IN THE MATTER OF THE SECURITIES ACT
R.S.O. 1990, c. S.5, AS AMENDED
IN THE MATTER OF
LIMELIGHT ENTERTAINMENT INC., CARLOS A. DA SILVA,
DAVID C. CAMPBELL, JACOB MOORE AND JOSEPH DANIELS
AMENDED STATEMENT OF ALLEGATIONS
OF STAFF OF THE ONTARIO SECURITIES COMMISSION
Staff of the Ontario Securities Commission (the "Commission") makes the following allegations:
1. Limelight Entertainment Inc. (“Limelight”) is an Ontario corporation incorporated on August 14, 2000. Limelight is not registered in any capacity with the Commission.
3. The president and a director of Limelight is Carlos A. Da Silva. Mr. Da Silva was formerly registered with the Commission as a securities salesperson with Marchment and MacKay Limited from March 25, 1994 to November 21, 1997 and with C. J. Elbourne Securities Inc. from November 28, 1997 to June 30, 2000.
5. Jacob Moore is employed by and/or acted as agent for Limelight and acted as a salesperson for the sale Limelight shares. Mr. Moore is not registered in any capacity with the Commission.
6. Joseph Daniels is employed and/or acted as agent for Limelight and acted as a salesperson for the sale Limelight shares. Mr. Daniels is not registered in any capacity with the Commission.
SALE OF SHARES TO THE PUBLIC
10. On or about October 13, 2004, Limelight filed a second Form F4 with the Commission relating to the distribution of common shares of Limelight to 69 investors in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia, New Brunswick, the United States, Barbados and the United Kingdom.
12. The second Form F4 was also signed by Carlos Da Silva, president of Limelight and reported on trades from July 27, 2004 to September 17, 2004 inclusive.
14. The Form 45-501F1 did not disclose any compensation or participation fees paid and stated that the accredited investor exemption found in section 2.3 of Rule 45-501 was being relied upon.
16. The Form 45-501F1 incorrectly listed the dates of the 29 trades as October 4, 2004 whereas the trades actually occurred on or between June 10, 2004 and August 29, 2004.
18. Since August 2004, Limelight through its officers, directors, employees and/or agents acting as salespersons has continued to sell and offer for sale Limelight shares to residents of Ontario and elsewhere.
20. Staff allege that from May 2004 to April 2006 inclusive, Limelight sold approximately 1,500,000 Limelight shares to in excess of 600 investors at prices which ranged from $0.50 to $2.00 per share.
22. Staff alleges that Carlos Da Silva, David Campbell, Jacob Moore and Joseph Daniels have acted as securities salespersons and advisors contrary to the registration requirements found in s. 25 of the Securities Act, R.S.O. 1990, c.S.5, as amended (the “Act”)
24. No prospectus receipt has been issued to qualify the sale of Limelight shares.
25. Limelight and the individual Respondents made representations regarding: (i) the future value of Limelight shares; and (ii) Limelight being listed on a stock exchange, with the intention of effecting trades in Limelight shares.
MISLEADING STATEMENTS MADE BY CARLOS DA SILVA TO STAFF
27. Staff alleges that Mr. Da Silva’s explanation of the process followed by Limelight’s salespersons was misleading and intended to lead Staff to conclude that Limelight was selling shares to accredited investors.
29. According to the Limelight shareholders list, Limelight sold approximately 84,500 Limelight shares to approximately 33 Ontario investors in 2005. During 2005, Limelight also issued: (i) 10,750,000 shares to Carlos Da Silva; (ii) 1,000,000 shares to David Campbell; and (iii) approximately 408,000 shares to other Limelight employees and salespersons.
30. Staff alleges that the information provided by Mr. Da Silva to Staff on December 13, 2005 was misleading and intended to lead Staff to conclude that Limelight was no longer selling shares to Ontario investors.
BREACH OF THE TEMPORARY ORDER
31. On April 13, 2006, the Commission issued a temporary order that: (1) all trading in the securities of Limelight cease; (2) Limelight, Carlos Da Silva, David Campbell and Jacob Moore cease trading in all securities; and (3) any exemptions contained in Ontario securities law do not apply to Limelight, Carlos Da Silva, David Campbell and Jacob Moore (the “Temporary Order”).
32. On or about April 17, 2006, Leo Bonnevie, a New Brunswick resident and Limelight shareholder had a discussion with Joseph Daniels, a salesperson with Limelight. During this discussion, Mr. Daniels asked Mr. Bonnevie if he wanted to purchase more Limelight shares at $1.00 per share before Limelight went public. Mr. Daniels also advised Mr. Bonnevie that: (1) Limelight had delays in getting listed on a stock exchange; and (2) Limelight expected to be listed on a stock exchange within 10 to 12 days.
33. Limelight, its directors and officers and Mr. Daniels have breached the Temporary Order by continuing to call persons for the purpose of selling Limelight shares to such persons subsequent to the Temporary Order.
34. Mr. Daniels’ representation that Limelight shares would be listed on a stock exchange within 10 to 12 days was made with the intention of effecting sales of Limelight shares and was contrary to s. 38(3) of the Act.
35. Limelight, its directors, officers and its salespersons have made misleading representations to Staff and to investors, including representations regarding the future listing and future value of Limelight shares with the intention of effecting sales of Limelight shares contrary to s. 38 of the Act and contrary to the public interest.
36. Limelight and Da Silva have made misrepresentations in two Form F4s and one Form 45-501F1 filed with the Commission contrary to s. 122(1) of the Act and contrary to the public interest.
37. None of Limelight, Carlos Da Silva, David Campbell, Jacob Moore or Joseph Daniels is registered with the Commission. The respondents have traded in securities and acted as securities salespersons and/or advisors contrary to s. 25 of the Act and acted contrary to the public interest.
38. No prospectus receipt has been issued to qualify the sale of Limelight shares contrary to s. 53 of the Act and contrary to the public interest.
39. As officers and directors of Limelight, Carlos Da Silva and David Campbell have authorized, permitted or acquiesced in breaches of s. 25, s. 38 and s. 53 of the Act by Limelight and its salespersons contrary to s. 122(3) and/or s. 129(2) of the Act and in doing so have engaged in conduct contrary to the public interest.
40. Such additional allegations as Staff may advise and the Commission may permit.
Dated at Toronto this 25th day of April, 2006