The Alberta Securities Commission (ASC) has banned Nelson Bradbury, a former investment broker in Calgary, permanently from most capital market activity and ordered him to pay more than $500,000 for violating Alberta securities laws, which include dealing securities without registration and without prospectus documents for those securities.
Specifically, the ban would prevent Bradbury from trading or purchasing any securities or derivatives and acting in any type of capacity within a company that would allow him to participate in capital market activity. However, he can purchase or trade securities for himself or his immediate family, but only through a registered representative who is aware of the ASC’s decision against him.
Bradbury is also expected to pay a disgorgement fine of $370,000, which is the amount he took from investors for his own personal use; an administrative penalty of $150,000; and investigation and hearing costs of $13,000, according to the details of the ASC’s decision, which was released on Friday. The penalties are connected to regulation violations that took place between 2010 and 2013.
This is not Bradbury’s first run-in with the ASC. He had been a registered investment broker from 1998 to 2000 and, in 2001, admitted to raising money from investors illegally. At that time, he agreed to temporary market-access bans and paid costs related to the regulator’s investigation.
“Bradbury’s misconduct in the relevant period [between 2010 and 2013] in the face of his earlier registration and sanctioned misconduct exposes him as a recurrent and, in our view, a continuing danger to the investing public,” the ASC’s decision states. “This factor argues for strong — and enduring — protective sanctions.”
Bradbury admitted to raising more than $1.5 million in investment agreements with at least 16 investors, including his spouse and his parents, in his most recent set of infractions. He did this as an unregistered representative and without any prospectus or offering memorandum documents for those securities.
Bradbury promised investors that his investment model would generate profits and that, in some cases, their money was being used to invest in shares of Facebook Inc. prior to the social media network undergoing its initial public offering — none of which was the case.
Instead, Bradbury used approximately half of his investors’ money to conduct trades within his own brokerage account, which resulted in losses, and diverted $370,000 for his personal use, which includes expenses related to his mortgage, utilities and recreational activities. He also used some of that money to make payments disguised as returns to investors, which is indicative of a Ponzi scheme, according to the ASC’s decision.
Bradbudy informed most investors in or about April 2013 that that all of their money was lost due to market turmoil, although his spouse and parents had their money returned to them.
His actions in continually misleading these investors constitutes fraud and the fact that he was unregistered and offered these unregulated investments deprived investors of protections they’re legally entitled to, according to the ASC’s decision.
Bradbury was also found to have misrepresented his actions to ASC staff when he responded to an inquiry letter from the regulator in September 2011. He told staff at that time that he was not soliciting investors and that he referred anyone who was not a relative or close family friend to a licensed financial advisor.
His false response to ASC staff’s inquiry enabled him to continue his fraudulent activity and attract more investors to his business for an additional year and a half.
The ASC notes that it allowed for some mitigating circumstances to be considered in the decision about the fine. The regulator took into account that Bradbury borrowed approximately $40,000 against the security of his home for trading purposes in order to recover some of the lost funds, which indicated an attempt to correct the situation. The fact Bradbury admitted to the charges in September 2016, which prevented a drawn-out hearing process for the regulator and the affected investors, was also taken into consideration.
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