Securities Law & Instruments

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED

AND

IN THE MATTER OF

ROBERT THOMISLAV ADZIJA, LARRYALLEN AYRES, DAVID ARTHUR BENDING, MARLENE BERRY, DOUGLAS CROSS,ALLAN JOSEPH DORSEY, ALLAN EIZENGA, GUY FANGEAT, RICHARD JULESFANGEAT, MICHAEL HERSEY, GEORGE EDWARD HOLMES, TODD MICHAELJOHNSTON, MICHAEL THOMAS PETER KENNELLY, JOHN DOUGLAS KIRBY,ERNEST KISS, ARTHUR KRICK, FRANK ALAN LATAM, BRIAN LAWRENCE,LUKE JOHN MCGEE, RON MASSCHAELE, JOHN NEWMAN, RANDALL NOVAK,NORMAND RIOPELLE, ROBERT LOUIS RIZZUTO AND MICHAEL VAUGHAN

 

ORDER

(Subsection 127(1) and section127.1)

WHEREAS on September 24, 1998, the OntarioSecurities Commission (the "Commission") issued aNotice of Hearing pursuant to section 127 of the SecuritiesAct, R.S.O. 1990, c. S.5, as amended (the "Act")respecting David Arthur Bending ("Bending") and others;

AND WHEREAS on September 24, 1998, theCommission made a Temporary Order as against Bending and others,such Temporary Order which was extended by Commission Ordersdated October 9, 1998 and February 5, 1999 (the "TemporaryOrder");

AND WHEREAS Bending entered into a SettlementAgreement executed October 1 and 4, 2002 (the "SettlementAgreement") in which he agreed to a proposed settlementof the proceedings, subject to the approval of the Commission;

AND UPON reviewing the Settlement Agreementand the Statement of Allegations of Staff of the Commissionand upon hearing submissions from Bending and from Staff ofthe Commission;

AND WHEREAS the Commission is of theopinion that it is in the public interest to make this Orderpursuant to subsection 127(1) and section 127.1 of the Act;

IT IS ORDERED THAT:

1. the attached Settlement Agreement is approved;

2. pursuant to subsection 127(1), paragraph1, Bending's registration with the Commission is suspendedfor eight months commencing on the date of this Order;

3. pursuant to subsection 127(1), paragraph2, trading in any securities by Bending cease for eight monthscommencing on the date of this Order;

4. pursuant to subsection 127(1), paragraph2, Bending must successfully complete the Canadian SecuritiesCourse in order for his registration to be reinstated followingthe suspension;

5. pursuant to subsection 127(1), paragraph6, Bending is reprimanded;

6. the Temporary Order as against Bendingno longer has any force or effect; and

7. pursuant to section 127.1, Bending willpay costs to the Commission in the amount of $2,000.

October 9, 2002.

"H. Lorne Morphy"                    "RobertL. Shirriff"

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED

AND

IN THE MATTER OF

ROBERT THOMISLAV ADZIJA, LARRYALLEN AYRES, DAVID ARTHUR BENDING, MARLENE BERRY, DOUGLAS CROSS,ALLAN JOSEPH DORSEY, ALLAN EIZENGA, GUY FANGEAT, RICHARD JULESFANGEAT, MICHAEL HERSEY, GEORGE EDWARD HOLMES, TODD MICHAELJOHNSTON, MICHAEL THOMAS PETER KENNELLY, JOHN DOUGLAS KIRBY,ERNEST KISS, ARTHUR KRICK, FRANK ALAN LATAM, BRIAN LAWRENCE,LUKE JOHN MCGEE, RON MASSCHAELE, JOHN NEWMAN, RANDALL NOVAK,NORMAND RIOPELLE, ROBERT LOUIS RIZZUTO AND MICHAEL VAUGHAN

 

SETTLEMENT AGREEMENT BETWEENSTAFF OF THE

ONTARIO SECURITIES COMMISSION

AND DAVID ARTHUR BENDING

I. INTRODUCTION

1. By Notice of Hearing dated September 24,1998 (the "Notice of Hearing"), the Ontario SecuritiesCommission (the "Commission") announced that itproposed to hold a hearing to consider, among other things:

(a) whether, pursuant to subsection 127(1)of the Securities Act, R.S.O. 1990, c. S.5 (the "Act"),it is in the public interest for the Commission to makean order that the exemptions contained in Ontario securitieslaw do not apply to the respondent David Arthur Bending("Bending") permanently or for such time as theCommission may direct; and

(b) such other orders as the Commissiondeems appropriate.

2. By Temporary Order dated September 24,1998, the Commission ordered that trading in securities byBending cease immediately except for trades in mutual fundsecurities and trades for his personal account (the "TemporaryOrder"). The Temporary Order was extended by CommissionOrders dated October 9, 1998 and February 4, 1999.

II. JOINT SETTLEMENT RECOMMENDATION

3. Staff of the Commission ("Staff")agrees to recommend settlement of the proceeding respectingBending initiated by the Notice of Hearing in accordance withthe terms and conditions set out below. Bending consents tothe making of an order against him in the form attached asSchedule "A" based on the facts set out in PartIII of this Settlement Agreement.

III. STATEMENT OF FACTS

Acknowledgement

4. Solely for the purposes of this proceeding,Staff and Bending agree with the facts set out in paragraphs5 through 19 of this Settlement Agreement.

Facts

5. Saxton Investment Ltd. ("Saxton")was incorporated on January 13, 1995. The respondent AllanEizenga ("Eizenga") was Saxton's registered director.Saxton and Eizenga established numerous offering corporations,as listed below (the "Offering Corporations").

The Saxton Trading Corp.
The Saxton Export Corp.
The Saxton Export (II) Corp.
The Saxton Export (III) Corp.
The Saxton Export (IV) Corp.
The Saxton Export (V) Corp.
The Saxton Export (VI) Corp.
The Saxton Export (VII) Corp.
The Saxton Export (VIII) Corp.
The Saxton Export (IX) Corp.
The Saxton Export (X) Corp.
The Saxton Export (XI) Corp.
The Saxton Export (XII) Corp.
The Saxton Export (XIII) Corp.
The Saxton Export (XIV) Corp.
The Saxton Export (XV) Corp.
The Saxton Export (XVI) Corp.
The Saxton Export (XVII) Corp.
The Saxton Export (XVIII) Corp.
The Saxton Export (XIX) Corp.
The Saxton Export (XX) Corp.
The Saxton Export (XXI) Corp.
The Saxton Export (XXII) Corp.
The Saxton Export (XXIII) Corp.
The Saxton Export (XXIV) Corp.
The Saxton Export (XXV) Corp.
The Saxton Export (XXVI) Corp.
The Saxton Export (XXVII) Corp.
The Saxton Export (XXVIII) Corp.
The Saxton Export (XXIX) Corp.
The Saxton Export (XXX) Corp.
The Saxton Export (XXXI) Corp.
The Saxton Export (XXXII) Corp.
The Saxton Export (XXXIII) Corp.
The Saxton Export (XXXIV) Corp.
The Saxton Export (XXXV) Corp.
The Saxton Export (XXXVI) Corp.
The Saxton Export (XXXVII) Corp.
The Saxton Export (XXXVIII) Corp.

6. Saxton and the Offering Corporations representedto the public that they were investing in businesses in Cubaand other Caribbean companies.

7. On or about October 7, 1998, the Courtappointed KPMG Inc. ("KPMG") as the custodian ofSaxton's assets. In early 1999, KPMG reported that the OfferingCorporations had raised approximately $37 million from investors.All funds invested in the Offering Corporations had been transferredto Saxton. At that time, KPMG held the view that the valueof the Saxton assets, at its highest (as reported by relatedcompanies), was approximately $5.5 million.

8. Bending became registered with the Commissionunder the Act to sell mutual fund securities and limited marketproducts on January 25, 1994.

9. Between October 1996 and November 1996,Bending sold to Ontario investors securities of one or moreof the Offering Corporations (the "Saxton Securities").Bending sold the Saxton Securities to 9 Ontario investorsfor a total amount sold of approximately $847,000.

10. All of the Offering Corporations wereincorporated pursuant to the laws of Ontario. Bending's salesof the Saxton Securities constituted trades in securitiesof an issuer that had not been previously issued.

11. None of the Offering Corporations fileda prospectus with the Commission. By selling the Saxton Securitiesto his clients, Bending traded in securities, which tradeswere distributions, without a prospectus being filed or receiptedby the Commission and with no exemption from the prospectusrequirements of Ontario securities law being available.

12. Bending failed to provide his clientswith access to substantially the same information concerningthe Saxton Securities that a prospectus filed under the Actwould provide. Bending had in his possession a copy of oneof the Offering Memoranda respecting the Saxton Securities.He did not provide any of his clients with this Offering Memorandumprior to their purchase of the Saxton Securities. Saxton alsoprovided to Bending vague promotional material which he, inturn, provided to clients without any supplemental information.

13. Bending received commissions and trailerfees of approximately $63,500 on the sales described in paragraph9 above.

14. Bending failed to adequately assess thesuitability of his clients' investments in the Saxton Securities.One client of Bending's invested approximately 90% of hisportfolio (approximately $250,000) in the Saxton Securities.

15. Bending failed to inform his sponsoringfirm that he was selling the Saxton Securities.

16. Bending's conduct in selling the SaxtonSecurities was contrary to Ontario securities law and thepublic interest.

17. Bending informs Staff that, prior to tradingin the Saxton Securities, he was advised by the respondentsRichard Fangeat and Luke McGee, the latter of whom representedhimself to be a Vice-President of Saxton and a lawyer, thatBending did not need to be registered with the Commissionin order to trade in the Saxton Securities. Bending did notmake any inquiries of his sponsor, or any one independentof Saxton, to verify this information.

18. Bending co-operated with the Commission'sinvestigation respecting the sale of Saxton Securities.

19. Bending has been subject to close supervisionby his sponsor since February 2001.

IV. TERMS OF SETTLEMENT

20. Bending agrees to the following termsof settlement:

(a) the making of an order:

(i) approving this settlement;

(ii) suspending Bending's registrationwith the Commission for eight months;

(iii) that trading in any securities byBending cease for eight months;

(iv) that Bending must successfully completethe Canadian Securities Course in order for his registrationto be reinstated following the suspension;

(v) reprimanding Bending;

(vi) that the Temporary Order no longerhas any force or effect; and

(vii) that Bending will pay costs to theCommission in the amount of $2,000.

V. STAFF COMMITMENT

21. If this settlement is approved by theCommission, Staff will not initiate any other proceeding underthe Act against Bending in relation to the facts set out inPart III of this Settlement Agreement.

VI. APPROVAL OF SETTLEMENT

22. Approval of the settlement set out inthis Settlement Agreement shall be sought at the public hearingof the Commission scheduled for October 9, 2002, or such otherdate as may be agreed to by Staff and Bending (the "SettlementHearing"). Bending will attend in person at the SettlementHearing.

23. Counsel for Staff or Bending may referto any part, or all, of this Settlement Agreement at the SettlementHearing. Staff and Bending agree that this Settlement Agreementwill constitute the entirety of the evidence to be submittedat the Settlement Hearing.

24. If this settlement is approved by theCommission, Bending agrees to waive his rights to a full hearing,judicial review or appeal of the matter under the Act.

25. Staff and Bending agree that if this settlementis approved by the Commission, they will not make any publicstatement inconsistent with this Settlement Agreement.

26. If, for any reason whatsoever, this settlementis not approved by the Commission, or an order in the formattached as Schedule "A" is not made by the Commission:

(a) this Settlement Agreement and its terms,including all discussions and negotiations between Staffand Bending leading up to its presentation at the SettlementHearing, shall be without prejudice to Staff and Bending;

(b) Staff and Bending shall be entitledto all available proceedings, remedies and challenges, includingproceeding to a hearing of the allegations in the Noticeof Hearing and Statement of Allegations of Staff, unaffectedby this Agreement or the settlement discussions/negotiations;

(c) the terms of this Settlement Agreementwill not be referred to in any subsequent proceeding, ordisclosed to any person, except with the written consentof Staff and Bending or as may be required by law; and

(d) Bending agrees that he will not, inany proceeding, refer to or rely upon this Settlement Agreement,the settlement discussions/negotiations or the process ofapproval of this Settlement Agreement as the basis for anyattack on the Commission's jurisdiction, alleged bias orappearance of bias, alleged unfairness or any other remediesor challenges that may otherwise be available.

VII. DISCLOSURE OF SETTLEMENT AGREEMENT

27. Except as permitted under paragraph 23above, this Settlement Agreement and its terms will be treatedas confidential by Staff and Bending until approved by theCommission, and forever, if for any reason whatsoever thissettlement is not approved by the Commission, except withthe consent of Staff and Bending, or as may be required bylaw.

28. Any obligations of confidentiality shallterminate upon approval of this settlement by the Commission.

VIII. EXECUTION OF SETTLEMENT AGREEMENT

29. This Settlement Agreement may be signedin one or more counterparts which together shall constitutea binding agreement.

30. A facsimile copy of any signature shallbe as effective as an original signature.

October 1, 2002.

"David Arthur Bending"
David Arthur Bending

October 4, 2002.

"Michael Watson"
Staff of the Ontario Securities Commission
(Per) Michael Watson

 

SCHEDULE "A"

 

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED

AND

IN THE MATTER OF

ROBERT THOMISLAV ADZIJA, LARRYALLEN AYRES, DAVID ARTHUR BENDING, MARLENE BERRY, DOUGLAS CROSS,ALLAN JOSEPH DORSEY, ALLAN EIZENGA, GUY FANGEAT, RICHARD JULESFANGEAT, MICHAEL HERSEY, GEORGE EDWARD HOLMES, TODD MICHAELJOHNSTON, MICHAEL THOMAS PETER KENNELLY, JOHN DOUGLAS KIRBY,ERNEST KISS, ARTHUR KRICK, FRANK ALAN LATAM, BRIAN LAWRENCE,LUKE JOHN MCGEE, RON MASSCHAELE, JOHN NEWMAN, RANDALL NOVAK,NORMAND RIOPELLE, ROBERT LOUIS RIZZUTO AND MICHAEL VAUGHAN

 

ORDER

(Subsection 127(1) and section127.1)

WHEREAS on September 24, 1998, the OntarioSecurities Commission (the "Commission") issued aNotice of Hearing pursuant to section 127 of the SecuritiesAct, R.S.O. 1990, c. S.5, as amended (the "Act")respecting David Arthur Bending ("Bending") and others;

AND WHEREAS on September 24, 1998, theCommission made a Temporary Order as against Bending and others,such Temporary Order which was extended by Commission Ordersdated October 9, 1998 and February 5, 1999 (the "TemporaryOrder");

AND WHEREAS Bending entered into a SettlementAgreement dated • (the "Settlement Agreement")in which he agreed to a proposed settlement of the proceedings,subject to the approval of the Commission;

AND UPON reviewing the Settlement Agreementand the Statement of Allegations of Staff of the Commissionand upon hearing submissions from Bending and from Staff ofthe Commission;

AND WHEREAS the Commission is of theopinion that it is in the public interest to make this Orderpursuant to subsection 127(1) and section 127.1 of the Act;

IT IS ORDERED THAT:

1. the attached Settlement Agreement is approved;

2. pursuant to subsection 127(1), paragraph1, Bending's registration with the Commission is suspendedfor eight months commencing on the date of this Order;

3. pursuant to subsection 127(1), paragraph2, trading in any securities by Bending cease for eight monthscommencing on the date of this Order;

4. pursuant to subsection 127(1), paragraph2, Bending must successfully complete the Canadian SecuritiesCourse in order for his registration to be reinstated followingthe suspension;

5. pursuant to subsection 127(1), paragraph6, Bending is reprimanded;

6. the Temporary Order as against Bendingno longer has any force or effect; and

7. pursuant to section 127.1, Bending willpay costs to the Commission in the amount of $2,000.

October 9, 2002.

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