Settlement Agreement: In the Matter of Veronika Hirsch
R.S.O. 1990, c. S.5, as amended
AND
IN THE MATTER OF
VERONIKA HIRSCH
SETTLEMENT AGREEMENT
I INTRODUCTION
1. By Notice of Hearing dated November 4th, 1997 the Ontario Securities Commission (the "Commission") announced that it proposed to hold a hearing toconsider:
a) whether pursuant to s. 127 of the Securities Act, R.S.O. 1990, c. S.5 as amended (the "Act"), in the opinion of the Commission, it is in the public interest tosuspend, cancel, restrict or impose terms and conditions upon the registrations of, or to reprimand, Veronika Hirsch ("Hirsch");
b) whether pursuant to section s. 127 of the Act, in the opinion of the Commission, it is in the public interest to order, subject to such terms and conditions as itmay impose, that any or all of the exemptions contained in sections 35, 72, 73 and 93 of the Act do not apply to Hirsch.
2. Staff of the Enforcement Branch of the Commission ("Staff") and Hirsch agree to recommend the settlement of the proceedings against Hirsch commenced byNotice of Hearing dated November 4th, 1997 in accordance with the facts, terms and conditions set out hereinafter.
3. Staff and Hirsch agree that only if, as and when the settlement is approved by the Commission, may this settlement agreement be released to the public.
II STATEMENT OF FACTS
The Parties
4. Between October 10, 1995 and August 13, 1996, Veronika Hirsch ("Hirsch") was employed by AGF Management Limited ("AGF") as a Vice-President andPortfolio Manager. During this period Hirsch was registered with the Ontario Securities Commission (the "OSC") in the category of Senior Counselling Officer,Vice-President and Portfolio Manager. During her term of employment at AGF, Hirsch managed the AGF Canadian Equity Fund and the equity portion of theAGF Growth and Income Fund.
5. AGF Management Limited is a mutual fund corporation incorporated under the laws of Ontario.
6. Sameh Magid ("Magid") is a Certified Financial Analyst, employed by Salman Partners Inc. ("Salman") as a Senior Investment Analyst/CoordinatorInstitutional Equity in their Vancouver office. Magid is registered with the OSC as a Limited Market Dealer and he is also registered with the British ColumbiaSecurities Commission (the "BCSC").
7. Salman is a member of The Toronto Stock Exchange (the "TSE") and the Investment Dealers Association of Canada (the "IDA") and is registered with theOSC in the categories of Equities Broker/Dealer and Broker.
8. Canaccord Capital Inc. ("Canaccord') is a member of the TSE and the IDA, and is registered with the OSC in the categories of Broker and Investment Dealer.
9. Oliver Gold Corporation ("Oliver Gold") is a reporting issuer in the Province of British Columbia, whose shares are listed and posted for trading on theVancouver Stock Exchange (the "VSE"). During 1996, Oliver Gold was not a reporting issuer in Ontario.
Oliver Gold Private Placement
10. Oliver Gold issued a news release dated January 30, 1996, announcing a private placement (the "Private Placement") of 1,000,000 Special Warrants at $1.53per Special Warrant. Each Special Warrant consisted of one common share and one half of a share purchase warrant. Each share purchase warrant wasexercisable at $1.53 for twelve months and at $1.76 for a further six months.
11. The Private Placement was not intended to be qualified by Oliver Gold under Ontario securities law for offering in Ontario.
12. On or about January 30, 1996 Magid asked Hirsch if the AGF funds, of which she was portfolio manager, would be interested in the Private Placement.Hirsch declined to participate in the Private Placement as portfolio manager for AGF as the investment in her opinion was not suitable for the AGF funds. Shedid agree, on or about January 30 or 31, 1996, to participate personally in the Private Placement.
13. On or about March 15, 1996 Magid advised Hirsch that she would be allocated 65,000 special warrants in respect of the Private Placement at a cost of$99,450.
14. The minimum amount under British Columbia securities law to qualify as a purchaser of this private placement was $97,000. Had this Private Placement beenqualified in Ontario, the minimum amount was $150,000.
15. To finalize Hirsch's participation in the Private Placement, Hirsch signed a private placement subscription agreement (the "Subscription Agreement") whichwas purported to have been signed in Vancouver, disclosing her address as 3174 West 3rd Avenue, in the City of Vancouver, in the Province of BritishColumbia, V3K 1M9.
16. Attached to the Subscription Agreement were two appendices: a Private Placement Questionnaire and Undertaking; and a Form 20A (IP), Acknowledgementof Individual Purchaser which form was required under British Columbia securities law. The Private Placement Questionnaire was shown as being signed inToronto. Both of these documents were signed by Hirsch and stated that her address was 3174 West 3rd Avenue, Vancouver B.C.
17. To Hirsch's knowledge, 3174 West 3rd Avenue, Vancouver B.C. was Magid's residential address. Hirsch was not at any material time a resident of BritishColumbia. During the material time Hirsch was a resident of Ontario.
18. In signing the Subscription Agreement, Hirsch acknowledged that Oliver Gold had not filed a prospectus with the British Columbia Securities Commission inrespect of this transaction and acknowledged that Oliver Gold was relying upon certain statutory exemptions under the British Columbia Securities Act.
19. Hirsch did not take appropriate steps to ensure that Oliver Gold had qualified the Private Placement for issue in Ontario.
20. The Private Placement closed on or about April 4, 1996. On April 10, 1996 Oliver Gold filed with the British Columbia Securities Commission a Form 20dated April 3, 1996 disclosing the full name and address of the purchasers of the Private Placement and stating the total value of the securities distributed. Hirschwas disclosed as residing at 3174 West 3rd Avenue, Vancouver B.C. and as purchasing special warrants for a purchase price of $99,450.
21. On June 14, 1996, the British Columbia Securities Commission issued a receipt for a prospectus filed by Oliver Gold which qualified for sale the warrantsand common shares of Oliver Gold issued upon exercise of the special warrants purchased under the Private Placement.
22. Between July 16, 1996 and September 4, 1996, Hirsch sold all of the securities of Oliver Gold which she had personally acquired from or through the PrivatePlacement and realized a gross profit of $165,173.
Mitigating Factors
23. There was no evidence that Hirsch engaged in frontrunning in connection with the purchase of securities issued by Oliver Gold.
24. Hirsch fully cooperated with Staff's investigation.
III CONDUCT CONTRARY TO THE PUBLIC INTEREST
25. Hirsch's conduct was contrary to the public interest in that she:
a) participated in the Private Placement without taking appropriate steps to ensure it was qualified for offering to Ontario residents; and
b) made a false statement as to her residential address in a Form 20A.
IV TERMS OF SETTLEMENT
26. Hirsch agrees to the following terms of settlement:
a) that an order be made under section 127(1) paragraph 6 that she be reprimanded; and
b) that she make a voluntary contribution to the British Columbia Securities Commission Investors' Education Fund in the amount of $99,573, the amountequivalent to the net profit after tax she realized on the sale of the securities acquired from or through her participation in the Private Placement, which paymentsare to be made in two installments: the first in the amount of $50,000 on or before May 1, 1998; the second in the amount of $49,573 on or before November 1,1998.
V CONSENT
27. Hirsch hereby consents to an order of the Commission incorporating the provisions of Part IV above in the form of the order annexed hereto as Schedule"A".
VI STAFF COMMITMENT
28. If this Settlement Agreement is approved by the Commission, the Staff will not initiate any complaint to the Commission or request the Commission to hold ahearing or issue an order in respect of any conduct or alleged conduct of Hirsch in relation to the facts set out in Part II of the Settlement Agreement in respectof which the Notice of Hearing was issued against Hirsch.
VII PROCEDURE FOR APPROVAL OF SETTLEMENT
29. The approval of this Settlement Agreement shall be sought at a public hearing of the Commission scheduled for November 5th,1997.
30. The Staff and Hirsch agree that if the Settlement Agreement is approved by the Commission, it will constitute the entirety of the evidence to be submittedrespecting Hirsch in this matter and Hirsch agrees to waive her rights to a full hearing and appeal of this matter under the Act. This will also conclude Staff'sinvestigation respecting matters of which it is currently aware respecting Hirsch.
31. The Staff and Hirsch agree that if the Settlement Agreement is approved by the Commission, neither Staff nor Hirsch will make any further statements thatare inconsistent with the Settlement Agreement.
32. If, for any reason whatsoever, the Settlement Agreement is not approved by the Commission or the order set forth in Schedule "A" is not made by theCommission:
(a) the Staff and Hirsch will each be entitled to proceed with a hearing of the allegations in the Notice of Hearing, unaffected by the Settlement Agreement or thesettlement negotiations;
(b) the terms of the Settlement Agreement will not be raised in any other proceeding or disclosed to any person except with the written consent of Hirsch and theStaff or as may be otherwise required by law; and
(c) Hirsch further agrees that she will not raise in any proceeding this Settlement Agreement or the negotiation or process of approval thereof as the basis for anyattack on the Commission's jurisdiction, alleged bias, alleged unfairness or any other challenge that may otherwise be available, so long as the members of theCommission who participate in the making of any decision with respect to the Settlement Agreement do not participate as members of the Commission in thesubsequent proceeding.
33. If, prior to the approval of this settlement by the Commission, there are new facts or issues of substantial concern to the Staff regarding the facts set out inPart II of the Settlement Agreement, the Staff will be at liberty to withdraw from the Settlement Agreement. Notice of such intention will be provided to Hirschin writing. In the event that such notice is given, the provisions of paragraph 32 of this Part will apply as if the Settlement Agreement had not been approved inaccordance with the procedures set out herein.
VIII DISCLOSURE OF SETTLEMENT AGREEMENT
34. The terms of the Settlement Agreement will be treated as confidential by both parties hereto until approved by the Commission, and forever, if for any reasonwhatsoever the Settlement Agreement is not approved by the Commission.
35. Any obligation as to confidentiality shall terminate upon the approval of the Settlement Agreement by the Commission.
IX EXECUTION OF SETTLEMENT AGREEMENT
36. This Settlement Agreement may be signed in one or more counterparts which shall constitute a binding agreement and a facsimile copy of any signature shallbe as effective as an original signature.
November 4th, 1997.
SIGNED IN THE PRESENCE OF:
"Veronika Hirsch"
"Larry Waite"