An Ontario Securities Commission (OSC) panel has ruled that a couple engaged in an illegal distribution and helped perpetrate a fraud on investors, but not that they engaged in market manipulation.
The OSC handed down its decision today in its case against Alexander Khodjaiants and Alena Dubinsky, who were accused of violating securities laws for their role in a so-called “corporate hijacking” scheme, which involved reincorporating dormant over-the-counter companies, whose securities could then be manipulated. The regulator has already settled allegations against a number of others who were accused of running the so-called hijacking scheme.
As for Khodjaiants and Dubinsky, OSC staff alleged that they opened trading accounts to receive and trade fraudulent securities in a number of issuers; and, that Khodjaiants, through Dubinsky’s account, engaged in manipulative trading in two of those issuers.
The decision indicates that Khodjaiants took the position that OSC staff did not prove that they were involved in the alleged fraudulent scheme, and that it relied on evidence from an admitted fraudster to prove its case.
The panel found that the pair did participate in an illegal distribution, but it ruled that OSC staff did not prove the market manipulation charge, saying that it did not meet the burden of proof. It did however find that they participated in a fraud.
“I find that Khodjaiants had subjective awareness that he and Dubinsky were undertaking dishonest acts which could and did put investors’ financial interests at risk,” the decision said in concluding that they participated in acts which they knew perpetrated a fraud, and that their conduct was contrary to the public interest.
No sanctions have been handed down in the case yet. A hearing to determine sanctions has been set for Nov. 12.