Learn how to protect yourself and become a more informed investor at www.investright.org
SOURCE British Columbia Securities Commission