Rules Violated
Mr. Jang has admitted to violating Exchange Rule
E.1.01(2) which states in part, that every approved person shall observe high standards of
ethics and conduct in the transaction of their business and shall not engage in any
conduct that is unbecoming, inconsistent with just and equitable principles of trade or
detrimental to the public interest.
Penalty Assessed
Pursuant to the terms of the Offer of
Settlement, Mr. Jang is required to:
- pay of a fine in the amount of $2,000.
Summary of Facts
Pacific and Exchange listed Castle Bay Resources
Inc. ("Castle Bay") signed an agency agreement on or about May 29, 1998, which
provided that Pacific would act as agent for the initial public offering (the
"IPO") of 2,200,000 common shares at $.10 per share.
During the period from November 1, 1997, to March 4,
1998, (the "Relevant Period"), Mr. Jang provided blank new client application
forms ("NCAFs") to directors of Castle Bay, to be distributed to interested
investors. During the Relevant Period, Mr. Jang received the return of a number of the
NCAFs, which had been completed by the investors who had placed orders for the IPO (the
"Completed NCAFs").
Mr. Jang placed the Completed NCAFs in his desk to
await such time as the Castle Bay prospectus was receipted and the Castle Bay shares could
be posted and called for trading. One NCAF had a $100 cheque and another had $50 cash
(collectively the "Client Funds") attached for the purchase of the IPO.
A preliminary prospectus dated March 3, 1998, for
Castle Bay was filed with and receipted by the Alberta Securities Commission (the
"ASC") on March 5, 1998.
On May 29, 1998, the ASC issued a final prospectus
receipt for Castle Bay.
On July 27, 1998, Pacific withdrew from the agency
agreement with Castle Bay. The IPO did not proceed.
In distributing NCAFs to Castle Bay directors and in
accepting the Completed NCAFs with purchase orders for shares in the IPO when no
prospectus had been filed with or receipted by the ASC, Mr. Jang was engaging in acts in
furtherance of a trade and thereby engaged in conduct that was unbecoming and detrimental
to the interests of the public and/or the ASE.
Further, in storing the NCAFs and the Client’s
Funds in his desk and failing to inform the firm and in failing to ensure proper
safekeeping of Client’s Funds, Mr. Jang further engaged in conduct that was
unbecoming and detrimental to the interests of the public and/or the Exchange.
Mr. Jang thereby violated Exchange Rule E.1.01(2).
No fault was attributed to the Member firm.
