A Salmon Arm man was hit with a $130,000 penalty after misleading investors, the BC Securities Commission said Monday.
Donald Bergman was issued the penalty from the securities commission panel for statements about loans made by his mortgage investment corporation. The panel also prohibited him from engaging in various market activities for 15 years, and imposed permanent bans on his company, All Canadian Investment Corporation.
All Canadian Investment Corporation provided loans secured by mortgages on real estate properties and raised $1.6 million from 56 investors in 2014 and 2015 through three offering memorandums that explained how the loans would be secured.
“Dividends to ACIC investors dwindled in 2015 and stopped altogether in early 2017. The company has been in the process of liquidation under a court-appointed monitor ever since. Losses for investors, many of whom are elderly, are estimated to be between 82 per cent and 96 per cent,” reads a press release from the BC Securities Commission.
In July 2021, a BCSC panel found that Bergman and ACIC made false or misleading statements in the offering memorandums because some of the loans were not secured as promised. The panel also found that Bergman and ACIC made misrepresentations to investors.
“While these losses cannot be attributed solely to the misrepresentations, it was clear that ACIC’s failure to register certain of its mortgages impacted the financial recovery of its mortgage investments,” the panel said.
Bergman had previously been registered under the Securities Act to engage in various market activities. The panel said those registrations “should have made him aware of the requirements of the Act and the importance to investors of accurate and complete disclosure in making investment decisions and the effect of a failure to do so on investor confidence necessary for fair and efficient markets.”
In addition to the administrative penalty, Bergman is prohibited for 15 years from trading or purchasing any securities or derivatives, except in accounts in his own name, relying on any exemptions set out in the act, the regulations or a decision, becoming or acting as a registrant or promoter, advising or otherwise acting in a management or consultative capacity in connection with activities in the securities or derivatives markets and engaging in promotional activities.
ACIC is also permanently banned from trading in or purchasing any securities or derivatives, becoming or acting as a registrant or promoter, and engaging in promotional activities.
The securities commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the securities act.