ALBERTA SECURITIES COMMISSION DECISION Platinum Decisions... Its general partner was Platinum 5...

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Transcript of ALBERTA SECURITIES COMMISSION DECISION Platinum Decisions... Its general partner was Platinum 5...

  • ALBERTA SECURITIES COMMISSION

    DECISION

    Citation: Re Platinum Equities Inc., 2014 ABASC 71 Date: 20140225

    Platinum Equities Inc.,

    Deerfoot Court Real Estate Investment Fund Limited Partnership,

    Glenmore & Centre Retail Limited Partnership,

    Platinum 5 Acres and a Mule Limited Partnership,

    PMIC II Investments Ltd.,

    Qualia Real Estate Investment Fund VI Limited Partnership,

    Shariff Chandran and Chitra Chandran

    Panel: Stephen Murison

    Daniel McKinley, FCA

    Fred Snell, FCA

    Representation: Tom McCartney

    Natasha Bazant

    Peter Verschoote

    for Commission Staff

    Jakub Ksiazek

    Daniel Johnson

    for the Respondents

    Submissions Concluded: 19 December 2013

    Decision: 25 February 2014

    4757455.1

  • i

    TABLE OF CONTENTS

    I. INTRODUCTION .................................................................................................................. 1 II. THE RESPONDENTS............................................................................................................ 1

    A. Platinum and Linked Entities .............................................................................................. 1 B. The Individual Respondents ............................................................................................... 3

    1. Shariff Chandran........................................................................................................... 3 2. Chitra Chandran ............................................................................................................ 3 3. Benefits to the Individual Respondents; Family Invested ............................................ 4

    C. RM Group ........................................................................................................................... 4 III. THE ALLEGATIONS ........................................................................................................ 5 IV. THE LAW ........................................................................................................................... 6

    A. Trades and Distributions ..................................................................................................... 6

    1. The Registration Requirement ...................................................................................... 6 2. The Prospectus Requirement ........................................................................................ 7

    3. Registration and Prospectus Exemptions ..................................................................... 7 B. Misrepresentation ................................................................................................................ 8

    C. Fraud ................................................................................................................................... 8 D. Conduct Contrary to the Public Interest .............................................................................. 9

    V. THE RESPONDENTS' CONDUCT: FACTS AND ANALYSIS ...................................... 10

    A. Illegal Trades and Distributions ........................................................................................ 10 1. "Securities", "Trades" and "Distributions" ................................................................. 10

    2. No Registration, No Prospectus; Exemptions Unavailable ........................................ 11 3. Authorizing, Permitting or Acquiescing ..................................................................... 12

    B. The Deerfoot LP Syndication ........................................................................................... 12

    1. The Deerfoot Court Purchase ..................................................................................... 12

    2. The Deerfoot LP Syndication ..................................................................................... 14 3. Misrepresentation? ...................................................................................................... 15

    C. The Glenmore LP Syndication .......................................................................................... 16

    1. The Property and the Glenmore OM .......................................................................... 16 2. Misrepresentation? ...................................................................................................... 17

    (a) Allegations ................................................................................................................. 17 (b) Were the Impugned Statements Made? ..................................................................... 17

    (c) Relevant Respondents' Roles ..................................................................................... 18 (d) Were the Impugned Statements Materially Misleading or Untrue? .......................... 18

    (i) Key Issue – "Secure" and "Secured" ................................................................... 18

    Chitra's Perspective ............................................................................................ 19

    Shariff's Perspective ............................................................................................ 20

    (ii) Conclusion on the Key Issue............................................................................... 20

    (iii) Materiality ........................................................................................................... 21

    (e) Knowledge ................................................................................................................. 21

    D. The P5 LP Syndication ..................................................................................................... 22 1. Greenwich Land Purchases ........................................................................................ 22 2. The TCC LoC ............................................................................................................. 23 3. The P5 OMs ................................................................................................................ 25 4. Misrepresentation? ...................................................................................................... 26

  • ii

    5. Fraud ........................................................................................................................... 28

    (a) The Allegations .......................................................................................................... 28 (b) Pertinent Facts Summarized....................................................................................... 28 (c) Shariff's Perspective ................................................................................................... 28

    (d) Elements of Fraud: Analysis ..................................................................................... 29

    Prohibited Act and Deprivation ................................................................................. 29

    Subjective Knowledge ................................................................................................ 30

    Claimed Justifications or Defences ............................................................................ 30

    (e) Conclusion on Fraud .................................................................................................. 32 (f) Authorizing, Permitting or Acquiescing in the Fraud ................................................ 32

    E. Conduct Contrary to the Public Interest ............................................................................ 33 1. Training and Oversight of Salespeople ...................................................................... 33

    (a) The Platinum Selling Process Generally .................................................................... 33

    (b) Evidence as to Training.............................................................................................. 33

    (c) Evidence as to Oversight............................................................................................ 34 (d) Analysis and Findings ................................................................................................ 34

    Training ...................................................................................................................... 34

    Oversight .................................................................................................................... 35

    2. Other Conduct Contrary to the Public Interest ........................................................... 36 (a) Illegal Trades and Distributions ................................................................................. 36

    (b) Misrepresentation ....................................................................................................... 36 (c) Fraud .......................................................................................................................... 36 (d) Authorizing, Permitting or Acquiescing .................................................................... 37

    VI. CONCLUSION AND NEXT STEPS ............................................................................... 37

  • 1

    I. INTRODUCTION [1] Staff (Staff) of the Alberta Securities Commission (the ASC) allege that eight

    respondents (the Respondents) contravened Alberta securities laws and acted contrar