Thursday, 28 June 2018


The Financial Consumer Agency of Canada recently published its findings during a review of Domestic Banks sales practices.

 The FCAC report comes partly as a result of CBC's Go Public campaign last year which began to expose some of the mass amount of criminal activity taking place in the Canadian financial system, often with the help of regulators who are supposedly there to protect the public. Many other individuals and smaller independent news sources have also been instrumental in shedding light on crime in the financial sector, none more so then former Bay Street Exec Mr. Larry Elford whom has recently published a book 'About Your Financial Murder'. Mr. Elford who has spoken in front of the House of Parliament on these issues, can be found contributing to Unpublished Ottawa or on Facebook at Investment System Fraud.

 The FCAC's new report can be found here Financial Consumer Agency of Canada - Domestic Bank Sales Practice Review.

 An exert from the Executive Summary of this report can be seen below, note the use of a new term - mis-selling. It would seem FCAC has adopted the same wizardry that the World Bank, Central Bank of Ireland and a UK Financial Task force are using to magically make billions disappear with no questions asked by the unsuspecting public. An excellent  article on the Guardian outlines the true business model of the UK Financial System, it is a model built on deception and fraud. Banksters and their lawyers continue to use confusing language and terms to cloud what they are really doing.

 See exert on mis-selling below.

Executive summary
This report presents the findings and conclusions of the Financial Consumer Agency of Canada’s (FCAC’s) review of the domestic retail sales practices of Canada’s six largest banks (Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto–Dominion Bank), which are subject to federal consumer protection legislation overseen by FCAC.

This review focused on retail banking sales practices to identify and evaluate risks to consumers. FCAC examined the drivers of sales practices risk, assessed the effectiveness of the controls put in place by banks to mitigate these risks and recommended ways to more effectively reduce them.

Risks associated with sales practices include the potential for breaching market conduct obligations and mis-selling. Market conduct risk refers to the potential for breaching the legislative obligations, voluntary codes of conduct and public commitments that are overseen by FCAC.

FCAC defines "mis-selling" as the sale of financial products or services that are unsuitable for the consumer; sales that are made without taking reasonable account of the consumer’s financial goals, needs and circumstances; and sales where consumers are provided with incomplete, unclear or misleading information. This definition of mis-selling is informed by research conducted by the U.K. Financial Conduct Authority, the Central Bank of Ireland, the G20/OECD Task Force on Financial Consumer Protection and the World Bank.

 Source -


  What is most disturbing is that the FCAC seems to have adopted  a term used by its friends in the banking industry to hide or downplay what could be or often is a blatant criminal offence.
 The term mis-selling seems to have taken the place of criminal activities such as Section 341, and 361, of the Canadian Criminal Code. It is important to note that the highlighted words in the above exert -  'misleading information', are part of the definition of mis-selling.

 In a nation that operates under the true rule of law, a sale made when misleading information is given in order to make that sale is often a criminal offence. Below are several Canadian Criminal Code laws regarding fraud and deception.


 Fraudulent concealment

 Every one who, for a fraudulent purpose, takes, obtains, removes or conceals anything is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years.
  • R.S., c. C-34, s. 301.

False Pretences

Marginal note: False pretence
  •  (1) A false pretence is a representation of a matter of fact either present or past, made by words or otherwise, that is known by the person who makes it to be false and that is made with a fraudulent intent to induce the person to whom it is made to act on it.
  • Marginal note:Exaggeration
    (2) Exaggerated commendation or depreciation of the quality of anything is not a false pretence unless it is carried to such an extent that it amounts to a fraudulent misrepresentation of fact.
  • Marginal note:Question of fact
    (3) For the purposes of subsection (2), it is a question of fact whether commendation or depreciation amounts to a fraudulent misrepresentation of fact.
  • R.S., c. C-34, s. 319.

Marginal note: False pretence or false statement

  •  (1) Every one commits an offence who
    • (a) by a false pretence, whether directly or through the medium of a contract obtained by a false pretence, obtains anything in respect of which the offence of theft may be committed or causes it to be delivered to another person;
    • (b) obtains credit by a false pretence or by fraud;
    • (c) knowingly makes or causes to be made, directly or indirectly, a false statement in writing with intent that it should be relied on, with respect to the financial condition or means or ability to pay of himself or herself or any person or organization that he or she is interested in or that he or she acts for, for the purpose of procuring, in any form whatever, whether for his or her benefit or the benefit of that person or organization,
      • (i) the delivery of personal property,
      • (ii) the payment of money,
      • (iii) the making of a loan,
      • (iv) the grant or extension of credit,
      • (v) the discount of an account receivable, or
      • (vi) the making, accepting, discounting or endorsing of a bill of exchange, cheque, draft or promissory note; or
    • (d) knowing that a false statement in writing has been made with respect to the financial condition or means or ability to pay of himself or herself or another person or organization that he or she is interested in or that he or she acts for, procures on the faith of that statement, whether for his or her benefit or for the benefit of that person or organization, anything mentioned in subparagraphs (c)(i) to (vi).

Marginal note: Obtaining execution of valuable security by fraud

 Every one who, with intent to defraud or injure another person, by a false pretence causes or induces any person
  • (a) to execute, make, accept, endorse or destroy the whole or any part of a valuable security, or
  • (b) to write, impress or affix a name or seal on any paper or parchment in order that it may afterwards be made or converted into or used or dealt with as a valuable security,
is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years.
  • R.S., c. C-34, s. 321.

 Source -


 In order to be brief as possible in this post I will limit my dissection of the FCAC's report to addressing a couple key points although there is certainly more to cover on what is a truly laughable yet disturbing piece of work.

 Right now across Canada tens of thousands of financial 'advisors' are committing one or more of the above criminal offences all the time. Certainly some may not be aware of the nature of their crimes or what they are doing, they are simply working as sales people for financial firms and led by legal advisors and paychecks. That said the guilty parties involved for certain are the financial regulators such as the BC Securities Commission, the Ontario Securities Commission and the rest of Canada's so called financial regulators. Without these self funded and self regulating organizations help it would not be possible for the mass fraud that is occurring to continue.

This is not an accusation made lightly, this is not mere conjecture or hypothesis. In fact we welcome any provincial regulator, specifically the BCSC and CEO Brenda Leong to challenge these accusations in a real court of law if they disagree with them.
 Mr. Larry Elford among others has thoroughly demonstrated these claims.

 See exert from financial expert, Mr. Elford on Unpublished Ottawa here.


This is how a "confidence man" works:
Prior to September of 2009, the license and registration category of your investment "advice giver" was (in 99% of cases) one of the following two choices:
a) a registered investment adviser (the "Do no harm" fiduciary professional)
b) a registered "salesperson"  (the one where they could act against the investor interests)
Investors were not well informed, back then, as most, if not all persons who were registered in the "salesperson" category preferred to call themselves by a non registered and non-regulated title, spelled "advisor".
By clever use of a single "Vowel Movement", millions of investors are deceived, and led to believe they have a "do no harm" fiduciary-duty professional, while the salesperson and the dealer have accomplished a clever bait and switch.  They will have convinced trusting clients that they are dealing with someone to be trusted, while actually hiding the saleperson's lesser duty of care.
“ the confidence man is someone who preys upon peoples confidence in them”
Fast forward to September of 2009, when the CSA (umbrella organization of all 13 Canadian Provincial Securities Regulators), decide to change the rules/laws in Canada, REMOVING  every mention of the word SALESPERSON in the Securities Act, rules.  They replace that rather clear term, with the term "DEALING REPRESENTATIVE".  To be fair, they did, in some documents place the word (Salesperson) in brackets, immediately behind the word "Dealing Representative".  That helped maintain some of the original info and intent of the disclosure.
Still, one a small step was taken in the direction of "editing out" the term "Salesperson" from the Securities Rules and laws in Canada.  The important thing to keep in mind, is that Securities Commissions did NOT move to eliminate the commission sales role from "advice givers", but rather they simply allowed commission-sales "advice givers" to obfuscate their 'label', to in effect be less clear and open to their investor clients. Allowing them to hide their registration and job role from investors.
They continued (as they do to this day) to refer to themselves as "Advisors" in most cases, despite Securities Act rules and laws against "misrepresentation of ones registration category".  It simply serves investment salespeople better if they do not tell their customers that they are "salespersons".  Trust (and the customer's money) is eaier to gain if they conceal the true "salepserson" registration behind a not-true advisor title...(gaining trust by cocealment?)
Fast forward to January 2018 and the new changes quietly put into place have now deleted the (salesperson) clarification from the "Understanding Registration" page of the CSA web site.  It appears that the provincial governement regulators truly do not want the public to "Understand Registration", when it comes to investment salespersons...
This again brings to mind the regulatory double mandate, double-bind,..of having to do what they industry pays them to do....or else.
Ten million Canadians who rely upon their investments to support themselves financially in retirement should not be treated to intentional obfuscation and apparent deception, by the investment industry, and most certainly not by government empowered (but industry paid/selected) securities regulators.
This smacks of foxes guarding the henhouse, and helping their fox friends to pillage the hens, while working for a provincial government which tells the public that they are safely regulated and protected.  It smacks of a breach of the public trust.

 Source - Why Would 13 Canadian Securities Commissions Deliberately Deceive Investors?


As we have said many times on this blog, lawyers and bureaucrats can alter the laws to make crimes legal however this does not make it right, nor does it make it any less of a crime.
 It would seem deception is the norm in the financial industry in Canada. (and the West),
See the below exert from CBC for more on how the criminal code violations covered above are being violated on an ongoing basis, with the help and blessing of  financial securities commissions across Canada.


Deceptive employee titles

A recent report by the Small Investor Protection Associationfound there are 121,000 people registered as financial professionals in Canada, and the vast majority are registered as dealing representatives — salespeople licensed to sell financial investments.

Only about 4,000 of these registered financial professionals have a fiduciary duty, which is a legal obligation to act in the client's best interest.

 Even though the FCAC received 4500 complaints for review according to its Commissioner Ms. Lucie Tedesco governance could be beefed up, however there was no evidence of systematic mis-practices (crimes) going on. MP Mr. Francesco Sorbara questions her on this as seen in an exert from the transcript of the May 28th/18 report to the Standing Committee On Finance below.

Larry Elford says thousands of bank employees across Canada are salespeople with fancy titles. (Dave Rae/CBC )
"The game today is to earn clients' trust," said Larry Elford, a former certified investment manager with RBC and lead researcher of the SIPA report. "And never let them know that you are actually a commissioned salesperson and you don't have to honour that trust."

The stakes are high, says Elford, who points out that a two per cent management fee on mutual funds typically cuts an investor's retirement fund by about half over a 35-year period.

What's in a vowel?

A common trick for misleading customers, according to Elford, is the banking industry's use of the term "financial advisor" — spelled with an "o."

He says "advisor" is an unregulated title that anyone can use, whereas the title "adviser" — spelled with an "e" — can only be used if the employee has a fiduciary responsibility to the client.
"Advisors can sell you the third, fourth, fifth or least beneficial product to you," Elford said. "They do that a great deal of the time if it makes them more commissions, or if their bank manager is telling them they need to sell more of the house-brand product."
The Ontario Securities Commission confirms that "adviser" is a legal term under securities law that describes a person or company that is registered to give advice about securities, whereas "advisor" is not.
In an email to Go Public, the Canadian Securities Administratorsconfirmed that it does not regulate most titles used by employees in the financial industry.

 Source - CBC - Banks Deceptive Titles Put Investments at Risk


 The deception that has been outlined in the above article and many others, has been documented by numerous people and organizations and should not be allowed to continue in a nation which operates under the rule of law. Unfortunately to often today true rule of law has been replaced with rule by law, this difference is vast. The rule of law is a concept that gives law its power. Under the rule of law the law is applicable to all people and it is free of conflict of interest, it is not arbitrary or whimsical. Today in Canada and many other so called democracies where the rule of law is supposedly the governing ideal of society we have seen this twisted to become 'rule by law'. In other words officials who have become corrupted and self serving now make laws to protect themselves and their cronies as they use their positions of power to rob the public.
 They will often cite the rule of law as a reason we need to allow something to be done (like building a dam) when in reality they are simply ruling by decree. True rule of law means that all are equal under the law, including governing bodies, officials and corporations foreign or domestic.

 Unfortunately despite the revelations over the last couple of years of vast corruption in the financial sector and most every other sector of commerce and industry in the nation, a new measure in the Canadian budget tabled by Finance Minister Morneau and Prime Minister Trudeau includes plans to hand more immunity from prosecution over to corporations who have been involved in the committing of Criminal Code Offences. See CBC report here, Federal Budget Bill Quietly Proposes Tool To Ease Penalties On Corporate Crime

 Of course the provision is being sold as designed to protect innocent pensioners and shareholders from loss however what it really does is give high level shareholders, owners and executives a vehicle with which they can more efficiently rob people from. The company employees who commit the crime may well be punished but the corporation will still profit in the sense that it can continue to go about its business with very little in the way of punishment. Yes there are provisions to force the corporation in question to pay damages however as we have seen in many past court cases these are usually token fees and fines that do not necessarily restore justice for victims of such crimes.
 One needs to look no further then the current corruption at the BC Investment Management Corporation (BCI) as we have documented numerous times.
 See the link posted below to understand the type of web of deception, fraud and theft BCI gets up to.
 BCI, BCSC, Serco, BC Attorney General Office, All Connected To RICO Crime?

BCI is the public servant pension fund for BC however it also has various managing partners and its global custodian is Northern Trust in Chicago.
 It is a well known fact despite the complete lack of co-operation from RCMP and the courts reluctance to even try the case of a man named Mr. Jack English, certain employees of the BC Investment Management Corporation along with other civil servants, lawyers and various individuals conspired to rob Mr. English of his $200 Million dollar ocean front property. This was achieved through a campaign of terror, destruction and deception. Details can be seen here Full Story On BCI (BCIMC) And Its Crimes Against The English Family.

 This case remains unresolved due to high level political interference, the BC Investment Management Corp is of course connected to the Finance Minister through its holdings as well as large financial firms such as BlackRock and CAI, a private US equity fund. See the following link for more on CAI and BCI, The Investment Funds Institute Of Canada, the BCSC, KPMG, BCIMC and Paul C. Bourque.

 Now the PM and the Finance Minister want to help corporations like the BC Investment Management Corporation ensure they are immune from Criminal prosecution.
 Sure maybe a few low level employees who were involved in such a case as that of Mr. English may be fired and even punished in a court of law and financial restitution could be made, however we highly doubt that fair compensation will ever be awarded nor can compensation be properly made for robbing the English family of a life during the campaign of terror waged against them.
 The BCI will continue in its ways and even if this issue is resolved with some measure of justice for the English family, provisions such as the proposed new deferred prosecution tool for corporate crime will do nothing do discourage the BCI from doing the same to others in the future. (Editors note - we are aware of multiple crimes of similar or greater magnitude involving BCI, we simply do not have time to cover them at this point.)

 Why do I bring all this up when it seemingly has nothing to do with the FCAC?
 Again lets go back to the new laws designed to ease penalties for corporate crime.
We have on one hand possibly over a hundred thousand supposed financial 'advisors' who are faking or deceptive regarding their true credentials. Now we know that many may not even understand the implications and magnitude of what is happening, they have been simply working for a financial firm and have been given various tools and taught various courses regarding selling financial instruments on the orders of the firm. This does not make it any better however it does show us that the deception starts with the securities commissions who have allowed this to happen. This is of course one of the results that comes with a self funded self regulated regulator, it becomes a monster intent only on continuing to feed itself. This comes at the expense of all else including the rule of law and the protection of the public.

 Here we have a self funded agency, the FCAC that is supposedly there for the consumers protection yet it is clear from the report fielded by FCAC officials that they are simply going to continue to deny wrongdoing in the banking sector exists. They are funded by the industry, why would they bite the hand that feeds them? Any wrongdoing that gets highlighted or brought to their attention can simply be washed away with the use of the term mis-selling.

 The short blurb from Ms. Lucie Tedsco outlines the typical responses from those in power be it with a consumer advocacy agency or a financial regulator. The end result is usually the same, no wrong doing is found. It was refreshing to see several MPs who seemed to have serious concerns over the whitewashing of the FCAC report.


    It's just in terms of the report highlighting that there are no systemic mis-practices going on in sales practices by the banks, but controls—governance—need to be beefed up. Is that correct?

    Yes, that's correct.

     During the course of the review, we did identify certain risks to consumers and ways to address those risks, but we did not find any evidence of a widespread problem with mis-selling or breaches of market conduct obligations. That doesn't mean we didn't find that risks existed across all six banks, and that doesn't mean we didn't find incidences of potential market conduct violations, which, if we did find—and I understand we did find some—we are currently investigating, and they are following our normal enforcement procedure.




  What is most disturbing is that the FCAC seems to have helped its friends in the banking industry coin a new term to hide or downplay what could be or often is a blatant criminal offence.
 The term mis-selling seems to have taken the place of activities such as Section 341, and 361, of the Canadian Criminal Code.

 What we are seeing and what has been outlined in BCIMC, BCSC, Serco, The BC Attorney General Office, All Connected To RICO Crime?  Also on The Investment Funds Institute Of Canada, the BCSC, KPMG, BCIMC and Paul C. Bourque  as well as numerous other posts on this blog, and by many other individuals over the last couple of years is a systematic robbery of the wealth of both the US and Canada by a cabal of bankers and their lackeys. The terrorism, the division, the circus that is the mainstream media that surrounds it all is the side show, divide and conquer is the M/O.

A  excellent article in the Guardian outlines what is also really happening right here in Canada, many are still unaware just how deep the tentacles of the beast run here in this northern nation.

 See snippet below on the 'City Of London' and how it operates as a haven for financial corruption that spreads the length the British Empire in her glory days and beyond. It has evolved and today along with entities like the Bank of International Settlements, World Bank others it controls the finances of most of the planet. The collection of corporations housed here are often behind the concepts, organizations, and efforts to divide and conquer by funding war, terror, division and religious extremism etc. in order to keep the public pre-occupied and in terror so that they will accept what the true puppet masters have in store next. The continued destruction of your rights, the law, and the planet, all for power and money. This is not free market capitalism, this is out right robbery on a grand scale. See below.


The City of London, operating with the help of British overseas territories and crown dependencies, is the world’s leading tax haven, controlling 24% of all offshore financial services. It offers global capital an elaborate secrecy regime, assisting not just tax evaders but also smugglers, sanctions- busters and money-launderers. As the French investigating magistrate Eva Joly has complained, the City “has never transmitted even the smallest piece of usable evidence to a foreign magistrate”. The UK, Switzerland, Singapore, Luxembourg and Germany are all ranked by Transparency International as among the least corrupt nations in the world. They are also listed by the Tax Justice Network as among the worst secrecy regimes and tax havens. For some reason, though, that doesn’t count.
The Private Finance Initiative has been used by our governments to deceive us about the extent of their borrowing while channelling public money into the hands of corporations. Shrouded in secrecy, stuffed with hidden sweeteners, it has landed hospitals and schools with unpayable debts, while hiding public services from public scrutiny.
 State spies have been engaged in mass surveillance. And the police, adopting the identities of dead children, lying in court to assist false convictions and fathering children by activists before disappearing, have infiltrated and sought to destroy peaceful campaign groups. Police forces have protected prolific paedophiles, including Jimmy Savile, and – it is now alleged – a ring of senior politicians who are also suspected of the murder of children. Savile was shielded too by the NHS and the BBC, which has sacked most of the those who sought to expose him while promoting people who tried to perpetuate the cover-up.

 Source - Corruption Rife in Britian


  Again this all may seem a far cry from our original topic of the FCAC and its recent report on the Standing Committee on Finance however I will soon make my point on the absurdity of this all before posting the actual transcript from the report to the Standing Committee on Finance.

 Canada and the United States of America are both being systematically robbed of their wealth and destroyed in the manner of Greece and Italy so that a few global private benefactors are able to buy up everything they can while government agencies and organizations go bankrupt and are siphoned of cash.
  The agencies of these nations that were formerly supposed to protect and serve have been hijacked and have been used against the very people who fund their existence through a needless burden of debt and tax that should not have to be what it is. Nations have the right to create sovereign money and not have to pay interest to a private cabal of bankers who create that money out of thin air. Since Canada became party to the Basel Accords it has given up this privilege and thus is no longer able to properly finance the infrastructure, healthcare, education, social programs justice, and law enforcement systems it needs to. See for more.

 The myth is that Canada is a safe place to invest and free of corruption could not be further from the truth, we did not escape the 2008 economic crisis unscathed. The Centre for Policy Alternatives outlines the basics of a bail out of Canadian banks during that time of well over $100 Billion.
 Without retaking control of our finances here in Canada we may soon see economic crisis that mirror Greece, Italy, Brazil and many others who are also being robbed and destroyed by a global cabal of banksters.

 Going back to the FCAC again it is simply another tool being used by a cabal of bankers, lawyers and other individuals in both the corporate and government world to hide siphoning of wealth from hard working Canadians and into the pockets of a few wealthy CEOs, bankers and their minions.
  The recent findings of the FCAC are simply a continuation of the same old modus operandi, they are just words. These words  are designed to confuse, deceive and obfuscate the areas of financial contracts, law and the sales practices of financial instruments. Where is the concern or action regarding fake advisor labels and deceptive sales tactics on behalf of the FCAC? There is none, the FCAC is just a sham like the BC Securities Commission.

We are very doubtful any of the investigations that have been alluded to by the FCAC into what could be crimes will ever have findings of real wrongdoing, if they do it will be minimized and brushed aside quietly as seems to be the way of dealing with financial fraud and many other crimes in Canada.

 The regulators will never help, not with the current model and personal in charge, nor will the new national regulator be an improvement. They are all designed to hide crime and help financial firms and corporate entities rob the public without them even knowing it.
 See how the new national regulator has plans to set up a regulatory regime that will have the power to jail people who tell the truth in regards to the financial markets if the truth negatively impacts the value of the markets. The regulators plan on having the power to prop up a dead horse indefinitely.
 See New Canadian Regulators Remove 'Integrity' From Framework, Replace With 'Material Adverse Effects'.

 As for the FCAC, thankfully there are still a few MPs with the integrity and courage to question what is really going on. See the full transcript from the FCAC report to the Standing Committee on Finance here at,

 More to come..

Thursday, 26 April 2018


 The BC Securities Commission has had another loss inn BC Court of Appeals. We cannot comment on the nature of the case and if the man in question Mr. Larry Davis is guilty or innocent however there will surely be implications for the BCSC and its string of court losses beyond firing of lawyers.

 See the Court Transcript below,


Davis v. British Columbia (Securities Commission),
2018 BCCA 149
Date: 20180420
Docket: CA44114
Larry Keith Davis
British Columbia Securities Commission and the Executive Director of the British Columbia Securities Commission
The Honourable Mr. Justice Frankel
The Honourable Mr. Justice Groberman
The Honourable Madam Justice Garson
On appeal from: Decisions of the British Columbia Securities Commission dated June 22, 2016 and November 7, 2016 (Re Davis, 2016 BCSECCOM 214 and
2016 BCSECCOM 375).
Counsel for the Appellant:
P.A.A. Taylor
H. Thauli
Counsel for the Respondents:
J.L. Whately
O.L. Fagbamiye
Place and Date of Hearing:
Vancouver, British Columbia
January 8, 2018
Place and Date of Judgment:
Vancouver, British Columbia
April 20, 2018
Written Reasons by:
The Honourable Mr. Justice Frankel
The Honourable Madam Justice Garson
Concurred in by:
The Honourable Mr. Justice Groberman
A hearing panel found D. committed fraud by falsely representing to an investor that he owned the company shares he was selling.  D. used the $7,000 paid by the investor for his personal expenses.  D. never received any shares and it was necessary for the investor to commence a small claims action to recover her money.  D. testified that, by reason of a non-binding arrangement with the company’s principal, he believed he would receive the shares needed to complete the transaction.  The sanctions imposed by the panel included several permanent market bans.  D. appealed both the finding of liability and the sanctions.  Held: Liability appeal dismissed; sanctions appeal allowed.  Even if D. honestly believed he would receive the shares, the elements of fraud were established.  The sanctions decision was unreasonable because the panel failed to take into consideration D.’s previously unblemished record and the principle of proportionality.
Reasons for Judgment of the Honourable Mr. Justice Frankel and the Honourable Madam Justice Garson:


[1]            Larry Keith Davis appeals from the finding of a hearing panel of the British Columbia Securities Commission that he committed fraud contrary to s. 57(b) of the Securities Act, R.S.B.C. 1996, c. 418.  If that finding is upheld, then Mr. Davis appeals from the permanent market bans the panel imposed on him.
[2]            The liability decision is based on Mr. Davis having untruthfully told an investor he owned the shares he was selling to that investor.  Mr. Davis contends his actions do not amount to fraud because he believed he would receive those shares in the future.  With respect to the permanent market bans, Mr. Davis contends the panel’s sanctions decision is unreasonable because it is predicated on such bans being generally imposed in fraud cases, without regard to the circumstances of the offence and the offender.
[3]            For the reasons that follow, we would dismiss Mr. Davis’s appeal from the liability decision but allow his appeal from the sanctions decision.

Factual Background

[4]            Mr. Davis is a resident of British Columbia.  He has been involved in providing investor-relations services for approximately 25 years.
[5]            In 2009, using the name Bravo International Services, Mr. Davis began providing investor-relations services for FormCap Corporation, a Nevada company trading over-the-counter in the United States of America.  Mr. Davis had no formal agreement to provide services to FormCap and received no remuneration directly from FormCap.  Rather, he was compensated for his services in FormCap shares transferred to him from existing shareholders.
[6]            The transfer of FormCap shares to Mr. Davis ended in January 2011.  By April 2011, he had sold all the FormCap shares he had received.
[7]            Wendy McDonald was a friend and neighbour of Mr. Davis.  In June 2011, Mr. Davis told Ms. McDonald he had an investment opportunity for her.  At this time, FormCap was planning a 1-for-10 share consolidation.
[8]            Ms. McDonald agreed to invest $4,000.  On June 17, 2011, she gave Mr. Davis a money order in that amount.  Mr. Davis told Ms. McDonald that her investment was safe and that she could get her money back.
[9]            A few days later, Mr. Davis deposited the money order into his personal bank account, which was then overdrawn by approximately $1,900.  In the next few days, Mr. Davis used some $900 of the money he had received from Ms. McDonald to pay for his personal expenses.
[10]        On June 24, 2011, Mr. Davis issued Ms. McDonald a receipt on Bravo International letterhead for $4,000, with reference to “attached Share Exchange Agreement for, FormCap Corp.”, a document Mr. Davis drafted.  The agreement, which was for the sale of 40,000 shares of FormCap for $4,000, made several references to Mr. Davis as the “owner” or “seller” of those shares, including:
THIS AGREEMENT is made and entered into this 24 day of June, 2011 by and between Larry Davis, (“Seller”) and Wendy McDonald (“Purchaser”);
WHEREAS, the Seller is the record owner and holder of the issued and outstanding shares of the capital stock, (“FormCap Corporation”), a Nevada Corporation, which is consolidating its issued capital stock on a 1 new share for 10 old shares.
Seller hereby warrants and represents:
(b) Restrictions on Stock…ii. Seller is the lawful owner of the Stock, free and clear of all security interests, liens, encumbrances, equities and other charges…
[Emphasis added.]
[11]        With respect to the completion of the transaction, the agreement stated:
The certificates representing the Corporation’s Stock shall be delivered by the Seller to the Purchaser upon the closing of the transactions contemplated by this Agreement (“Closing”), shall be held on or about AUG/SEPT/2011, or date and time as the parties hereto may otherwise agree.
[12]        Mr. Davis’s signature on the agreement was witnessed by his wife, Diane Jane Davis.  Mr. Davis did not ask Ms. McDonald to sign the agreement as it did not have a place for her signature.
[13]        By July 14, 2011, Mr. Davis had used what remained of Ms. McDonald’s money for his personal expenses.  His bank account was overdrawn again.
[14]        On October 17, 2011, FormCap issued a report publicly disclosing its intention to abandon the planned 1-for-10 share consolidation.  Mr. Davis was aware the 1-for-10 consolidation would no longer take place but did not advise Ms. McDonald of this.
[15]        In April 2012, Mr. Davis told Ms. McDonald that another opportunity to invest in FormCap shares had come available.  He told her there was a short time-window to invest and that other investors were investing more funds.  Ms. McDonald agreed to invest a further $3,000, and gave that amount to him in cash.  Mr. Davis used that money for his personal expenses.
[16]        After making the second investment, Ms. McDonald asked Mr. Davis where her FormCap shares would go.  Mr. Davis recommended a brokerage firm and Ms. McDonald opened an account with that firm.
[17]        On August 10, 2012, FormCap issued a news release publically disclosing it proposed to proceed with a 1-for-50 share consolidation.
[18]        In late March 2013, Ms. McDonald, who had misplaced her copy of the 2011 agreement, asked Mr. Davis for documentation with respect to her $7,000 investment.  She and Mr. Davis exchanged emails through April and May.
[19]        On April 4, 2013, Ms. McDonald emailed Mr. Davis.  She stated that due to a change in her financial circumstances she would like to withdraw the $7,000 she had given him to invest.  Mr. Davis replied that day:
Your investment in FormCap resulted in you becoming a shareholder.  Your original paperwork that you misplaced reflected that fact.  Therefore, you, me and all the other shareholders are stuck and will have to wait for FormCap to get its act together.  Myself and others are keeping the pressure on, but we remain skeptical due to the majority shareholder’s declining health issues.  I have touched on that topic in my previous e-mail and telephone conversation.  I know it sucks, however, I have always guaranteed your investment so you will never loose [sic] your principal amount of $7,000.  As previously mention [sic], I was prepared to do the following for you, so when I close on any of the three projects that I am currently working on, I can switch you into that first project which would allow your position to be eligible for sale either privately or when we go public.  I hope this note serves as reassurance for you, Wendy, and your investment is still sound and intact, however, just not liquid at this time.
[20]        Over the next few weeks Ms. McDonald sent further emails to Mr. Davis asking why the shares had not be deposited into her account at the brokerage firm and requesting the return of her money.  In his responses, Mr. Davis told Ms. McDonald that neither the shares nor her money were available but her investments were fine.  For example, in an email sent on April 23, 2013, Mr. Davis stated:
As a friendly reminder… this is an investment that is in the form of shares that are tied to the stock market.  If you recall, I had you open an account with a brokerage firm in Vancouver.  This payment request you are now asking for would be considered or categorized as a favour re your situation.  This is something that you are obviously coming up now because of your circumstances, however, I’m sorry to say, my dear, that your timing for this (favour, request or demand) doesn’t work that way.  But please don’t panic.  All is fine with your investment.
[21]        On April 25, 2013, Mr. Davis responded as follows to an email in which Ms. McDonald asked him why the FormCap shares were not in her brokerage account:
As previously mentioned, you will receive your shares once the certificates are issued.  Then they can go either to you directly or to an account of your choosing.  I will notify you when this takes place.
[22]        In an email sent on May 13, 2013, Ms. McDonald advised Mr. Davis that if he did not return her money by May 17, 2013, then she would “pursue the regulatory avenues open to [her].”  Mr. Davis replied on May 15, 2013, that everything outlining the investment was in the 2011 agreement and he would go through it with her again.  He declined to return the $7,000.
[23]        On May 17, 2013, the person handling the brokerage account Ms. McDonald had opened suggested she have the 2011 agreement revised to reflect the total amount of her investment.  As a result, Ms. McDonald went to Mr. Davis’s home that day.  She took David H. Stone with her as a witness.  The 2011 agreement was revised in handwriting to reflect the sale of 70,000 shares of FormCap for $7,000.  The recital with respect to FormCap consolidating its stock on a 1-for 10 basis was not changed.  The amended agreement was signed by Mr. Davis, Ms. McDonald, and Mr. Stone.
[24]        On May 28, 2013, Ms. McDonald contacted the Commission by telephone; she advised Mr. Davis by email she had done so.  In his reply email, Mr. Davis stated (in part):
This has nothing to do with the BC Securities Commission.  This is a Nevada, USA based company.  You don’t own these shares.  I do.  You have been told that many times.
[25]        On May 29, 2013, Ms. McDonald again asked Mr. Davis to return her money.  On June 4, 2013, the money not having been returned, she filed a written complaint with the Securities Commission.
[26]        On March 13, 2015, the executive director of the Commission issued a notice of hearing to Mr. Davis alleging he had committed fraud contrary to s. 57(b) of the Act.  That section provides:
A person must not, directly or indirectly, engage in or participate in conduct relating to securities or exchange contracts if the person knows, or reasonably should know, that the conduct
(b) perpetrates a fraud on any person.
[27]        Later in 2015, Ms. McDonald commenced a small claims action against Mr. Davis to recover the $7,000.  As a result of that action, Mr. Davis returned the money to her.
[28]        The Commission’s hearing into Mr. Davis’s conduct took place in early February 2016.  The executive director called a Commission investigator and Ms. McDonald as witnesses.  It is not necessary to set out the details of their evidence.  Mr. Davis testified and called his wife as a witness.  As their evidence is pertinent to this appeal it is set out below.

Mr. Davis’s Evidence

[29]        Mr. Davis testified that, starting in the fall of 2009, he performed investor-relations services on behalf of FormCap.  FormCap’s majority and controlling shareholder, Terry Butchart, arranged for Mr. Davis to be compensated in the form of FormCap shares.  Those shares were transferred to Mr. Davis from companies Mr. Butchart either owned or over which Mr. Butchart had influence.  The last transfer took place in December 2010 or January 2011.
[30]        In January 2011, Mr. Davis and Mr. Butchart discussed Mr. Davis continuing to work on FormCap’s behalf.  In June 2011, Mr. Davis learned FormCap was planning a 1-for-10 share consolidation.  Mr. Davis and Mr. Butchart agreed that once the consolidation was completed, Mr. Davis would receive 100,000 post-consolidation shares as compensation for his services.  At the time, the consolidation was expected to occur in August/September 2011.
[31]        When Ms. McDonald approached Mr. Davis looking for an investment opportunity, he suggested FormCap once he was confident the consolidation would take place.  He told her about the consolidation and that he would get his shares after it had taken place.  Although confident he would get the shares, Mr. Davis told Ms. McDonald he would personally guarantee her investment, i.e., if he did not get his shares, then she would get her money back.
[32]        Mr. Butchart kept Mr. Davis informed as to the progress of the consolidation.  When the consolidation did not proceed, Mr. Davis so advised Ms. McDonald.
[33]        When Ms. McDonald approached Mr. Davis in May 2012, about investing more money, he believed there would be a consolidation and that he would then receive FormCap shares.  Mr. Butchart had agreed to provide him with shares regardless of the nature of the consolidation.  Mr. Davis intended to provide Ms. McDonald with her shares once he received them.  He continually updated her on what was happening with the consolidation.
[34]        When, in August 2012, FormCap announced a 1-for-50 consolidation, Mr. Butchart assured Mr. Davis he would still be receiving a substantial number of shares.  At that time, Mr. Davis was working on behalf of FormCap.  Mr. Butchart repeated those assurances to Mr. Davis later that summer, when the two met at Mr. Butchart’s home.
[35]        When Ms. McDonald and Mr. Stone came to Mr. Davis’s house on May 17, 2013, Mr. Davis believed he would be getting FormCap shares.  He explained to Mr. Stone that Ms. McDonald would not receive her shares until after the consolidation.  After hearing the explanation, Mr. Stone told Ms. McDonald everything was fine.
[36]        Mr. Davis said because he was “forward selling” shares to Ms. McDonald he could do whatever he wanted with the money she gave him.
[37]        Mr. Davis never received any FormCap shares.

Ms. Davis’s Testimony

[38]        Ms. Davis said Mr. Butchart “hired” Mr. Davis in 2009 to work for FormCap.  Mr. Davis was paid in FormCap shares.
[39]        In the summer of 2012, Ms. Davis was frustrated and upset by the fact Mr. Davis was not being paid in a timely way.  As a result, Mr. Davis asked her to come with him to Mr. Butchart’s house.  She overheard Mr. Butchart and Mr. Davis discussing when a share rollback/consolidation would take place.  Large amounts of shares were mentioned, but nothing could happen until after the rollback.  Although no timeframe for the rollback was given, she was told it would not be very long.

Liability Decision
(2016 BCSECCOM 214)

[40]        Before the panel, Mr. Davis acknowledged he did not receive any FormCap shares after January 2011.  He further acknowledged he did not own any FormCap shares at the time of Ms. McDonald’s investments, or at the time he amended the written agreement at her request.
[41]        The panel concluded Mr. Davis had perpetrated fraud in the amount of $7,000 contrary to s. 57(b) of the Act.  With respect to the elements of fraud, it relied on the following from the judgment of Justice McLachlin (as she then was) in R. v. Théroux, [1993] 2 S.C.R. 5 at 20, a case dealing with fraud under s. 380(1) of the Criminal Code, R.S.C. 1985, c. C-46:
… the actus reus of the offence of fraud will be established by proof of:
1.   the prohibited act, be it an act of deceit, a falsehood or some other fraudulent means; and
2.   deprivation caused by the prohibited act, which may consist in actual loss or the placing of the victim's pecuniary interests at risk.
Correspondingly, the mens rea of fraud is established by proof of:
1.   subjective knowledge of the prohibited act; and
2.   subjective knowledge that the prohibited act could have as a consequence the deprivation of another (which deprivation may consist in knowledge that the victim's pecuniary interests are put at risk).
[42]        The panel found Mr. Davis’s testimony about a collateral oral agreement with Ms. McDonald was not credible.  It rejected his evidence that he and Ms. McDonald had orally agreed that: (a) he was selling her his future interest in post-consolidation FormCap shares; (b) she would receive her shares only after he received his shares; and (c) he would pay her back her money if he did not receive his shares: paras. 57, 6673.
[43]        In finding the actus reus element of fraud had been proven, the panel stated:
[74]      [Mr. Davis] represented to [Ms. McDonald] that he owned the FormCap shares he was purporting to sell her when he did not.  As late as May 28, 2013 he continued to represent to [Ms. McDonald] that he owned the FormCap shares even though the 1-for-10 share consolidation had been abandoned in October 2011 and he had never received any FormCap shares following the eventual 1-for-50 share consolidation which commenced in August 2012.  This falsehood is the prohibited act.
[75]      The prohibited act caused deprivation to [Ms. McDonald’s] pecuniary interests.  The British Columbia Court of Appeal, in R. v. Abramson, [1983] B.C.J. No. 1305, confirmed that the payment of money as part of an investment was sufficient to establish deprivation for the purpose of fraud.  In Re Streamline Properties 2014 BCSECCOM 263, the Commission followed Abramson.
[76]      While [Ms. McDonald] eventually obtained the return of the monies she had invested, it was only after she had expended considerable time and effort pursuing their return by various means, finally achieving success in late 2015 through the Small Claims Court’s processes.
[44]        With respect to the mens rea of fraud, the panel said:
[77]      While [Mr. Davis] may have believed at the time of the first investment that he would acquire FormCap shares following the initially proposed 1-for-10 share consolidation through [Mr. Butchart], [Mr. Davis] knew at that time that he did not own any FormCap shares.  Yet he proceeded to sell FormCap shares he did not own to [Ms. McDonald].  Shortly, thereafter, he spent [Ms. McDonald’s] funds on personal expenditures.
[78]      By the time of the second investment, [Mr. Davis] not only knew he did not have any FormCap shares to sell to [Ms. McDonald] but also knew the previously proposed FormCap share consolidation had been abandoned and the company was having serious financial difficulties.  Yet, he proceeded to agree to sell [Ms. McDonald] another 30,000 FormCap shares which he did not own on the same terms and conditions.  When she sought the return of these funds, he rejected her request saying there were no funds available and continued his deceit by telling [Ms. McDonald] that the investment was in the form of shares tied to the stock market.
[79]      [Mr. Davis] thus knew at the time of each investment of the prohibited act and that the prohibited act could have as a consequence the deprivation of [Ms. McDonald] by putting the monies she had invested with him at risk.

Sanctions Decision
(2016 BCSECCOM 375)

[45]        The panel ordered Mr. Davis to pay a $15,000 administrative penalty and permanently prohibited him from participating in the securities market, other than for his own account through a person registered under the Act.
[46]        In reaching this conclusion, the panel stated that, “While the amount involved in this case is relatively small, [Mr. Davis’s] initial and ongoing deceit is misconduct properly characterized as falling within the most serious misconduct prohibited by the Act”: para. 13.  The panel also stated that the absence of a prior regulatory history is not a mitigating factor: para. 30.
[47]        The executive director provided the panel with four sanctions decisions in which permanent market bans had been imposed, submitting they were comparable to Mr. Davis’s case.  The frauds in those decisions ranged from $6,000 to $38,250.
[48]        The panel rejected Mr. Davis’s submission that proportionality is the overarching principle in the determination of appropriate sanctions: para. 42.  It noted Mr. Davis had been unable to provide any relevant cases wherein anything less than permanent market bans had been imposed following a finding of liability based on fraud: para. 49.  The panel held that “[i]n keeping with similar circumstances in other cases of fraud”, imposing permanent market bans on Mr. Davis was appropriate: para. 52.
[49]        In the result, the panel ordered that (at para. 61):
a)      [Mr. Davis] cease trading in, and is permanently prohibited from purchasing, securities; except [Mr. Davis] may trade or purchase securities for his own account through a registrant if he gives the registrant a copy of this decision;
b)      any or all of the exemptions set out in the Act, regulations or a decision do not apply to the respondent;
c)      [Mr. Davis] resign any position he holds as, and is permanently prohibited from becoming or acting as, a director or officer of any issuer or registrant;
d)      [Mr. Davis] is permanently prohibited from becoming or acting as a registrant or promoter;
e)      [Mr. Davis] is permanently prohibited from acting in a management or consultative capacity in connection with activities in the securities market; and
f)       [Mr. Davis] is permanently prohibited from engaging in investor relations activities.


Standard of Review

[50]        The parties agree that the reasonableness standard of review applies to the panel’s findings of credibility, findings of fact, and imposition of sanctions.
[51]        In their factum, the Commission and executive director cite McLean v. British Columbia (Securities Commission), 2013 SCC 67 at paras. 1921, [2013] 3 S.C.R. 895, for the proposition that the reasonableness standard of review presumptively applies to the panel’s interpretation of its home statute.  However, in their oral submissions they accepted that the correctness standard of review applies to the panel’s determination of the elements of fraud under s. 57(b) of the Securities Act.
[52]        The elements of fraud are not in issue in this case.  Both parties accept that the elements of fraud under s. 57(b) are those under s. 380(1) of the Criminal Code, as discussed in Théroux.  The liability question here is whether those elements were proven.
[53]        Mr. Davis’s primary position is that the correctness standard applies to this question.  Applying that standard, he says the facts do not support the conclusion that he committed fraud.  In effect, Mr. Davis says that, as in the criminal law, the legal effect of undisputed or found facts is a question of law to which the correctness standard applies: see R. v. Mara, [1997] 2 S.C.R. 630 at para. 29; R. v. Greyeyes, [1997] 2 S.C.R. 825 at para. 40; R. v. J.M.H., 2011 SCC 45 at para. 28, [2011] 3 S.C.R. 197.  In the alternative, he submits the panel’s determination that he committed fraud is unreasonable.
[54]        The Commission and the executive director submit the reasonableness standard applies to the question of whether the elements of fraud were proven.
[55]        We need not determine which standard of review applies to the question of whether the elements of fraud were proven because we have concluded that the more rigorous standard of correctness is, in any event, satisfied.

Liability Finding

[56]        Mr. Davis does not say the panel erred in considering the elements of fraud to be those discussed in Théroux.  What he says is that even though he was untruthful in telling Ms. McDonald he owned the FormCap shares he was selling her, he did not commit fraud because he honestly believed he would receive post-consolidation shares and, thereafter, live up to his obligations under the written agreement.  He says that by reason of that belief, neither the actus reus nor mens rea elements of fraud were proven.  We do not agree.
[57]        Mr. Davis’s arguments rest on two passages in the panel’s reasons.  The first passage is in the section entitled “Background”.  In discussing Mr. Davis’s evidence concerning his conversations with Mr. Butchart in June 2011, the panel stated:
[12]      While [Mr. Davis] may have believed, based on past experience, that [Mr. Butchart] would arrange to have FormCap shares transferred to him from other shareholders for the FormCap investor relations work the [Mr. Davis] was doing in 2011 and later, there was no evidence of any enforceable agreement by [Mr. Butchart] to do so.
[Emphasis added.]
The second passage is para. 77 (which appears in the section entitled “Analysis”) which, for ease of reference, we will set out again:
[77]      While [Mr. Davis] may have believed at the time of the first investment that he would acquire FormCap shares following the initially proposed 1-for-10 share consolidation through [Mr. Butchart], [Mr. Davis] knew at that time that he did not own any FormCap shares.  Yet he proceeded to sell FormCap shares he did not own to [Ms. McDonald].  Shortly, thereafter, he spent [Ms. McDonald’s] funds on personal expenditures.
[Emphasis added.]
[58]        The parties disagree as to what the words “While [Mr. Davis] may have believed” connote.  Mr. Davis’s position is that they indicate a positive finding of fact that he honestly believed he would receive FormCap shares, i.e., that those words should be read as if the panel had said, “Mr. Davis believed”.  The position of the Commission and the executive director is that no such finding was made.  In this regard, they point to the panel’s adverse finding with respect to Mr. Davis’s credibility.
[59]        We confess it is not clear to us what finding the panel made with respect to Mr. Davis’s state of mind at the time of the first investment.  While it is true that the panel did make an adverse finding with respect to Mr. Davis’s credibility, it did so only with respect to his assertion that he and Ms. McDonald had entered into a collateral oral agreement.  After referring to Mr. Davis’s evidence that Ms. McDonald was aware of, and agreed to, his “forward selling” her shares he did not own, the panel stated:
[68]      We do not consider [Mr. Davis’s] testimony in this regard to be credible.”
[Emphasis added.]
[60]        The panel then went on to further discuss the evidence and concluded by stating:
[73]      We reject [Mr. Davis’s] testimony and argument as to the existence of a collateral “oral agreement”.  We find the terms of the agreement between [Mr. Davis] and [Ms. McDonald] as to [Ms. McDonald’s] two investments are those set out in the [share purchase agreement] as amended.
[Emphasis added.]
[61]        However, even if Mr. Davis’s interpretation of the words “may have believed” is correct, it would not affect the panel’s finding he committed fraud; a finding grounded on Mr. Davis: (a) misrepresenting to Ms. McDonald that he owned the shares he was selling; (b) using the purchase money she gave him for his own purposes; and (c) continuing to deceive her after she asked for her money back.  Those facts satisfy the elements of fraud set out in Théroux.
[62]        With respect to the actus reus, the prohibited act was the falsehood Mr. Davis told Ms. McDonald about being the owner of the FormCap shares he was selling.  Her pecuniary interests were put at risk when she provided him with money to purchase those shares.
[63]        Mr. Davis submits that despite the panel’s rejection of his evidence regarding the existence of a collateral oral agreement, the panel accepted, in para. 12 of the sanctions decision, that Ms. McDonald initially believed she would get her money back if she did not receive her shares.  He argues that, as a result, it cannot be said Ms. McDonald’s pecuniary interests were at risk.  This argument ignores, however, the fact Mr. Davis used the money Ms. McDonald gave him to pay for his personal expenses and refused to return her money when she asked for it in 2013; the mere promise of a refund cannot immunize Mr. Davis from a claim of fraud.
[64]        Mr. Davis further submits the panel’s actus reus analysis is inconsistent with the liability decision in Re Maddigan, 2016 BCSECCOM 379, which was released shortly after the sanctions decision in this case.  Maddigan, however, is distinguishable.
[65]        In Maddigan, 0902395 B.C. Ltd., a company controlled by Mr. Maddigan, entered into loan agreements with investors, promising to repay the funds advanced in cash by the maturity date, or deliver to the investors shares of an another company equal to the loan amounts.  0902395 B.C. Ltd. failed to deliver cash or shares to two of the investors, electing, instead, to satisfy its obligations to other creditors.  The hearing panel noted, with respect to the loan agreements, “[t]here is no evidence that this promise was, at the time made, in any way deceitful or false”: para. 34.
[66]        Before the Maddigan hearing panel, the executive director argued that regardless of the reason for making it, the decision to prefer one creditor over another constituted the actus reus of fraud, i.e., “other fraudulent means” as discussed in Théroux.  In rejecting that argument, the panel stated that, in circumstances where it is not possible to satisfy all legitimate creditors, a reasonable person would not consider satisfying some over others to be dishonest: paras. 3839.
[67]        In this case, the panel found Mr. Davis engaged in a “falsehood” at the time the investments were made by representing to Ms. McDonald that he owned the FormCap shares he purported to sell her.  The “other fraudulent means” analysis required to establish fraud is, therefore, inapplicable.
[68]        Turning to mens rea, when Mr. Davis told Ms. McDonald he owned FormCap shares, he knew he was being untruthful; he continued that falsehood for years.  Mr. Davis also knew that taking Ms. McDonald’s money could put her pecuniary interests at risk because his ability to deliver the shares was uncertain; he had no legal entitlement to any shares.
[69]        Further, and most importantly, even if Mr. Davis believed he would receive FormCap shares in the future, the mens rea element of fraud would still be established.  This is evinced by Théroux.
[70]        Mr. Théroux was the directing mind of a company involved in two residential construction projects.  The company falsely represented to buyers that the deposits they paid were insured.  When the company became insolvent, the projects could not be completed, and most of the depositors lost their money.  The trial judge who convicted Mr. Théroux of fraud found that he knowingly made the misrepresentations without any reasonable assurance that the projects would be completed, although he sincerely believed they would be completed.
[71]        In affirming Mr. Théroux’s conviction, McLachlin J. held that his sincere belief that the projects would be completed was not a defence.  With respect to the mens rea element of fraud generally, she stated (at pp. 2324):
A person who deprives another person of what the latter has should not escape criminal responsibility merely because, according to his moral or her personal code, he or she was doing nothing wrong or because of a sanguine belief that all will come out right in the end.  Many frauds are perpetrated by people who think there is nothing wrong in what they are doing or who sincerely believe that their act of placing other people's property at risk will not ultimately result in actual loss to those persons.  If the offence of fraud is to catch those who actually practise fraud, its mens rea cannot be cast so narrowly as this.
[Emphasis added.]
With respect to Mr. Théroux in particular, she said (at p. 27):
The mens rea too is established.  The appellant told the depositors they had insurance protection when he knew that they did not have that protection.  He knew this to be false.  He knew that by this act he was depriving the depositors of something they thought they had, insurance protection.  It may also be inferred from his possession of this knowledge that the appellant knew that he was placing the depositors’ money at risk.  That established, his mens rea is proved.  The fact that he sincerely believed that in the end the houses would be built and that the risk would not materialize cannot save him.
[Emphasis added.]
See also: R. v. Kingsbury, 2012 BCCA 462 at para. 46, 297 C.C.C. (3d) 255 (per Harris J.A.): “An honest belief that one’s conduct is not dishonest is irrelevant.  An honest belief that one’s conduct is not wrong or a hope or expectation that no deprivation will occur is equally irrelevant.”
[72]        We, therefore, would not accede to Mr. Davis’s challenge to the panel’s finding that he perpetrated a fraud on Ms. McDonald.

Sanctions Decision

[73]        Mr. Davis challenges only the permanent market bans.  He submits the decision to impose those bans was unreasonable because the panel failed to consider: (a) his previously unblemished record; and (b) the principle of proportionality.  We agree.
[74]        When the sanctions decision is read in its entirety, it is apparent the panel proceeded on the basis that permanent market bans are appropriate in fraud cases, regardless of the circumstances of the offence or the offender.  As we will explain, in our view that approach renders the sanctions decision unreasonable.
[75]        Sections 161 and 162 of the Securities Act provide that the Commission may make various sanction orders if it considers it in the public interest to do so:
Enforcement orders
161(1)   If the commission or the executive director considers it to be in the public interest, the commission or the executive director, after a hearing, may order one or more of the following:
(a)   that a person comply with or cease contravening, and that the directors and officers of the person cause the person to comply with or cease contravening,
(i)      a provision of this Act or the regulations,
(ii)     a decision, whether or not the decision has been filed under section 163, or
(iii)    a bylaw, rule, or other regulatory instrument or policy or a direction, decision, order or ruling made under a bylaw, rule or other regulatory instrument or policy of a self regulatory body, exchange or quotation and trade reporting system, as the case may be, that has been recognized by the commission under section 24;
(b)   that
(i)      all persons,
(ii)     the person or persons named in the order, or
(iii)    one or more classes of persons cease trading in, or be prohibited from purchasing, any securities or exchange contracts, a specified security or exchange contract or a specified class of securities or class of exchange contracts;
(c)   that any or all of the exemptions set out in this Act, the regulations or a decision do not apply to a person;
(d)   that a person
(i)      resign any position that the person holds as a director or officer of an issuer or registrant,
(ii)     is prohibited from becoming or acting as a director or officer of any issuer or registrant,
(iii)    is prohibited from becoming or acting as a registrant or promoter,
(iv)    is prohibited from acting in a management or consultative capacity in connection with activities in the securities market, or
(v)     is prohibited from engaging in investor relations activities;
(e)   that a registrant, issuer or person engaged in investor relations activities
(i)      is prohibited from disseminating to the public, or authorizing the dissemination to the public, of any information or record of any kind that is described in the order,
(ii)     is required to disseminate to the public, by the method described in the order, any information or record relating to the affairs of the registrant or issuer that the commission or the executive director considers must be disseminated, or
(iii)    is required to amend, in the manner specified in the order, any information or record of any kind described in the order before disseminating the information or record to the public or authorizing its dissemination to the public;
(f)    that a registration or recognition be suspended, cancelled or restricted or that conditions, restrictions or requirements be imposed on a registration or recognition;
(g)   if a person has not complied with this Act, the regulations or a decision of the commission or the executive director, that the person pay to the commission any amount obtained, or payment or loss avoided, directly or indirectly, as a result of the failure to comply or the contravention;
(h)   that a person referred to in subsection (7) submit to a review of its practices and procedures;
(i)    that a person referred to in subsection (7) make changes to its practices and procedures;
(j)    that a person be reprimanded.
Administrative penalty
162        If the commission, after a hearing,
(a)   determines that a person has contravened
(i)      a provision of this Act or of the regulations, or
(ii)     a decision, whether or not the decision has been filed under section 163, and
(b) considers it to be in the public interest to make the order,
the commission may order the person to pay the commission an administrative penalty of not more than $1 million for each contravention.
[76]        To summarize the above provisions, the Commission may impose a wide range of sanctions, including disgorgement, bans on trading securities, bans on holding certain positions or engaging in certain activities, and administrative penalties up to $1 million.
[77]        In Cooper v. British Columbia (Liquor Control and Licensing Branch), 2017 BCCA 451 at para. 42, 5 B.C.L.R. (6th) 44, Justice Newbury stated that “a disproportionately harsh result can render a decision unreasonable.”  She went on to discuss Stetler v. The Ontario Flue-Cured Tobacco Growers’ Marketing Board, 2009 ONCA 234, 311 D.L.R. (4th) 109, as an example of that proposition.  The reasoning in Stetler is pertinent to Mr. Davis’s appeal.
[78]        Mr. Stetler, who was 70 years old, had been a tobacco farmer for his entire life.  The marketing board found that Mr. Stetler sold small amounts of tobacco in excess of his basic production quota and cancelled his entire quota.  Mr. Stetler appealed to the Agricultural, Food and Rural Affairs Appeal Tribunal.  Being of the view that general deterrence was the primary consideration, the tribunal affirmed the board’s decision to cancel Mr. Stetler’s quota.  The tribunal said neither the number of illegal sales nor the amounts of those sales mattered.  Further, it did not consider Mr. Stetler’s lack of a prior regulatory history to be a mitigating factor.
[79]        Mr. Stetler sought judicial review of the tribunal’s decision before the Ontario Divisional Court, which set the tribunal’s decision aside and ordered a new sanctions hearing.  The board then appealed to the Court of Appeal for Ontario.
[80]        In finding in Mr. Stetler’s favour, the Court of Appeal found error in the tribunal’s failure to consider Mr. Stetler’s unblemished record and emphasized the need for some degree of proportionality between the wrongdoing and the penalty imposed:  at paras. 34, 37.  With respect to these matters, Justice Gillese stated:
[34]      Second, it was unreasonable for the Tribunal to find that there were no mitigating factors in Mr. Stetler’s favour.  His age and health are mitigating factors.  So, too, is his unblemished record.  Apart from the incidents in question, he has never been charged with any regulatory or criminal offence.  For that matter, there is no evidence or suggestion that anyone in the Stetler family has ever been charged with any type of offence related to his farming business.
[37]      Third, it was unreasonable for the Tribunal to give no consideration to the number of times in which a person has engaged in unlawful activity or to the quantities of tobacco which have been unlawfully sold.  There can be no quarrel with the Tribunal's view that every unlawful sale of tobacco is serious.  However, just because each unlawful sale is serious, it does not mean that every such sale warrants the most serious of penalties, that is, cancellation of 100% of the tobacco grower's basic production quota.  There must be some degree of proportionality between the wrongdoing and the penalty imposed. The importance of proportionality is particularly significant where, as here, a person’s livelihood is at stake.  As the Divisional Court stated in Carruthers v. College of Nurses of Ontario (1996), 31 O.R. (3d) 377 at p. 404:
[N]ot every case is the worst case, nor every person adjudged guilty worthy of the most severe sanction.  There must be proportionality between the underlying findings and the penalty imposed.
[Emphasis added.]
See also: Walton v. Alberta (Securities Commission), 2014 ABCA 273 at para. 154, 376 D.L.R. (4th) 448: “[A]t the end of the day the sanction must be proportionate and reasonable for each appellant.  The pursuit of general deterrence does not warrant imposing a crushing or unfit sanction on any individual appellant.”
[81]        Justice Gillese went on to comment on the availability of a large range of possible penalties:
[40]         It can be seen that the Tribunal had a large range of possible penalties at its disposal.  Again, in part because it appears that the Tribunal saw its role as reviewing the penalty previously imposed rather than reconsidering penalty afresh, the Tribunal meted out the most severe punishment available, without any apparent consideration of the range of possible penalties and whether something less than full cancellation of Mr. Stetler’s basic production quota could meet the appropriate sentencing objectives.
[82]        In Rahmani (Re), 2009 BCSECCOM 279, leave to appeal ref’d, Investment Industry Regulatory Organization of Canada v. Rahmani, 2010 BCCA 93 (Chambers), 284 B.C.A.C. 122, the Commission, acting pursuant to its jurisdiction under s. 28 of the Securities Act, reviewed the decision of a hearing panel of the Investment Industry Regulatory Organization of Canada (“IIROC”) to permanently prohibit Mr. Rahmani from acting in any registered capacity with any IIROC member.  The Commission noted that permanent bans should be reserved for those cases where lesser sanctions would be ineffective in protecting investors:
30        Section 4.3 of the [IIROC’s Disciplinary Sanction] Guidelines provides specific guidance about the imposition of a permanent ban:
A permanent ban ... is a severe economic penalty and should generally be reserved for cases where:
·        the public itself has been abused
·        where it is clear that a respondent's conduct is indicative of a resistance to governance;
·        the misconduct has an element of criminal or quasi-criminal activity; or
·        there is reason to believe that the respondent could not be trusted to act in an honest and fair manner in all their dealings with the public, their clients, and the securities industry as a whole.
31        This, appropriately, appears to reserve permanent bans for cases where lesser sanctions would not be effective to protect investors and markets against future misconduct.
[83]        Rahmani is indicative of what we consider to be the correct approach; one which reserves the harshest penalties for circumstances in which the Commission considers lesser measures to be inadequate to protect the public interest.
[84]        Although no explicit guidelines like those in Rahmani exist to guide the Commission’s application of ss. 161 and 162 of the Securities Act, in Eron Mortgage Corp. (Re), 2000 LNBCSC 34, the Commission did identify a non-exhaustive list of factors to be considered when imposing sanctions.  The Commission referred to the Eron factors at para. 10 of its sanctions decision in Mr. Davis’s case.  In Eron, the Commission stated:
In making orders under sections 161 and 162 of the Act, the Commission must consider what is in the public interest in the context of its mandate to regulate trading in securities.  The circumstances of each case are different, so it is not possible to produce an exhaustive list of all of the factors that the Commission considers in making orders under sections 161 and 162, but the following are usually relevant:
·        the seriousness of respondent’s conduct,
·        the harm suffered by investors as a result of the respondent’s conduct,
·        the damage done to the integrity of the capital markets in British Columbia by the respondent’s conduct,
·        the extent to which the respondent was enriched,
·        factors that mitigate the respondent’s conduct,
·        the respondent’s past conduct,
·        the risk to investors and the capital markets posed by the respondent’s continued participation in the capital markets of British Columbia,
·        the respondent’s fitness to be a registrant or to bear the responsibilities associated with being a director, officer or adviser to issuers,
·        the need to demonstrate the consequences of inappropriate conduct to those who enjoy the benefits of access to the capital markets,
·        the need to deter those who participate in the capital markets from engaging in inappropriate conduct, and
·        orders made by the Commission in similar circumstances in the past.
Applying these factors to this case, it has been clearly established, and we have found, that the conduct of Slobogian and the corporate respondents is of the most egregious nature, has devastated investors and has damaged the integrity of the capital markets of British Columbia. Slobogian and the corporate respondents were substantially enriched by their actions - we found Slobogian’s direct income alone from Eron during the relevant period to be $2.7 million.  There is no evidence of mitigating conduct.  None of these respondents is fit for participation in our capital markets.  It is important the orders we make fit these circumstances.
In cases of serious fraud, the Commission has in the past issued orders permanently cease trading issuers and permanently removing respondents from the market.  This case is the most serious fraud dealt with by the Commission in recent memory and similar orders are clearly warranted in these circumstances.
[85]        Stetler, Eron, and Rahmani show it is incumbent upon the tribunal to consider whether measures short of a permanent market ban would protect the investing public where a person’s livelihood is at stake.  Sections 161 and 162 of the Securities Act facilitate this approach by granting the Commission jurisdiction to craft a wide range of remedies tailored to a particular offence and offender.  In doing so, principles of proportionality should be considered by the Commission or, put as the Commission did in Eron, the harm suffered by the investor and the extent to which the respondent was enriched are factors pertinent to determination of the appropriate sanctions.
[86]        By virtue of the bans imposed by the panel, Mr. Davis is precluded from earning a living as he has done for many years.  In effect, he was “given ‘capital punishment’ for his transgressions”: Stetler at para. 38.  Although the Commission purported to follow the Eron factors, it failed to conduct an individualized assessment.
[87]        The Commission did not mention the evidence before it of Mr. Davis’s personal circumstances.  In particular, it did not consider Mr. Davis’s long and unblemished career in the securities industry; he testified during the liability hearing that he was 56 and had been working in the industry since his late twenties.  The Commission may well have determined that continued participation by Mr. Davis in the market is a risk that could not be ameliorated by a remedy short of a lifetime full market ban, but its reasons for doing so must demonstrate a consideration of individual circumstances and alternative sanctions.
[88]        In finding the defects in the Commission’s reasoning to be fatal to its decision, we acknowledge that courts must avoid seizing “on one or more mistakes … which do not affect the decision as a whole” when conducting judicial review on a reasonableness standard: Law Society of New Brunswick v. Ryan, 2003 SCC 20 at para. 56, [2003] 1 S.C.R. 247.  We also recognize that the outcome reached by the Commission may ultimately be justified by the seriousness of Mr. Davis’s conduct.  However, when reviewing for reasonableness, a court must look to both the outcome and the reasons: Delta Air Lines Inc. v. Lukács, 2018 SCC 2 at para. 27, 416 D.L.R. (4th) 579.  Justice Tysoe explained the proper approach to flaws in the reasoning of a tribunal in Kenyon v. British Columbia (Superintendent of Motor Vehicles), 2015 BCCA 485, 82 B.C.L.R. (5th) 266, as follows:
[53]           ... Judicial review judges should read the reasons of the adjudicator as a whole in order to assess whether the reasoning is so lacking in logic, or is otherwise flawed, that it renders the decision unreasonable despite the fact there is some evidence to support a conclusion that the decision falls within a range of acceptable outcomes.
[89]        We, therefore, would allow Mr. Davis’s appeal from the sanctions decision and remit that matter to the Commission for reconsideration in accordance with these reasons.


[90]        We would dismiss the appeal from the liability decision.
[91]        We would allow the appeal from the sanctions decision, set aside the bans listed in para. 61(1) of that decision, and remit the issue of sanctions to the Commission for reconsideration.
“The Honourable Mr. Justice Frankel”
“The Honourable Madam Justice Garson”
“The Honourable Mr. Justice Groberman


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