Aug. 29, 2008
SAINT JOHN (CNB) - A 10-year ban on participating in capital markets has been imposed on Sang H. Park of Toronto, Ont., as part of a settlement agreement approved by a New Brunswick Securities Commission-hearing panel. The agreement also imposes an administrative penalty of $15,000 plus costs of $3,000.
The panel found that Park made an insufficient effort to ensure that New Brunswick residents who were investing in, or who were considering investing in, the securities he was promoting were qualified as accredited investors. This enabled his employer to take advantage of certain registration and prospectus filing exemptions available under New Brunswick securities law.
Accredited investors include individuals with net assets over $1 million - or income over $200,000 individually or $300,000 combined with a spouse's income - and who may purchase securities without being provided a prospectus. The regulatory system is structured to protect investors, but because accredited investors are considered to be experienced and sophisticated, they do not require the full protection of securities regulation. It is the responsibility of firms and individuals promoting securities under this exemption to the Securities Act to ensure that those purchasing securities are accredited investors.
Park worked for Walton International Inc., a Canadian firm promoting legitimate securities to New Brunswick residents during presentations at a local restaurant. During these presentations he did not review the definition of an accredited investor. When he met with individuals to complete the required documentation, he did not take the steps necessary to ensure that they met the criteria of accredited investors under securities law. In some cases he downplayed the requirements. On one occasion he forged a witness signature acknowledging receipt of an offering document.
As a result of Park's presentations, about $2 million was invested in the firm's securities by 53 New Brunswick residents; 22 of them clearly did not meet the criteria for an accredited investor. Walton International Inc. offered all of the investors the opportunity to get their money back. None of the investors was harmed financially as a result of Park's violations. He has since been dismissed from employment with Walton International Inc.
"Salespersons are reminded that they are responsible for knowing what can and cannot be included in their client's investment portfolio," said Rick Hancox, executive director of the New Brunswick Securities Commission. "It is important that both the salesperson and the investor communicate with each other when making any investment. Investors need to inform their salesperson of their risk tolerance, financial situation, investment objectives, experience and knowledge."
For more information about accredited investors and exemptions, and other information on investing, visit the New Brunswick Securities Commission website.
The New Brunswick Securities Commission is the Crown corporation that regulates the securities industry in New Brunswick. It is funded indirectly by investors through industry. Its mandate is to protect investors from unfair, improper or fraudulent practices, and foster fair and efficient capital markets, as well as confidence in those markets.
MEDIA CONTACT: Wendy Connors-Beckett, senior communications specialist, New Brunswick Securities Commission, 506-643-7745.