IN THE MATTER OF THE SECURITIES ACT,
R.S.O. 1990 c. S.5, AS AMENDED
IN THE MATTER OF GREGORY HRYNIW AND
AMENDED STATEMENT OF ALLEGATIONS
OF STAFF OF THE ONTARIO SECURITIES COMMISSION
Staff of the Ontario Securities Commission make the following allegations:
1. Golden Hope Mines Limited is a reporting issuer in the Province of Ontario. The shares of Golden Hope were, at the material time, listed and posted for trading on the Canadian Dealing Network.
2. Gregory Hryniw was appointed a director of Golden Hope on May 30, 1997, and continues to act in that capacity. From time to time, both before and after he became a director, Gregory engaged in a business or professional activity, or was employed with Golden Hope as a geologist. Gregory is a resident of the City of Montreal in the Province of Quebec.
3. Walter Hryniw is Gregory's father and a resident of the City of Montreal in the Province of Quebec. At the material time, Gregory and Walter resided in the same home.
4. As a director and by virtue of Gregory's knowledge of the material fact described below, Gregory was a person in a special relationship with Golden Hope. At the material time, Walter was also a person in a special relationship with Golden Hope by virtue of learning from Gregory the material fact, which is described below. Walter knew, or ought reasonably to have known that his son, Gregory, was a person in a special relationship with Golden Hope.
B. JUNE 3, 1997 TRADING
5. On June 2, 1997, Gregory knew of a material fact regarding Golden Hope which was not publicly disclosed until after trading had closed on June 3, 1997. On June 2, 1997, in his capacity as a director of Golden Hope, Gregory signed a resolution pursuant to which the Board approved Golden Hope's participation in a private placement. The private placement involved the purchase of 1.5 million common shares of Golden Hope (at $0.20 per share) together with a warrant entitling the private placee to purchase an additional 1.5 million common shares of Golden Hope (at $0.20 per share). The private placement was a material fact.
6. On June 3, 1997, before the announcement of the material fact, 740,200 Golden Hope shares were purchased. The price of the Golden Hope share purchases on June 3, 1997 ranged between $0.07 and $0.13. Of the total number of shares traded that day, 140,200 were purchased by Gregory in an account held directly by him at Marleau Lemire Securities Inc.
7. The majority of the remaining shares purchased that day (585,000 shares) were purchased through a nominee account at Marleau Lemire in the name of the Bank of N.T. Butterfield & Son Limited in Hamilton, Bermuda. The nominee account was beneficially held by or on behalf of both Gregory and his father Walter.
8. Shortly after the close of trading on June 3, 1997, Golden Hope publicly announced the material fact by issuing a press release about the private placement. Based on an average trading price in the twenty trading days following the public announcement, Gregory's Marleau Lemire account earned a deemed profit of approximately $26,000.00 and the Bermuda nominee account earned a deemed profit of approximately $96,000.00.
9. By virtue of the foregoing, Gregory and Walter breached section 76(1) of the Ontario Securities Act.
C. MISLEADING OR UNTRUE STATEMENTS
10. During the course of the Staff's investigation of this matter, both Gregory and Walter made misleading or untrue statements to Staff, the particulars of which are described below.
11. On April 23, 2002, Gregory attended a voluntary interview at the offices of the Commission. During the course of the interview, in response to questions put to him by Staff of the Commission, Gregory denied knowledge of the nominee account.
12. By letter dated August 20, 2002, in response to questions put to him by Staff of the Commission, Walter denied trading any Golden Hope shares "in the name of a nominee".
D. CONDUCT CONTRARY TO THE PUBLIC INTEREST
13. The respondents' conduct was contrary to the public interest.
14. Staff reserve the right to make such other allegations as Staff may advise and the Commission permit.
DATED at Toronto this 8th day of October, 2003.