Regulators in Alberta are accusing a firm that was in the business of loaning money to high-risk borrowers of illegally trading and distributing securities.
The Alberta Securities Commission (ASC) issued a notice of hearing against Raymond Harvey Johnston, and his company, Sherwood Financial Services Ltd., alleging that they illegally traded and distributed securities, made misrepresentations to investors, and failed to file exempt distribution reports with the ASC.
The commission alleges that Johnston and Sherwood, which was in the business of loaning money to high risk borrowers, breached securities laws by trading in securities without registration; that they engaged in illegal distributions of Sherwood securities; that the promotional materials provided in connection with the offering contained statements that were misleading; that they acted as an investment advisers without being registered; and that they failed to file reports of exempt distribution with the commission.
The allegations have not been proven.
The ASC charges that, between January 2007 and June 2008, Sherwood raised approximately $1.1 million in Alberta from 12 investors by entering into loan agreements or promissory notes with the investors. It claims that these notes were securities, and that distributing them violated securities laws. It also says that they failed to qualify investors for exemptions from the registration and prospectus requirements; and, distributed securities to investors who failed to qualify for exemptions. It also alleges that Sherwood misrepresented the investment.
An appearance to set a date for a hearing in Calgary will be held on Jan. 16, 2013.