Sept. 5, 2008
SAINT JOHN (CNB) - A settlement agreement providing an opportunity for New Brunswickers who invested in Locate Technologies Inc. and Tubtron Controls Corp. to have their money refunded was approved by a New Brunswick Securities Commission hearing panel on Aug. 25. The companies must also provide these investors with full disclosure documents and the information needed to make an informed decision about this opportunity.
The settlement agreement was between commission staff and four respondents: Lorne Drever, Locate Technologies Inc., Tubtron Controls Corp., and 706166 Alberta Ltd. All are from Alberta, and have a long history of circumventing securities regulations in the province in order to sell their securities. None have ever registered with the New Brunswick Securities Commission to trade in securities, nor have they ever filed or sought to file a prospectus.
As a result of repeated violations, the four respondents paid a total of $225,000 in administrative penalties and costs. Drever paid a penalty of $100,000; Locate and Tubtron paid $60,000 and $40,000, respectively; and together, the respondents paid a further $25,000 for the costs of the commission's investigation.
The terms of the agreement permanently ban all four respondents from issuing securities in New Brunswick. Drever, the president of all three companies, is permanently banned from trading in securities, as well as acting as an officer or director of any issuer carrying on securities-related activities in New Brunswick.
An investigation by commission staff indicates that in 2004, Drever, Locate, and Tubtron were ordered by the Court of Queen's Bench to not trade in securities in New Brunswick unless they received permission to do so from the province's securities regulator. The investigation revealed that within weeks, trading in the shares of Locate and Tubtron again took place in the province, in violation of the order.
Over $1 million worth of Locate and Tubtron shares were sold to New Brunswick residents between 2004 and 2006. Investors were asked to make their cheques for shares payable to a numbered company, 706166 Alberta Ltd., which is a company wholly owned by Drever. These shareholders did not receive share certificates for their investments. Some of the funds obtained were used for Drever's personal use and for other expenses unrelated to the activities of Locate or Tubtron.
Although the commission repeatedly requested information during its investigation, Drever failed to fully disclose these trades when asked in 2005, 2006 and 2007 to provide details of the companies' trading activities.
The settlement agreement provides for investors who made investments in Locate Technologies Inc. or Tubtron Controls Corp. to receive by registered mail a disclosure document and letter with details about the offer to cancel their investment in either of the two companies. Investors will have 60 days from the date the documentation is sent to respond to the offer. The process of preparing the disclosure document and contacting investors will likely take several months.
"Investors who receive the disclosure from Locate or Tubtron need to review this investment information carefully with a professional advisor," said Rick Hancox, executive director of the commission. "They need to determine if this investment is suitable for their portfolio and risk tolerance, or whether they want a refund. There are time limits to this opportunity, so investors should not delay."
The settlement resolves proceedings that started in October 2007 against the respondents. A full copy of the agreement is available on the commission website.
Proceedings with respect to the remaining New Brunswick respondents - Michael Cody, Donald Nason, Harry Niles and Bradley Corporate Services Ltd. - were adjourned to a later date, which will be set this fall.
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: Michelle Robichaud, communications officer, New Brunswick Securities Commission, 506-643-7045 or 1-866-933-2222, e-mail: Michelle.Robichaud@nbsc-cvmnb.ca.