Proceedings

 

IN THE MATTER OF THE SECURITIES ACT
R.S.O. 1990, CHAPTER S.5
AND
IN THE MATTER OF
VERONIKA HIRSCH AND SAMEH MAGID
STATEMENT OF ALLEGATIONS OF
STAFF OF THE ENFORCEMENT BRANCH
OF THE ONTARIO SECURITIES COMMISION

Staff of the Ontario Securities Commission ("Staff") make the following allegations:

THE PARTIES

 

1. Between October 10, 1995 and August 13, 1996, Veronika Hirsch ("Hirsch") was employed by AGF Management Limited ("AGF") as a Vice-President andPortfolio Manager. During this period Hirsch was registered with the Ontario Securities Commission (the "OSC") in the category of Senior Counselling Officer,Vice-President and Portfolio Manager. During her term of employment at AGF, Hirsch managed the AGF Canadian Equity Fund and the equity portion of theAGF Growth and Income Fund.

2. AGF Management Limited is a mutual fund corporation incorporated under the laws of Ontario.

3. Sameh Magid ("Magid") is a Certified Financial Analyst, employed by Salman Partners Inc. ("Salman") as a Senior Investment Analyst/CoordinatorInstitutional Equity in their Vancouver office. Magid is registered with the OSC as a Limited Market Dealer and he is also registered with the British ColumbiaSecurities Commission (the "BCSC").

4. Salman is a member of The Toronto Stock Exchange (the "TSE") and the Investment Dealers Association of Canada (the "IDA") and is registered with theOSC in the categories of Equities Broker/Dealer and Broker.

5. Canaccord Capital Inc. ("Canaccord') is a member of the TSE and the IDA, and is registered with the OSC in the categories of Broker and Investment Dealer.

6. Oliver Gold Corporation ("Oliver Gold") is a reporting issuer in the Province of British Columbia, whose shares are listed and posted for trading on theVancouver Stock Exchange (the "VSE"). During 1996, Oliver Gold was not a reporting issuer in Ontario.

OLIVER GOLD PRIVATE PLACEMENT

7. Oliver Gold issued a news release dated January 30, 1996, announcing a private placement (the "Private Placement") of 1,000,000 Special Warrants at $1.53per Special Warrant. Each Special Warrant consisted of one common share and one half of a share purchase warrant. Each share purchase warrant wasexercisable at $1.53 for twelve months and at $1.76 for a further six months. Canaccord acted as agent for Oliver Gold on the Private Placement.

8. The Private Placement was not intended to be qualified by Oliver Gold under Ontario securities law for offering in Ontario.

9. On or about January 30, 1996 Magid asked Hirsch if the AGF funds, of which she was portfolio manager, would be interested in the Private Placement. Hirschdeclined to participate in the Private Placement as portfolio manager for AGF as the investment in her opinion was not suitable for the AGF funds. She did agree,on or about January 30 or 31, 1996, to participate personally in the Private Placement.

10. On or about March 15, 1996 Magid advised Hirsch that she would be allocated 65,000 special warrants in respect of the Private Placement at a cost of$99,450.

11. The minimum amount under British Columbia Securities law to qualify as a purchaser of this private placement was $97,000. Had this Private Placementbeen qualified in Ontario, the minimum amount was $150,000.

12. To finalize Hirsch's participation in the Private Placement, Hirsch signed a private placement subscription agreement (the "Subscription Agreement") whichwas purported to have been signed in Vancouver, disclosing her address as 3174 West 3rd Avenue, in the City of Vancouver, in the Province of BritishColumbia, V3K 1M9.

13. Attached to the Subscription Agreement were two appendices: a Private Placement Questionnaire and Undertaking; and a Form 20A (IP), Acknowledgementof Individual Purchaser which form was required under British Columbia securities law. The Private Placement Questionnaire was shown as being signed inToronto. Both of these documents were signed by Hirsch and stated that her address was 3174 West 3rd Avenue, Vancouver B.C.

14. To Hirsch and Magid's knowledge, 3174 West 3rd Avenue, Vancouver B.C. was Magid's residential address. Hirsch was not at any material time a residentof British Columbia. During the material time Hirsch was a resident of Ontario.

15. In signing the Subscription Agreement, Hirsch acknowledged that Oliver Gold had not filed a prospectus with the British Columbia Securities Commission inrespect of this transaction and acknowledged that Oliver Gold was relying upon certain statutory exemptions under the British Columbia Securities Act.

16. Hirsch and Magid did not take appropriate steps to ensure that Oliver Gold had qualified the Private Placement for issue in Ontario.

17. The Private Placement closed on or about April 4, 1996. On April 10, 1996 Oliver Gold filed with the British Columbia Securities Commission a Form 20dated April 3, 1996 disclosing the full name and address of the purchasers of the Private Placement and stating the total value of the securities distributed. Hirschwas disclosed as residing at 3174 West 3rd Avenue, Vancouver B.C. and as purchasing special warrants for a purchase price of $99,450.

18. On June 14, 1996, the British Columbia Securities Commission issued a receipt for a prospectus filed by Oliver Gold which qualified for sale the warrantsand common shares of Oliver Gold issued upon exercise of the special warrants purchased under the Private Placement.

19. Between July 16, 1996 and September 4, 1996, Hirsch sold all of the securities of Oliver Gold which she had personally acquired from or through the PrivatePlacement and realized a gross profit of $165,173.

ALLEGATIONS AGAINST HIRSCH

20. Hirsch's conduct was contrary to the public interest in that she:

a) participated in the Private Placement without taking appropriate steps to ensure it was qualified for offering to Ontario residents; and

b) made a false statement as to her residential address in a Form 20A.

ALLEGATIONS AGAINST MAGID

21. Magid's conduct was contrary to the public interest in that he:

a) made a false statement as to Hirsch's residential address in a Form 20A.

DATED at Toronto this 4th day of November, 1997.