Vancouver Stock
Exchange: Approved Person Disciplined
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Notice to Members #94/98
By way of an Offer of Settlement, Michael Kevin Patterson ("Patterson"), an
Approved Person employed by Pacific International Securities Inc., has agreed to the
imposition of the following penalties by the Exchange for violation of Exchange Rules
C.1.38 and Rule C.1.39:
1. a fine in the amount of $3,000, and 2. an assessment of investigative costs in the
amount of $1,200.
Rule C.1.38 states in part that no one shall make a short sale of any security listed
on the Exchange through the facilities of the Exchange at or below the price at which the
last sale of a board lot of such security was made on the Exchange unless the sale price
is on an uptick.
Rule C.1.39 states in part that a Member that knows or is informed that an order to
sell is a short sale for the purposes of Rule C.1.38, shall mark the order as
"short" or "S" and enter the order as such, and must ensure that the
provisions of Rule C.1.38 have been observed.
On July 25, 1995, Patterson participated in a non-brokered private placement (the
"Private Placement") in the shares of Exchange listed Yukon Gold Corp.
("Yukon Gold"). Patterson purchased 5,309 units at a price of $0.26 per unit.
Each unit consisted on one share and one warrant, which when exercised totalled 10,618
Yukon Gold common shares.
On July 30, 1995, the Private Placement closed and a share certificate representing
5,309 units of Yukon Gold was issued to Patterson. The shares where subject to a hold
period of one year and could not be traded in British Columbia until the expiry of the
hold period, July 30, 1996, (the "Hold Period").
On July 29, 1996, Patterson exercised the Yukon Gold warrants increasing his position
of Yukon Gold to 10,618 shares (the "Restricted Shares"), the Restricted Shares
were subject to the Hold Period. Patterson's sole security position in the shares of Yukon
Gold, were the Restricted Shares.
Patterson could not sell the Restricted Shares from a long position until the
expiration of the Hold Period on July 30, 1996. Patterson had however, between July 23,
1996 and July 26, 1996, sold the Restricted Shares prior to the expiration of the Hold
Period. Patterson inadvertently was of the belief that the Hold Period expired on July 23,
1996.
As a result, Patterson's sell transactions in the shares of Yukon Gold prior to and
including July 30, 1996, were then sales from a short position. Patterson conducted a
total of 7 short sale, 4 of which were executed on a downtick. Patterson further failed to
designate the orders as "short" or "S" and enter the orders as such.
Patterson thereby violated Rules C.1.38 and C.1.39.
No fault was attributed to the Member Firm.
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