R.S.O. 1990, c.S.5, AS AMENDED
ANDREW CURRAH, COLIN HALANEN,
JOSEPH DAMM, NICHOLAS WEIR,
PENNY CURRAH AND WARREN HAWKINS
1. By Notice of Hearing dated November 1, 2005, the Ontario Securities Commission (the "Commission") announced that it proposed to hold a hearing to consider whether, pursuant to section 127 of the Securities Act, R.S.O. 1990, c. S.5 (the "Act"), it is in the public interest for the Commission to make an order approving the settlement agreement entered into between Staff of the Commission and the respondent Colin Halanen ("Halanen").
II. JOINT SETTLEMENT RECOMMENDATION
2. Staff of the Commission ("Staff") recommend settlement with Halanen (also referred to hereafter as the "Respondent") in accordance with the terms and conditions set out below. The Respondent agrees to the settlement on the basis of the facts set out in Part III herein and consents to the making of an Order in the form attached as Schedule "A" on the basis of the facts set out in Part III herein.
3. The terms of this settlement agreement, including the attached Schedule "A" (collectively, the "Settlement Agreement") will be released to the public only if and when the Settlement Agreement is approved by the Commission.III. AGREED FACTS
4. For the purposes of this settlement agreement only, the Respondent agrees with the facts set out in Part III.(a) Background
5. Findore Minerals Inc. ("Findore") is an Ontario junior resource company that was listed on the Canadian Dealing Network ("CDN") at all material times. Findore's common shares traded over-the-counter and were quoted on the CDN. Although Findore changed its name to Cantex Energy Inc. on December 17, 1997, the company will be referred to herein as Findore.
6. Halanen is a resident of Toronto, Ontario. Halanen was introduced to Andrew Currah ("Currah") by a family friend during Halanen's last year of university. Halanen began working for Currah part-time during his last year of university and began working for Currah full-time in the spring of 1996 at the age of 25.
7. Halanen was encouraged by Currah to purchase shares in Findore because of its prospects and was paid his salary in common shares and stock options in Findore. Accordingly, his income was derived from selling his shares in Findore.
8. Currah made Halanen a director of Findore in or about June 1996 and he remained a director of Findore until approximately September 1997.
9. Between September 1997 and December 1999, Halanen remained involved in the affairs of Findore, fielding telephone calls from investors and potential investors interested in finding out about the company's activities.(b) Trading Activity of Halanen in Findore Shares
10. Between July 1997 and December 1998, Halanen (personally and through corporate trading accounts in which he directed all trading) made more than 800 trades in Findore shares. The allegations in this proceeding concern 44 of those trades which were made using 9 brokerage accounts at 5 brokerage houses.
11. Halanen allowed debit balances to accumulate in those accounts. He made trades monthly to reduce his debit balance. On 14 occasions between July 1997 and December 1998, Halanen made trades between two of the accounts he controlled thereby reducing or eliminating a debit in the seller's account and creating a debit balance in the purchaser's account. These trades permitted Halanen to hold as many Findore shares as possible to participate in the increase in the share price that he anticipated.
12. Although all of these trades were made through registered brokers, Halanen was not told by his brokers that there was anything improper about the trades. His registered brokers also permitted Halanen to purchase shares without money in his account to pay for those shares and permitted him to maintain the resulting debit balance for some period of time before requiring that it be cleared
13. In the same period, Halanen entered 30 orders which were filled by either Currah, Weir or companies that they owned or controlled. Halanen believed at all material times that Currah was effectively the market maker for Findore shares and therefore it was reasonably likely that Currah, Weir or companies that they owned or controlled would be on the other side of some of his Findore trades. Halanen executed these trades to earn trading profits. The majority of these trades occurred at a higher price than the preceding reported trade.
14. Between July 1997 and December 1998, Halanen's proceeds from his 800 trades, and thus his income from Findore for that 18 month period, was approximately $88,000.
15. Halanen, Currah and the respondent Nick Weir ("Weir") frequently traded Findore shares and used the respondents, Joe Damm ("Damm") and Warren Hawkins ("Hawkins"), as their broker. From time to time, Halanen participated in telephone calls at the end of the day with Damm, Hawkins, Currah and/or Weir during which Damm and/or Hawkins asked Halanen, Currah and Weir to identify the trades they had made that day.(c) Market Price of Findore's Shares
16. In June 1997, the common shares of Findore had been trading in the range of $0.10 to $0.14 per share. By September 26, 1997, the share price reached $1.92. The stock peaked on April 3, 1998 at a high of $2.30 per share. During this period of time, Findore announced that it had obtained rights to a property in Texas. It also announced that it had raised money that would be used to pursue the exploration of this site. It also announced its initial drilling results. The reported share price stayed above $1.00 per share through to the fall of 1998 before declining to its June 1997 levels in 1999 once the final drilling results were released.(d) Credit for Cooperation
17. Throughout this proceeding, and even before this proceeding was initiated, Halanen cooperated fully with Staff.IV. RESPONDENT'S POSITION
18. Halanen's working arrangements were unusual in that he worked for Currah, not Currah Capital Corporation or Findore. Before working with Currah, Halanen had never before worked in the mining industry. He was also unfamiliar with the securities markets and therefore took his lead from Currah and, to a lesser extent, Weir.
19. In September 1997, an experienced businessman joined the company and caused Halanen to be removed from Findore's board of directors because of Halanen's youth and inexperience.
20. Although Halanen was a frequent trader of Findore shares, based on his experiences with Currah and Weir, Halanen did not believe that his frequency of trading was unusual.
21. With respect to the calls he received from Damm/Hawkins at the end of some trading days, although Halanen knew that Damm/Hawkins were busy, he did not understand why Damm/Hawkins did not keep better records and needed to call him, Currah and Weir. At the time he did not believe that these conversations suggested anything improper.
22. Halanen has not worked or associated with Currah or Weir since January 2000 and is now familiar with the mining sector and the securities markets. To broaden his knowledge, he has signed up for one of the four Venture Success Workshops offered by the TSX called Venture Filing Fundamentals, and he will undertake as part of this settlement to take the other three workshops offered by the TSX within the next 12 months.V. CONDUCT CONTRARY TO THE ACT AND THE PUBLIC INTEREST
23. With the benefit of hindsight (including the knowledge he gained post-Currah), and despite this being his first job, Halanen ought to have known that his trades, as described in paragraph 11, could have created a misleading appearance as to market activity for Findore shares and he admits that those trades were contrary to the public interest.VI. TERMS OF SETTLEMENT
24. Halanen agrees to the following terms of settlement, pursuant to s. 127(1) of the Act:
(a) Halanen shall not trade in securities for a period of 5 years, subject to the following exception:After 2 ½ years, Halanen shall be permitted to trade: (i) bonds issued by governments; (ii) guaranteed investment certificates issued by banks; (iii) mutual funds; and (iv) stocks of companies listed on a recognized exchange provided the trades are all made through a registered broker, subject to the restrictions set out in (b) and (c) below.(b) Halanen shall not purchase shares on margin for a period of 5 years.
(c) Halanen shall not be permitted to purchase/sell any security, for a period of 5 years, in which he holds, or in which he would hold as a result of the contemplated transaction, directly or indirectly through another person or company or through any person or company acting on his behalf, more than one (1) percent of the outstanding securities of the class or series of class of that company’s issued and outstanding shares;
(d) Subject to (a), (b) and (c), Halanen shall not be entitled to rely on the exemptions contained in s. 35 of the Securities Act and OSC Rule 45-501 for a period of 5 years;
(e) Halanen shall pay costs to the Commission of its investigation, pursuant to s. 127.1 of the Act, in the amount of $15,000;
(f) The restrictions set out in paragraph (a) shall apply to restrict Halanen from trading in accounts held in his own name or the names of his family members, accounts held in trust for his family members and accounts held in the name of any company controlled by Halanen or a member of his family;
(g) Halanen shall undertake to complete the following workshops offered by the TSX within the next 12 months: Managing a Public Company, Venture Filing Fundamentals, Rules and Tools, and Investor Relations Fundamentals; and
(h) Halanen will cooperate with Staff in its investigation of trading in Findore shares, including testifying as a witness for Staff at any proceedings commenced by Staff before the Commission, the Ontario Court of Justice or the Ontario Superior Court.
VII. STAFF COMMITMENT
25. If this Settlement Agreement is approved by the Commission, Staff will not initiate any proceeding under Ontario securities law in respect of any conduct or alleged conduct of Halanen in relation to the facts set out in Part III of this Settlement Agreement or the allegations made by Staff against Halanen in this matter, subject to the provisions of paragraph 29 below.VIII. PROCEDURE FOR APPROVAL OF SETTLEMENT
26. Approval of this Settlement Agreement shall be sought at a hearing of the Commission on a date agreed to by counsel for Staff and Halanen.
27. Staff and Halanen may refer to any part, or all, of the Settlement Agreement at the Settlement Hearing. Staff and Halanen also agree that if this Settlement Agreement is approved by the Commission, it will constitute the entirety of the evidence to be submitted respecting Halanen in this matter, and Halanen agrees to waive his rights to a full hearing, judicial review or appeal of the matter under the Act.
28. Staff and Halanen agree that if this Settlement Agreement is approved by the Commission, neither Staff nor Halanen will make any public statement inconsistent with this Settlement Agreement.
29. If this Settlement Agreement is approved by the Commission and, at any subsequent time, Halanen fails to honour any of the Terms of Settlement set out in Part VI herein, Staff reserve the right to bring proceedings under Ontario securities law against Halanen based on, but not limited to, the facts set out in Part III of the Settlement Agreement, as well as the breach of the Settlement Agreement.
30. If, for any reason whatsoever, this Settlement Agreement is not approved by the Commission or an Order in the form attached as Schedule "A" is not made by the Commission, each of Staff and Halanen will be entitled to all available proceedings, remedies and challenges, including proceeding to a hearing of the allegations in the Notice of Hearing and Statement of Allegations, unaffected by this Settlement Agreement or the settlement negotiations.
31. Whether or not this Settlement Agreement is approved by the Commission, Halanen agrees that he will not, in any proceeding, refer to or rely upon this Settlement Agreement or the negotiation or process of approval of this Settlement Agreement as the basis for any allegation against the Commission of lack of jurisdiction, bias, appearance of bias, unfairness, or any other remedy or challenge that may otherwise be available.IX. DISCLOSURE OF AGREEMENT
32. The terms of this Settlement Agreement will be treated as confidential by all parties hereto until approved by the Commission, and forever if, for any reason whatsoever, this Settlement Agreement is not approved by the Commission, except with the written consent of both Halanen and Staff or as may be required by law.
25. Any obligations of confidentiality shall terminate upon approval of this Settlement Agreement by the Commission.X. EXECUTION OF SETTLEMENT AGREEMENT
26. This Settlement Agreement may be signed in one or more counterparts which together shall constitute a binding agreement.
27. A facsimile copy of any signature shall be effective as an original signature.
|Dated this "1st" day of November, 2005|
Staff of the Ontario Securities Commission
Per: Michael Watson
Director, Enforcement Branch
IN THE MATTER OF THE SECURITIES ACT
R.S.O. 1990, c.S.5, AS AMENDED
ANDREW CURRAH, COLIN HALANEN,
JOSEPH DAMM, NICHOLAS WEIR,
PENNY CURRAH AND WARREN HAWKINS
WHEREAS on July 23, 2004 , the Ontario Securities Commission (the “Commission”) issued a Notice of Hearing pursuant to section 127 of the Securities Act (the “Act”) in respect of trading in the shares of Findore Minerals Inc.;
AND WHEREAS on October 20, 2005, Staff of the Commission filed an Amended Statement of Allegations;
AND WHEREAS Colin Halanen entered into a settlement agreement dated November 1, 2005 (the “Settlement Agreement”) in relation to the matters set out in the Amended Statement of Allegations;
AND WHEREAS the Commission issued a Notice of Hearing dated November 1, 2005 setting out that it proposed to consider the Settlement Agreement;
AND WHEREAS Halanen has undertaken as part pf the Settlement Agreement to complete the following workshops offered by the TSX within the next 12 months: Managing a Public Company, Venture Filing Fundamentals, Rules and Tools, and Investor Relations Fundamentals;
UPON reviewing the Settlement Agreement, the Notice of Hearing, the Amended Statement of Allegations, and upon considering submissions from Halanen and from Staff of the Commission;
AND WHEREAS the Commission is of the opinion that it is in the public interest to make this Order;
IT IS HEREBY ORDERED, PURSUANT TO SECTIONS 127 AND 127.1 OF THE ACT, THAT :
- The Settlement Agreement attached to this Order is approved;
- Halanen shall not trade in securities for a period of 5 years, subject to the following exception:
After 2 ½ years from the date of this Order, Halanen shall be permitted to trade: (i) bonds issued by governments; (ii) guaranteed investment certificates issued by banks; (iii) mutual funds; and (iv) stocks of companies listed on a recognized exchange provided the trades are all made through a registered broker, subject to the restrictions set out in paragraphs 2 and 3 below;
- Halanen shall not purchase shares on margin for a period of 5 years.
- Halanen shall not be permitted to purchase/sell any security, for a period of 5 years, in which he holds, or in which he would hold as a result of the contemplated transaction, directly or indirectly through another person or company or through any person or company acting on his behalf, more than one (1) percent of the outstanding securities of the class or series of class of that company’s issued and outstanding shares;
- Subject to paragraphs 2, 3 and 4 above, Halanen shall not be entitled to rely on the exemptions contained in s. 35 of the Securities Act and OSC Rule 45-501 for a period of 5 years;
- Halanen shall pay costs to the Commission of its investigation, pursuant to s. 127.1 of the Act, in the amount of $15,000; and
- The restrictions set out in paragraph 2 above shall apply to restrict Halanen from trading in accounts held in his own name or the names of his family members, accounts held in trust for his family members and accounts held in the name of any company controlled by Halanen or a member of his family.
Dated at Toronto, Ontario this day of , 2005