Securities regulators in New Brunswick are seeking a cease order against a man while they investigate a possible $1.2 million improper distribution.
The New Brunswick Securities Commission announced that it has filed a motion requesting a temporary cease-trade order against Richard Scott for potential violations of the Securities Act. NBSC staff allege that Scott, who is not registered to trade in securities and has never filed a prospectus or report of exempt distribution with the commission, contravened securities laws by issuing 17 promissory notes to 13 investors for a total of $1,217,650.
The regulator says that the one-year notes bear an interest rate of 20% payable at maturity, and that nine of the notes mature before the end of July. It also alleges that some or all of the proceeds received from investors were subsequently invested into shares of two Canadian junior mining companies, and that those shares are currently worth less than half of the value of the notes.
NBSC staff acknowledge that it does not appear that Scott made any misrepresentations to the investors, but they also argue that it would be contrary to the public interest to allow him to issue further securities in these circumstances.
The allegations have not been proven. A commission panel will hear the motion at a public hearing on April 4. At that time, NBSC staff will request that the temporary order remain in place pending the completion of their investigation.