Ignorance of securities law is no excuse, an Alberta Securities Commission (ASC) panel has ruled.
The ASC announced Wednesday that it has found that Alberta bookkeeper, Lawrence Zeiben, and his companies, Grit International Inc. and Texas Petroleum Inc., breached securities laws and acted contrary to the public interest by hyping the companies’ operations, earnings and revenue potential, and made misrepresentations to investors and perpetrated a fraud on them. An ASC panel also ruled that Grit illegally distributed its shares in Alberta.
In its decision, the panel says that a “false picture of the companies was presented to investors”, and that prospectus and other disclosure requirements were ignored. “Indeed, the securities laws of Alberta were ignored,” it notes. “Beyond that Zeiben, Grit and Texas Petroleum engaged in the deliberate creation of a public façade to the detriment of shareholders.”
“The inevitable happened,” the panel found. “The façade attracted investors, pumped up the share price, increased share sales, and, when the façade came down, disappointed investors lost their investment.”
The decision indicates that Zeiben represented himself before the commission. And, it says that his assertions that “he should not be found guilty because he did not know that he was violating any law and that he relied on others around him to tell him what the law was and what he needed to do to comply, is not accepted. Not knowing the law is not a defence when being charged with violation of it,” it says. “Everyone is taken to know the law.”
This is particularly the case for those engaged in running a public company, it says. “It is incumbent upon individuals who undertake this type of activity to familiarize themselves with the law applicable to the activity,” it says.
The ASC has not yet handed down sanctions in the case. It has set a hearing for May 20 to consider possible sanctions.