Statement of Allegations: In The Matter of Paul Gordon
IN THE MATTER OF
THE SECURITIES ACT
R.S.O. 1990, c. S.5, AS AMENDED
AND
IN THE MATTER OF
PAUL GORDON
STATEMENT OF ALLEGATIONS OF STAFF
OF THE ONTARIO SECURITIES COMMISSION
Factual Background
1. CCI Capital Canada Limited ("CCI") was, at the material time, a corporation registered pursuant to Ontario securities law as a mutual fund dealer.
2. Paul Gordon ("Gordon") is registered with the Commission to sell mutual fund securities. From January 1998 to September 1999 Gordon was sponsored by CCI to sell mutual fund securities.
Amber Coast Resort Corporation
3. Amber Coast Resort Corporation ("Amber Coast") is a corporation organized pursuant to the laws of Turks and Caicos Islands.
4. Amber Coast created two offerings for its securities which relied on separate exemptions from the prospectus and registration requirements of the Act. No prospectus for Amber Coast was ever filed with or receipted by the Commission.
5. On September 1, 1998, Gordon's sponsor, CCI, entered into an agreement to "place" $200,000 (U.S.) worth of units of Amber Coast by September 30, 1998 and an additional $400,000 (U.S.) worth of units by November 30, 1998 in exchange for fees and use of a luxury villa.
6. Although CCI was never registered as a limited market dealer, CCI encouraged its sales representatives, including Gordon, to sell units of Amber Coast to their clients.
7. Gordon sold units of Amber Coast to two of his clients. In total, those clients invested $20,000 (U.S.) in Amber Coast.
8. CCI paid referral fees of 5% of the monies invested to Gordon by way of commission cheques.
9. As he was in the business of trading in securities, Gordon required registration to sell limited market products in order to sell units of the Amber Coast offering. Gordon was not licensed to sell limited market products thus his sales to clients constituted trading without registration.
Conduct Contrary to the Public Interest
10. The conduct of Gordon was contrary to the public interest in that he sold shares of a distribution which relied on an exemption from the prospectus requirements. This trading required a limited market dealer licence which Gordon did not have. Accordingly, Gordon engaged in trading without registration in contravention of subsection 25(1) of the Act.
11. Such other allegations as Staff may make and the Commission may permit.
April 20, 2001.