R.S.O. 1990, c. S.5, AS AMENDED
IN THE MATTER OF
DAVID SINGH, JEFFREY LIPTON,
INFINITY INVESTMENT COUNSEL LIMITED
April 23, 1999
Howard I. Wetston, QC - Vice-Chair
G. Patrick H. Vernon, QC - Commissioner
Tim Moseley - For the Staff of the Ontario Securities Commission
Phillip Anisman - Jeffrey Lipton
I wish to note that, by Notice of Hearing, dated February 10th, 1999, the Commission announced thatit proposed to hold this hearing to consider whether, pursuant to Section 127 of the Securities Act,it would be in the public interest for the Commission to make an order that, pursuant to Clause (1)of the section 127(1) of the Act, the registration granted to Mr. Lipton under the Ontario SecuritiesAct would be suspended for a period of one month, to commence on July 1st, 1999. Mr. Lipton isalready under suspension.
Mr. Lipton agrees to the settlement on the basis of the facts in the settlement agreement andconsents to the making of the Order against him in the form that is attached as Schedule A to thesettlement agreement. Mr. Lipton, at all material times, was a director, president and chief executiveofficer of Infinity Investment Counsel Limited and was registered with the Commission pursuant tothe Act as a portfolio manager and investment counsel.
A Notice of Hearing and Statement of Allegations were issued by the Commission onJanuary 12th, 1999, against Mr. Singh, Mr. Lipton and Infinity Investment Counsel. A settlementagreement was signed on January 12th, 1999 by Mr. Singh, Mr. Lipton and Infinity InvestmentCounsel. At that time, that is, a few days later, on January 19th, 1999, a three-month suspension wasimposed on Mr. Lipton and others by Order of the Commission.
During the week of January 12th, 1999, certain draft advertisements were created by Mr.Singh and revised by a public relations firm retained by Infinity Investment Counsel. Mr. Liptonreceived a draft of the advertisement at the meeting held on January 18th, 1999. It appears that Mr.Lipton did not express any objections to the publication of the advertisement, but said at that meetingthat the performance figures contained in the advertisement could not be published as they were andthat the advertisement should be reviewed by the lawyers for Infinity Investment Counsel before itwas published.
Unfortunately, Mr. Lipton did not follow up to ensure that this was done. He also did not askhis counsel, who represented him in negotiating the settlement agreement, to review theadvertisement for compliance with the settlement agreement.
This settlement agreement notes that Mr. Lipton believed that the performance figures couldnot be published as they were and had indicated that his lawyer should review them before they wentout. Mr. Lipton believed that the advertisement would be submitted to counsel prior to itspublication and would be revised, if necessary, so that it satisfied all regulatory requirements.Obviously, this did not happen.
Mr. Anisman, counsel for Mr. Lipton, submits that these steps amount to a failure to ensureregulatory compliance. We agree with that submission. Mr. Lipton agrees that his conduct wascontrary to the public interest in that he did not take steps, beyond those identified above, to ensurethat the advertisement was not misleading; did not contain statements inconsistent with thesettlement agreement; and did not contravene the prohibition against misleading salescommunications which are set out in Section 16 of National Policy 39.
We have obviously considered the settlement agreement and the Order which has been agreedupon between Staff and Mr. Lipton. As part of its mandate, the Commission must determinewhether, in its opinion, it is in the public interest to issue the Order. Stated somewhat differently,whether or not the sanction is proportional to the conduct that is agreed upon as being contrary tothe public interest.
During his submissions in camera, Mr. Anisman, proposed that settlement hearings shouldnot form the basis for broad public statements since the entire factual underpinning is not beforethe Commission in a settlement agreement. This is not a matter that needs to be decided at this time.However, the Commission would note that such proceedings are not proceedings on consent asbetween private parties. This is a settlement that involves public interest considerations as part ofthe Commission's ongoing regulatory responsibility.
Staff of the Commission have submitted that the Commission should have regard to a numberof factors, including the seriousness of the allegations; the respondent's experience in themarketplace, which we more or less have already referred to; whether or not there has been arecognition of the seriousness of the improprieties, and any mitigating factors.
These factors are considered in the decision of this Commission in the matter of BeltecoHoldings Inc. (1998) 21 OSCB 7743, which is a case known to both counsel in this proceeding. Wehave considered that decision and submissions with respect to whether or not such factors have beenmet. We have noted that Staff contends that they have made allegations or serious allegations thatthe respondent engaged in conduct contrary to the public interest by permitting publication of amisleading advertisement which contravened the Act as well as an agreement between the respondentand Staff. On the facts before us, we see no reason why those facts have not been made out.
The respondent is a registrant with the Commission in the capacity of portfolio manager andinvestment counsel. The respondent is also president and CEO of Infinity Investment Counsel. Assuch, he has a responsibility in respect of the corporate actions of that company.
During the submissions, counsel discussed what is more or less a mitigating factor,
that is, that the respondent was not consulted about the version of the advertisement which waspublished. During the submissions, we noted that in one way this may be looked at as a mitigatingfactor; in another way, it might not be. However, for the purposes of this decision, it is a matter thatwe have taken into account.
We also note, as mitigating factors, a retraction to the advertisement was published, but itsform was significantly less prominent than the original advertisement. Moreover, the respondent hasrecognized his misconduct and has agreed to the sanction.
By entering into the settlement agreement, the respondent has avoided the necessity of theCommission conducting a more lengthy and expensive proceeding into this matter.
Accordingly and finally, it is our opinion that the facts as agreed upon support the settlementagreement and the sanction as proposed. The Order is granted.May 12, 1999.
"Howard I. Wetston" "G. P. H. Vernon"