Securities regulators in British Columbia allege that an exempt market dealer promoted the securities of a real estate investment trust (REIT) without properly disclosing its connection to the REIT.
The B.C. Securities Commission (BCSC) issued a notice of hearing today alleging that between September 2010 and June 2012, League Investment Services Inc. (LISI), which is a B.C.-based exempt market dealer, promoted the sale of IGW Real Estate Investment Trust securities without disclosing that the owners of the firm are also trustees of the REIT, and the owners of the REIT’s management company. In doing so, the BCSC says they breached securities laws. The allegations have not been proven.
The BCSC says that LISI is owned by Adam Gant and Emanuel Arruda through their family trusts, and that they are also its officers and sole directors. At the same time, it says that Gant and Arruda are also trustees of the IGW REIT, and Gant is its president. They also own League Assets Corporation (LAC), which manages the REIT, and are its officers and sole directors, and that Gant is CEO and Arruda is its president and co-chairman.
The regulator alleges that by recommending investments in IGW REIT securities without disclosing its relationship to the REIT and LAC, that LISI breached securities laws that prohibit a registered firm from recommending a security of a connected issuer. It also claims that Gant and Arruda, as the sole directors of LISI, allowed LISI’s contraventions, thereby breaching securities laws too.
The BCSC will apply to set a date to hear the case on September 17.