Securities Law & Instruments

IN THE MATTER OF

THE SECURITIES ACT

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

AND

IN THE MATTER OF

BENJAMIN EMILE POIRIER

 

ORDER

(Sections 127)

WHEREAS on October 13, 1999 the OntarioSecurities Commission (the "Commission") issued aNotice of Hearing pursuant to section 127 of the SecuritiesAct (the "Act") in respect of Benjamin Emile Poirier("Poirier");

AND WHEREAS Poirier entered into a settlementagreement dated January 21, 2003 (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 January21, 2003, attached to this Order, is hereby approved;

(2) pursuant to clause 2 of subsection 127(1)of the Act, Poirier will cease trading securities for aperiod of ten years effective the date of this Order, withthe exception that after one year from the date of thisOrder, Poirier is permitted to purchase or sell securitieswhich are beneficially owned by him in his personal accountsin his name; and

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

January 28, 2003.

"Robert L. Shirriff" "M. TheresaMcLeod"                    "RobertW. Davis"

IN THE MATTER OF

THE SECURITIES ACT

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

AND

IN THE MATTER OF

BENJAMIN EMILE POIRIER

 

SETTLEMENT AGREEMENT

I INTRODUCTION

1. By Notice of Hearing dated October 13,1999 (the "Notice of Hearing"), the Ontario SecuritiesCommission (the "Commission") announced that itproposed to hold a hearing to consider whether, pursuant tosection 127 of the Securities Act, 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 pursuant to section127(1) clause 2 of the Act that trading in securities byBenjamin Emile Poirier ("Poirier") cease permanentlyor for such other period as specified by the Commission;

(b) to make an order pursuant to section127(1) clause 3 of the Act that any exemptions containedin Ontario securities law do not apply to Poirier;

(c) to make an order pursuant to section127(1) clause 6 of the Act that Poirier be reprimanded;and

(d) 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" and Schedule "B"(collectively, the "Settlement Agreement"), willbe released to the public only if and when the settlementis approved by the Commission.

III SETTLEMENT OF FACTS AND CONCLUSIONS

Acknowledgement

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

Introduction

5. Poirer was registered as a salespersonfrom January 16, 1991 to May 31, 1999 with W.H. Stuart MutualLtd. ("W.H. Stuart"), a mutual fund dealer and limitedmarket dealer, pursuant to section 26(1) of the Act.

Trading by Poirier Contrary to the Requirementsof Ontario Securities Law

6. During the period from October, 1994 toDecember, 1996 (the "Material Time"), Poirier tradedin securities, namely units (the "Units") of DualCapital Limited Partnership, where such trading was a distributionof such securities, without having filed a preliminary prospectusand a prospectus and obtaining receipts therefor from theDirector as required by section 53(1) of the Act.

7. The Units were purportedly offered forsale pursuant to the "seed capital" prospectus exemptionset out in section 72(1)(p) of the Act. The requirements ofthe "seed capital" `exemption from the prospectusrequirements in Ontario securities law were not satisfied.An offering memorandum dated October 18, 1994 as amended onDecember 19, 1994 for the Limited Partnership (the "OfferingMemorandum") was provided to some of the investors whopurchased the Units.

8. On October 26, 2000, in a related prosecutionunder section 122 of the Act before the Honourable Mr. JusticeDouglas, Dual Capital Management Limited ("Dual Capital"),the limited partner of Dual Capital Limited Partnership, andthe two officers of Dual Capital Management Limited, WarrenWall and Shirley Joan Wall (collectively, the "Walls"),entered pleas of guilty in relation to trading by Dual Capitalin securities, namely, Units in the Dual Capital Limited Partnership,without being registered to trade in such securities as requiredby section 25(1) of the Ontario Securities Act and distributingsecurities without having filed a prospectus in contraventionof section 53(1) of the Ontario Securities Act.

9. In the course of delivering his Reasonsfor Sentence on October 30, 2000, [cited at (2001) 24 OSCB763, February 2, 2001], Mr. Justice Douglas stated the followingin relation to the description of the investment scheme inthe Dual Capital Limited Partnership (also referred to asthe "Roll Programme" and the "InternationalLending Programme"):

I find that the Roll Programme as conceived,was and remains utter nonsense. The programme, consideredin and of itself, is a fraudulent means....

...I find that the Roll Programme was perse dishonest.

...Indeed, the evidence is conclusive andnearly complete that all of the investors were neither sophisticated(but naïve), nor rich (but poor) or, at least, dependentupon the little money they had.

10. During the Material Time, Poirier soldUnits to ten investors, as well as to his spouse. The teninvestors paid approximately $325,000 for the purchase ofthe Units through Poirier. Poirier's spouse paid $15,000 forthe purchase of the Units. Poirier earned commissions of approximately$4,449.96 in respect of the sale of the Units.

11. During the Material Time, Poirier tradedin securities, namely the Units, without the knowledge orconsent of W.H. Stuart and accordingly, did not trade in accordancewith his registration under section 26(1) of the Act.

12. Further, W.H. Stuart refused to participatein the sale of the Units, and communicated the firm's positionto its salespersons, including Poirier, prior to the saleof the Units by Poirier to some of his clients. As statedabove, Poirier accepted commissions from Dual Capital in respectof the sale of the Units, which commissions he did not discloseto W.H. Stuart.

13. Poirier represents to Staff of the Commissionthat he relied on the representations made by the principalof the promoter of the offering, DJL Capital Corp., as wellas the Walls, the officers of Dual Capital Management Limited,that the sale of the securities complied with Ontario securitieslaw and that the Units in Dual Capital Limited Partnershipwere a legitimate investment. However, Poirier acknowledgesthat he should not have recommended or sold the Units to hisclients, having been told by his firm that its salespeopleshould not sell the Units.

14. Further, Poirier failed to conduct theappropriate due diligence concerning both the nature and qualityof the investments in the Dual Capital Limited Partnership,and compliance with the requirements of Ontario securitieslaw relating to the distribution of the Units. In particular,Poirier took the representations of the principals at facevalue notwithstanding significant discrepancies in the OfferingMemorandum, including,

(i) the lack of any logical and meaningfulexplanation as to how the investment worked and why it wasable to generate significant rates of return;

(ii) a logical inconsistency between a "norisk" investment and high rates of return; and

(iii) the nonsensical nature of the investmentproposal set out in the Offering Memorandum.

15. Further, contrary to Ontario SecuritiesCommission Rule 31-505 s.1(5), Poirier failed to ascertainthe suitability of the Units to the needs of the investors,the general investment needs and objectives of his clientsand the suitability of the purchase of the Units for his clients.Some of Mr. Poirier's clients were charitable organizations.Other clients were unsophisticated, elderly and in ill health,or lived upon fixed incomes. Additionally, Mr. Poirier's clientssuffered detrimental financial and emotional losses arisingfrom his recommendation that they purchase the Units.

Conduct Contrary To The Public Interest

16. In summary, during the Material Time,Poirier violated Ontario securities law and engaged in conductcontrary to the public interest, by reason of the following:

(a) Poirier traded in securities, as outlinedabove, where such trading constituted a distribution ofsuch securities, without filing and obtaining a receiptfor a prospectus and without an exemption to the prospectusrequirement, contrary to section 53(1) of the Act;

(b) Poirier failed to deal fairly and inthe best interests of his clients, as described above;

(c) Poirier traded in the Units withoutthe knowledge or consent of his firm, W.H. Stuart;

(d) Poirier failed to disclose to his firmthat he accepted commission payments from Dual Capital inrelation to the sale of the Units; and

(e) Poirier failed to assess the suitabilityof Units to the needs of his clients.

IV POSITION OF THE RESPONDENT, POIRIER

17. Poirier is deeply saddened by the losseshis clients have sustained and apologizes for being in anyway connected to these investments.

V TERMS OF SETTLEMENT

18. The respondent, Poirier, agrees to thefollowing terms of settlement:

(a) pursuant to clause 2 of subsection 127(1)of the Act, Poirier will cease trading securities (whichterm includes, for the purpose of this settlement, a purchaseof a security) for a period of 10 years effective the dateof the Order of the Commission approving the proposed settlementagreement herein, with the exception that after one yearfrom the date of the Order, Poirier is permitted to purchaseor sell securities which are beneficially owned by him inhis personal accounts in his name;

(b) Poirier undertakes never to apply forregistration in any capacity under Ontario securities law,and agrees to execute the undertaking to the Commissionin the form attached as Schedule "B" to this settlementagreement;

(c) Poirier agrees to be reprimanded bythe Commission under clause 6 of subsection 127(1) of theAct;

(d) Poirier will attend, in person, at thehearing before the Commission to consider the proposed settlement.

VI 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.

VII 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 23 in this part will apply as if this SettlementAgreement had not been approved in accordance with the proceduresset out herein.

VIII 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.

IX EXECUTION OF SETTLEMENT AGREEMENT

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

January 21, 2003.

"Owen Bury"
Witness
 
"Benjamin Emile Poirier"
Benjamin Emile Poirier
 
January 21, 2003.
 
"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

BENJAMIN EMILE POIRIER

 

ORDER

(Sections 127)

WHEREAS on October 13, 1999 the OntarioSecurities Commission (the "Commission") issued aNotice of Hearing pursuant to section 127 of the SecuritiesAct (the "Act") in respect of Benjamin Emile Poirier("Poirier");

AND WHEREAS Poirier entered into a settlementagreement dated January 21, 2003 (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 January21, 2003, attached to this Order, is hereby approved;

(2) pursuant to clause 2 of subsection 127(1)of the Act, Poirier will cease trading securities for a periodof ten years effective the date of this Order, with the exceptionthat after one year from the date of this Order, Poirier ispermitted to purchase or sell securities which are beneficiallyowned by him in his personal accounts in his name; and

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

DATED at Toronto this          dayof January, 2003

___________________________

 

SCHEDULE "B"

 

IN THE MATTER OF

BENJAMIN EMILE POIRIER

 

UNDERTAKING TO THE

ONTARIO SECURITIES COMMISSION

I, Benjamin Emile Poirier, am a Respondent toa Notice of Hearing dated October 13, 1999 issued by the OntarioSecurities Commission. I undertake to the Ontario SecuritiesCommission that I will never apply for registration in any capacityunder Ontario securities law. I have agreed to this term ofthe settlement between Staff of the Commission and me datedJanuary 21, 2003.

"Owen Bury"

"Benjamin Emile Poirier"

Witness

Benjamin Emile Poirier

January 21, 2003. January 21, 2003.

Acknowledgement as Received by,

"John Stevenson"
John Stevenson

January 28, 2003.