Decision in brief: Nova Tech Ltd, Enforcement Proceeding, Merits, July 19, 2024

In this enforcement proceeding, the OSC says that Cynthia Petion and Nova Tech Ltd. violated Ontario securities law by selling securities without being registered to do so and without having filed a prospectus for those securities, and by continuing to accept new money from investors despite a Tribunal order prohibiting them from doing so. A prospectus is a document that gives investors information about the investment. The OSC also says that Nova Tech and Petion abused the capital markets by freezing investor withdrawals while continuing to accept new money from investors.

Investors who believed they would earn three percent every week by investing in a managed product offered by Nova Tech lost some or all their money. Nova Tech claimed it could achieve and pay these returns by trading in foreign exchange and crypto assets using pooled investor funds.

The Tribunal decided that Nova Tech was required to file a prospectus before selling the securities, and to register before being in the business of selling securities.

The Tribunal also decided that Nova Tech breached the Tribunal’s order by continuing to accept new money from investors. Because it made this decision, the Tribunal did not consider whether Nova Tech freezing withdrawals while accepting new money abused the capital markets.

The Tribunal decided that Petion is responsible for Nova Tech’s actions. She is the founder, sole director and CEO of Nova Tech, oversaw its operations, and promoted its investments.

As a result of this decision, the Tribunal will hold a hearing to decide what sanctions and costs should be ordered against Nova Tech and Petion because of their conduct.