Settlement Agreement: In the Matter of Anwar Heidary and James Sylvester - James Sylvester
R.S.O. 1990, c. S.5, AS AMENDED
AND
IN THE MATTER OF
ANWAR HEIDARY AND JAMES SYLVESTER
SETTLEMENT AGREEMENT
RE: JAMES SYLVESTER
I INTRODUCTION
1. By Notice of Hearing dated September 7, 1999, (the "Notice of Hearing"), theOntario Securities Commission (the "Commission") announced that it proposedto hold a hearing to consider whether, pursuant to section 127 of the SecuritiesAct, R.S.O. 1990, c. S.5, as amended, (the "Act"), in the opinion of theCommission it is in the public interest for the Commission:
a. to make an order that James Sylvester cease trading in securities,permanently or for such time as the Commission may direct;
b. to make an order that James Sylvester be reprimanded; and/or
c. to make such other order as the Commission may deem appropriate;
II JOINT SETTLEMENT RECOMMENDATION
2. The Staff of the Commission ("Staff") agree to recommend the settlement of theproceedings initiated in respect of James Sylvester ("Sylvester") by the Noticeof Hearing in accordance with the terms and conditions set out below. Sylvesteragrees to the settlement on the basis of the facts agreed to as set out below andconsents to the making of an order against him in the form attached as Schedule"A" on the basis of those facts.
3. This settlement agreement, including the attached Schedule "A", will be releasedto the public only if and when the settlement is approved by the Commission.
III STATEMENT OF FACTS
(i) Acknowledgement
4. Staff, and Sylvester agree with the facts set out in this Part III.
(ii) Factual Background
5. Sylvester is an individual who resides in Woodstock, Ontario. Sylvester hasnever been registered with the Commission in any capacity.
The Sussex Admiral Group Ltd.
6. Between June 1993 and March 1995, Sylvester sold to Ontario investorssecurities of The Sussex Admiral Group Ltd. ("Sussex"), a corporation organizedpursuant to the laws of Ontario.
7. The sales of shares of Sussex constituted trades in securities of an issuer thathad not been previously issued.
8. Sussex did not file a prospectus with the Commission and was never issued areceipt for a prospectus by the Commission.
9. Although the distribution of shares of Sussex purportedly relied on the "seedcapital" exemption from the prospectus requirements of the Act found inparagraph 72(1)(p), the requirements of this exemption were not satisfied. Noneof the other exemptions from the prospectus requirements in Ontario securitieslaw was available for the distribution of shares of Sussex.
10. None of the exemptions from the registration requirements in Ontario securitieslaw was available for the sale of shares of Sussex.
11. Sylvester held himself out as engaging in the business of trading in securitiesand was, therefore, a "market intermediary" as defined in section 204 of theRegulation to the Act. To sell securities which relied upon the "seed capital"exemption from the prospectus requirements of the Act, Sylvester was requiredto be registered with the Commission to sell limited market products. Sylvesterdid not have this registration at the material time.
12. Sylvester's conduct as set out in paragraphs 6 through 11 was contrary to thepublic interest.
IV TERMS OF SETTLEMENT
13. Sylvester agrees to the following term of settlement:
a. pursuant to clause 2 of subsection 127(1) of the Act, Sylvester will beprohibited from trading in securities for a period of five years from thedate of this Order with the following exceptions:
i. After a period of one year from the date of this Order, Sylvester willbe permitted to trade in securities for his personal accountprovided that those securities trade on a recognized stockexchange, the transactions are not pre-arranged and Sylvester hasno knowledge of the counter party to the transaction;
ii. Sylvester will be permitted to sell securities of Club LinkCorporation, of which he is the beneficial owner, provided thatthose securities trade on a recognized stock exchange, thetransactions are not pre-arranged and Sylvester has no knowledgeof the counter party to the transaction;
iii. Sylvester will be permitted to trade in securities on behalf of ExportInvestors Group Ltd. for the purposes of completing acontemplated transaction involving the sale of the assets and/orshares of Sussex Group Ltd. and/or Sussex Admiral (Bahamas)Ltd. to a Canadian public company (the "public company") inexchange for securities in the public company; and
iv. If the contemplated transaction outlined in subparagraph iii iscompleted, Sylvester will be permitted to sell for his own accountsecurities of the public company provided that those securitiestrade on a recognized stock exchange, the transactions are notpre-arranged and Sylvester has no knowledge of the counter partyto the transaction.
V STAFF COMMITMENT
14. If this Settlement Agreement is approved by the Commission, Staff will notinitiate any complaint to the Commission or request the Commission to hold ahearing or issue any order in respect of any conduct or alleged conduct ofSylvester in relation to the facts set out in Part III of this Settlement Agreement.
VI PROCEDURE FOR APPROVAL OF SETTLEMENT
15. The approval of the settlement as set out in the Settlement Agreement shall besought at a public hearing before the Commission scheduled for such date as isagreed to by Staff and Sylvester in accordance with the procedures describedherein and such further procedures as may be agreed upon between Sylvesterand Staff.
16. If this Settlement Agreement is approved by the Commission, it will constitute theentirety of the evidence to be submitted respecting Sylvester in this matter andSylvester agrees to waive his right to a full hearing and appeal of this matterunder the Act.
17. If this Settlement Agreement is approved by the Commission, neither of theparties to this Settlement Agreement will make any statement that is inconsistentwith this Settlement Agreement.
18. If, for any reason whatsoever, this settlement is not approved by theCommission, or the order set forth in Schedule "A" is not made by theCommission:
a. each of Staff and Sylvester will be entitled to proceed to a hearing of theallegations in the Notice of Hearing and related Statement of Allegationsunaffected by the Settlement Agreement or the settlement negotiations;
b. the terms of the Settlement Agreement will not be raised in any otherproceeding or disclosed to any person except with the written consent ofSylvester and Staff or as may be otherwise required by law; and
c. Sylvester further agrees that he will not raise in any proceeding theSettlement Agreement or the negotiation or process of approval thereofas a basis for any attack on the Commission's jurisdiction, alleged bias,appearance of bias, alleged unfairness or any other challenge that mayotherwise be available.
19. If, prior to the approval of this Settlement Agreement by the Commission, thereare new facts or issues of substantial concern, in the view of Staff, regarding thefacts set out in Part III of this Settlement Agreement, Staff will be at liberty towithdraw from this Settlement Agreement. Notice of such intention will beprovided to Sylvester in writing. In the event of such notice being given, theprovisions of paragraph 18 in this part will apply as if this Settlement Agreementhad not been approved in accordance with the procedures set out herein.
VII DISCLOSURE OF SETTLEMENT AGREEMENT
20. The terms of the Settlement Agreement will be treated as confidential by bothparties hereto until approved by the Commission and forever if for any reasonwhatsoever, the Settlement Agreement is not approved by the Commission.
21. Any obligation as to confidentiality shall terminate upon the approval of thisSettlement Agreement by the Commission.
VIII EXECUTION OF SETTLEMENT AGREEMENT
22. This Settlement Agreement may be signed in one or more counterparts whichshall constitute a binding agreement and a facsimile copy of any signature shallbe as effective as an original signature.
DATED this 21st day of January, 2000.
SIGNED IN THE PRESENCE OF:
"James Sylvester"
"Michael Watson"Director of Enforcement on Behalf of Staff of the Ontario Securities Commission