Securities Law & Instruments

IN THE MATTER OF

THE SECURITIES ACT

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

AND

IN THE MATTER OF

EDWARD CARL BLASIAK

 

ORDER

(Sections 127 and 127.1)

WHEREAS on October 11, 2002 the OntarioSecurities Commission (the "Commission") issued aNotice of Hearing pursuant to sections 127 and 127.1 of theSecurities Act (the "Act") in respect of EdwardCarl Blasiak ("Blasiak");

AND WHEREAS Blasiak entered into a settlementagreement dated October 11, 2002 (the "Settlement Agreement")wherein he agreed to a proposed settlement of the proceeding,subject to the approval of the Commission, and wherein he providedto the Commission a written undertaking never to apply for registrationin any capacity under Ontario securities law;

AND UPON reviewing the Settlement Agreementand the Statement of Allegations of Staff of the Commission,and upon hearing submissions from the respondent and from Staffof the Commission;

AND WHEREAS the Commission is of theopinion that it is in the public interest to make this Order;

IT IS ORDERED THAT:

(1) the Settlement Agreement dated October11, 2002, attached to this Order, is hereby approved;

(2) pursuant to clause 1 of subsection 127(1)of the Act, the registration of Blasiak is terminated;

(3) pursuant to clause 2 of subsection 127(1)of the Act, Blasiak shall cease trading in securities fora period of five years effective 30 days from the date ofthis Order;

(4) pursuant to clause 7 of subsection 127(1)of the Act, Blasiak shall resign his position as an officeror director of any reporting issuer in Ontario in whichhe holds the position of officer or director and as an officeror director of any issuer which has an interest directlyor indirectly in any registrant effective the date of thisOrder;

(5) pursuant to clause 8 of subsection 127(1)of the Act, Blasiak is prohibited from becoming or actingas an officer or director of any reporting issuer in Ontarioor an officer or director of any issuer which has an interestdirectly or indirectly in any registrant, for a period offive years effective the date of this Order; and

(6) pursuant to clause 6 of subsection 127(1)of the Act, Blasiak is reprimanded.

October 17, 2002.

"H. Lorne Morphy"                    "HaroldP. Hands"

IN THE MATTER OF

THE SECURITIES ACT

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

AND

IN THE MATTER OF

EDWARD CARL BLASIAK

 

SETTLEMENT AGREEMENT

I INTRODUCTION

1. By Notice of Hearing dated October 11,2002 (the "Notice of Hearing"), the Ontario SecuritiesCommission (the "Commission") announced that itproposed to hold a hearing to consider whether, pursuant tosections 127 and 127.1 of the Securities Act, R.S.O.1990, c. S.5, as amended (the "Act"), in the opinionof the Commission, it is in the public interest for the Commission:

(a) to make an order pursuant to section127(1) clause 2 of the Act that trading in securities byEdward Carl Blasiak ("Blasiak") cease permanentlyor for such other period as specified by the Commission;

(b) to make an order pursuant to section127(1) clause 1 of the Act that the registration of Blasiakbe suspended for such period as is specified in the Orderor be terminated, or that terms and conditions be imposedon the registration of Blasiak;

(c) to make an order pursuant to section127(1) clause 7 of the Act that Blasiak resign one or morepositions which Blasiak may hold as an officer or directorof any issuer;

(d) to make an order pursuant to section127(1) clause 8 of the Act that Blasiak is prohibited frombecoming or acting as a director or officer of any issuerpermanently or for such other period as specified by theCommission;

(e) to make an order pursuant to section127(1) clause 6 of the Act that Blasiak be reprimanded;

(f) to make an order pursuant to section127.1 of the Act that Blasiak pay the costs of Staff's investigationand the costs of, or related to, this proceeding, incurredby or on behalf of the Commission; and

(g) to make such other order as the Commissionconsiders appropriate.

II JOINT SETTLEMENT RECOMMENDATION

2. Staff of the Commission ("Staff")agree to recommend settlement of the proceedings initiatedin respect of the respondent by the Notice of Hearing in accordancewith the terms and conditions set out below. The respondentagrees to the settlement on the basis of the facts agreedto as hereinafter provided and the respondent consents tothe making of an Order in the form attached as Schedule "A"on the basis of the facts set out below.

3. This settlement agreement, including theattached Schedule "A" (collectively, the "SettlementAgreement"), will be released to the public only if andwhen the settlement is approved by the Commission.

III FACTS

Acknowledgement

4. Staff and the respondent agree with thefacts and conclusions set out in Part III of the SettlementAgreement.

Introduction

5. During the Material Time (as describedbelow), Blasiak was registered as a registered representativeunder Ontario securities law. Blasiak has not been registeredin any capacity under the Act since March 26, 2001. Duringthe Material Time, Blasiak was employed with Goepel McDermidInc. ("Goepel McDermid"), a registered dealer anda member of the Investment Dealers Association of Canada (the"IDA").

6. During the period from May 1995 to May1999 (the "Material Time"), Blasiak was the registeredrepresentative for approximately 45 accounts (the "Accounts")held at Goepel McDermid in the name of Britwirth InvestmentCompany, Ltd. ("Britwirth"), Fulton Park Limited("Fulton Park") and Wifsta Ltd. ("Wifsta").

7. Britwirth was incorporated pursuant tothe laws of the Turks and Caicos Islands. Fulton Park andWifsta were incorporated pursuant to the laws of the Isleof Man. Britwirth, Fulton Park and Wifsta have not been registeredin any capacity under the Act.

8. During the Material Time, Blasiak receivedtrading instructions from James Frederick Pincock ("Pincock")on behalf of Britwirth, Fulton Park and Wifsta. On August27, 2002, the Commission approved a settlement agreement betweenStaff of the Commission and Pincock dated August 23, 2002,the terms of which are set out therein.

Conduct of Blasiak Contrary to the Requirementsof Ontario Securities Law

9. During the Material Time, in his capacityas the registered representative for the Accounts, Blasiakassisted Britwirth, Fulton Park and Wifsta in making trades,where such trading was a distribution of such securities,without having filed a preliminary prospectus and a prospectus,and obtaining receipts therefor from the Director, as requiredby section 53(1) of the Act, and without registration contraryto section 25(1) of the Act.

10. In particular, Britwirth, Fulton Parkand Wifsta received funds from investors in Ontario and elsewhereto purchase securities in at least six companies, including,Royal Laser Tech Corporation ("Royal Laser"), ChampionCommunication Services Inc. ('Champion"), Leisure CanadaInc., Indocan Resources Inc., Pacific Concorde Capital Inc.(collectively, referred to as the "Companies").Funds in excess of CAD 1,000,000 and in excess of USD 550,000received from at least 130 investors were deposited in theAccounts for the purpose of purchasing securities in the Companies.Investors purchased securities in the Companies through poolingand subscription agreements entered into between the investorsand Britwirth, Fulton Park or Wifsta (the "Agreements").

11. During the Material Time, certain investorswho purchased securities in the Companies held individualaccounts with Goepel McDermid. Blasiak was the registeredrepresentative for these clients, as well as Britwirth, FultonPark and Wifsta.

12. During the Material Time, Blasiak assistedBritwirth, Fulton Park and Wifsta in making trades contraryto the prospectus and registration requirements of Ontariosecurities law, the particulars of which are as follows:

(a) Blasiak was the registered representativeresponsible for the opening of the Accounts held in thename of Britwirth, Fulton Park and Wifsta;

(b) numerous third party cheques of individualinvestors were deposited into the Accounts for the purchaseof the securities in the Companies;

(c) on a number of occasions, the principalof Britwirth, Fulton Park or Wifsta instructed Blasiak totransfer securities from the Accounts to the accounts ofindividual investors held at either Goepel McDermid or accountsheld with other brokerage firms, without using the facilitiesof the Toronto Stock Exchange. In the case of accounts ofindividual investors held at Goepel McDermid, Blasiak wasalso the registered representative for these clients;

(d) in some instances, Blasiak acted asa witness for the signatories, either the investor or Britwirth,in respect of the subscription or pooling agreements describedabove;

(e) in some instances, Blasiak participatedin the pooling arrangement by purchasing shares from Britwirthon behalf of himself or his spouse in relation to severalof the Companies noted above; and

(f) Blasiak did not inform Goepel McDermidor its compliance department that he was assisting Britwirth,Fulton Park or Wifsta in making trades contrary to the prospectusand registration requirements contained in Ontario securitieslaw, as described above.

13. Further, Blasiak failed to advise allof his clients who purchased securities in the Companies fromBritwirth, Fulton Park or Wifsta, that they purchased thesesecurities without the benefit of a prospectus or any exemptionfrom the prospectus requirements contained in Ontario securitieslaw.

14. Following the commencement of the investigationby Staff of the Commission in relation to the matters describedherein, Blasiak was instructed by the compliance departmentof Goepel McDermid to close the Accounts.

Conduct Contrary To The Public Interest

15. In his capacity as the registered representativefor the Accounts, Blasiak acted contrary to the public interestas described above by assisting Britwirth, Fulton Park andWifsta in making trades where such trading was a distributionof securities, contrary to the prospectus and registrationrequirements contained in Ontario securities law.

16. Blasiak failed to deal fairly, honestlyand in good faith with his clients, in breach of the requirementsset out in Ontario securities law and in particular, subsections2.1(1) and (2) of Rule 31-505 in failing to advise all ofhis clients who purchased securities in the Companies fromany of Britwirth, Fulton Park or Wifsta, that they purchasedthese securities without the benefit of a prospectus or anyexemption from the prospectus requirements contained in Ontariosecurities law.

Other Matters

17. On September 28, 1998, the Ontario DistrictCouncil of the IDA approved a settlement agreement enteredinto between the IDA and Blasiak imposing disciplinary penaltieson Blasiak, the terms of which are set out in IDA Bulletin#2521 dated October 14, 1998 (the "Bulletin"). Asstated in the Bulletin, pursuant to the settlement agreementBlasiak admitted that he failed to ensure that orders forthe accounts of customers of McDermid St. Lawrence ChisholmLtd. were given priority over all other orders executed onbehalf of the firm contrary to IDA Regulation 1300.17.

IV TERMS OF SETTLEMENT

18. The respondent agrees to the followingterms of settlement:

(a) pursuant to clause 1 of subsection 127(1)of the Act, the registration of Blasiak is terminated;

(b) pursuant to clause 2 of subsection 127(1)of the Act, Blasiak will cease trading in securities fora period of five years, effective 30 days following thedate of the Order of the Commission approving the proposedsettlement agreement herein;

(c) pursuant to clause 7 of subsection 127(1)of the Act, Blasiak is required to resign his position asan officer or director of any registrant in Ontario, hisposition as an officer of director of any issuer in Ontariowhich has an interest directly or indirectly in any registrant,or his position as officer or director of any reportingissuer, in which he holds the position of officer or directoreffective the date of the Order of the Commission approvingthe proposed settlement agreement herein;

(d) pursuant to clause 8 of subsection 127(1)of the Act, Blasiak is prohibited from becoming or actingas an officer or director of a registrant, an officer ordirector of any issuer in Ontario which has an interestdirectly or indirectly in any registrant, or an officeror director of any reporting issuer in Ontario, for a periodof five years effective the date of the Order of the Commissionapproving the proposed settlement agreement herein;

(e) Blasiak undertakes never to apply forregistration in any capacity under Ontario securities law;

(f) Blasiak agrees to be reprimanded bythe Commission under clause 6 of subsection 127(1) of theAct; and

(g) Blasiak will attend, in person, thehearing before the Commission to consider the proposed settlement,or such other date as may be agreed to by the parties forthe scheduling of the hearing to consider the proposed settlement.

V STAFF COMMITMENT

19. If this Settlement Agreement is approvedby the Commission, Staff will not initiate any complaint tothe Commission or request the Commission to hold a hearingor issue any order in respect of any conduct or alleged conductof the respondent in relation to the facts set out in PartIII of this Settlement Agreement.

VI PROCEDURE FOR APPROVAL OF SETTLEMENT

20. The approval of the settlement as setout in the Settlement Agreement shall be sought at a publichearing before the Commission in accordance with the proceduresdescribed herein and such further procedures as may be agreedupon between Staff and the respondent.

21. If this Settlement Agreement is approvedby the Commission, it will constitute the entirety of theevidence to be submitted respecting the respondent in thismatter and the respondent agrees to waive any right to a fullhearing and appeal of this matter under the Act.

22. If this Settlement Agreement is approvedby the Commission, the parties to this Settlement Agreementwill not make any statement that is inconsistent with thisSettlement Agreement.

23. If, for any reason whatsoever, this settlementis not approved by the Commission, or the Order set forthin Schedule "A" is not made by the Commission:

(a) each of Staff and the respondent willbe entitled to proceed to a hearing of the allegations inthe Notice of Hearing and related Statement of Allegationsunaffected by the Settlement Agreement or the settlementnegotiations;

(b) the terms of the Settlement Agreementwill not be raised in any other proceeding or disclosedto any person except with the written consent of Staff andthe respondent or as may be otherwise required by law; and

(c) the respondent agrees that he will notraise in any proceeding the Settlement Agreement or thenegotiation or process of approval thereof as a basis forany attack on the Commission's jurisdiction, alleged bias,appearance of bias, alleged unfairness or any other challengethat may otherwise be available.

24. If, prior to the approval of this SettlementAgreement by the Commission, there are new facts or issuesof substantial concern, in the view of Staff, regarding thefacts set out in Part III of this Settlement Agreement, Staffwill be at liberty to withdraw from this Settlement Agreement.Notice of such intention will be provided to the respondentin writing. In the event of such notice being given, the provisionsof paragraph 20 in this part will apply as if this SettlementAgreement had not been approved in accordance with the proceduresset out herein.

VII DISCLOSURE OF SETTLEMENT AGREEMENT

25. Staff or the respondent may refer to anypart or all of this Settlement Agreement in the course ofthe hearing convened to consider this agreement. Otherwise,this Settlement Agreement and its terms will be treated asconfidential by all parties to the Settlement Agreement untilapproved by the Commission, and forever if, for any reasonwhatsoever, this settlement is not approved by the Commission.

26. Any obligation as to confidentiality shallterminate upon the approval of this Settlement Agreement bythe Commission.

VIII EXECUTION OF SETTLEMENT AGREEMENT

27. This Settlement Agreement may be signedin one or more counterparts which together shall constitutea binding agreement and a facsimile copy of any signatureshall be as effective as an original signature.

October 11, 2002.

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