IN THE MATTER OF THE SECURITIES ACT
R.S.O. 1990, c. S.5, AS AMENDED
IN THE MATTER OF
A.C. MacPHERSON & CO. INC. AND GENO DELLA ROCCA
STATEMENT OF ALLEGATIONS OF STAFF OF THE ONTARIO SECURITIES COMMISSION
Staff of the Ontario Securities Commission make the following allegations:
1. The respondent A.C. MacPherson & Co. Inc. ("A.C. MacPherson") is registeredunder Ontario securities law as an investment dealer. The respondent Geno DellaRocca ("Della Rocca") is registered under Ontario securities law and is thepresident and chief executive officer of A.C. MacPherson.
2. During the years 1996 and 1997, virtually all of A.C. MacPherson's businessconsisted of its acquiring stock for its own account and selling that same stock toits clients.
3. In 1996, more than two-thirds of A.C. MacPherson's revenue from principal tradingwas derived from trading stock of seven issuers. In the following year,approximately 99% of its revenue from principal trading was derived from the sameseven issuers, all of which traded on the Canadian Dealing Network. Those issuersincluded the following two:
(a) Heartland Resources Inc.; and
(b) Complex Minerals Corp.
4. In the case of both of these issuers, A.C. MacPherson acquired stock at asignificant discount to what was then the market price of the stock. A.C.MacPherson then resold that stock to its own clients at excessive markups.
Heartland Resources Inc.
5. Between October 19, 1995 and June 25, 1996, A.C. MacPherson acquired5,000,000 shares of Heartland Resources Inc. ("Heartland") at prices ranging from$0.215 to $0.32 per share. During the same time period, the market price ofHeartland shares ranged from $0.55 to $0.90.
6. Between June 18 and July 25, 1996, A.C. MacPherson acquired a further 640,000shares of Heartland at prices ranging from $0.23275 and $0.32 per share. Duringthe same time period, the market price ranged from $0.55 to $0.75 per share.
7. Between April 18 and June 27, 1997, A.C. MacPherson acquired an additional4,000,000 shares of Heartland at prices ranging from $0.16 to $0.20 per share.During the same time period, the market price ranged from $0.50 to $0.67 pershare.
8. During the period from November 7, 1995 to August 31, 1997, A.C. MacPhersonsold substantially all of its Heartland shares to its own clients. A.C. MacPhersonsold the shares at prices ranging from $0.35 per share to $1.10 per share, andrealized a gross profit of several million dollars.
Complex Minerals Corp.
9. From December 29, 1995 to October 10, 1996, A.C. MacPherson acquired7,700,000 shares of Complex Minerals Corp. ("Complex") at prices up to $0.33 pershare. The market price ranged from $0.40 to $1.00 per share. A.C. MacPhersonsubsequently acquired an additional 500,000 shares.
10. During the period from February 5, 1996 to August 31, 1997, A.C. MacPherson soldsubstantially all of its Complex shares to its own clients. A.C. MacPherson sold theshares at prices ranging from $0.30 to $0.95 per share, and realized a gross profitof several million dollars.
Conduct of the Respondents
11. In engaging in the conduct set out above, A.C. MacPherson may have placed itselfin a conflict of interest with its clients. Its conduct was therefore contrary to thepublic interest.
12. In allowing A.C. MacPherson to engage in the conduct set out above, Della Rocca,as a registrant under Ontario securities law, acted in a manner contrary to thepublic interest.
13. Such additional allegations as Staff may make and as the Commission may permit.