The individuals behind a multi-million dollar hedge fund fraud involving investments in Icelandic glaciers have been fined $1.3 million and ordered to disgorge $6.74 million by the Ontario Securities Commission (OSC).

In a document released on Friday, the OSC outlines sanctions and costs facing Toronto-based hedge fund company Sextant Capital Management Inc. and its founder and former president Otto Spork, along with Konstantinos Ekonomidis, former vice president of corporate developments, Natalie Spork, former officer, director and ultimate responsible person, and Sextant Capital GP.

In May 2011, an OSC panel found that Sextant and the three executives sold investment fund units of Iceland Glacier Products (IGP) with falsely inflated values, took millions of dollars in fees based on falsely inflated values and directly misappropriated money from investment funds.

The panel found that between July 2007 and December 2008, as a result of the wrongful inflation of the market price of IGP, the Sextant Strategic Opportunities Hedge Fund L.P. paid performance and management fees totalling $6,934,187, which Spork benefitted from directly or indirectly.

Following a sanctions and costs hearing held on Apr. 18, 2012, the OSC has ordered Spork to pay $1 million, Ekonomidis to pay $250,000 and Natalie Spork to pay $50,000 in administrative penalties, to be allocated to or for the benefit of third parties. In addition, Spork must disgorge $6,350,000, Ekonomidis must disgorge $250,000 and Natalie Spork must disgorge $140,000 in funds that were obtained as a result of their non-compliance with Ontario securities law.

The order also requires that Spork pay $350,000 in costs, representing 80% of the total costs, while Ekonomidis must pay $65,000, representing 15% of the costs, and Natalie Spork must pay $20,000, representing 5% of the costs.

The OSC also ordered Spork’s registration terminated, and he’s permanently prohibited from trading or acquiring securities, becoming or acting as director or officer of any issuer, registrant or investment fund manager, and from becoming or acting as a registrant, investment fund manager or promoter.

“The imposition of permanent director and officer bans,” the OSC says in its reasons for decision, “will ensure that Spork will not be placed in a position of control or trust with respect to any issuer, registrant or investment fund manager in the future.”

Ekonomidis has been prohibited from trading and acquiring securities for 10 years, and his registration has been terminated. Also for a period of 10 years, Ekonomidis is prohibited from becoming or acting as director or officer of any issuer, registrant or investment fund manager, and from becoming or acting as a registrant, investment fund manager or promoter.

Natalie Spork is prohibited for three years from becoming a registrant under the act and from trading in or acquiring securities. For five years, she’s prohibited from becoming or acting as director or officer of any issuer or registrant.

“The Respondents cannot be trusted to participate in the capital markets,” the OSC says. It points out that they raised $23 million from investors through the fraudulent sale of securities, affecting at least 246 Canadian investors. “The Individual Respondents were found to have breached their duties to act fairly to clients…Given this misconduct, the Respondents should not be permitted to trade in or acquire securities or rely on exemptions.”

Meanwhile, Sextant Capital Management’s registration has been terminated, and both Sextant Capital Management and Sextant Capital GP have been permanently prohibited from trading in and acquiring securities. Both companies are in receivership.