Regulators in British Columbia are alleging that an Alberta-based healthcare tech company breached securities laws by improperly distributing several million dollars worth of securities.
The B.C. Securities Commission (BCSC) is accusing HRG Healthcare Resource Group Inc., its founder, Alexander Downie, and Daniel Mohan, its CEO, of improperly raising funds in the province. It alleges that HRG, Downie, and Mohan breached securities laws regarding prospectus and reporting requirements, and that Downie and Mohan (who were also directors of the firm) allowed the company’s violations as officers and directors of the company. The allegations have not been proven.
The BCSC says that between December 2010 and March 2012, the company distributed over $5.6 million of securities to 149 investors. “Of this amount, approximately $4.5 million was raised from 129 investors without an exemption from securities laws concerning prospectus requirements,” it says.
The regulator reports that the company claimed to rely on the Family, Friends and Business Associates exemption, and the Accredited Investor exemption, in exempt distribution reports that it filed with the commission. However, it says that for at least 31 investors, who invested almost $1 million, the claimed exemptions were not available. And, it says that the company failed to disclose that it paid agents at least $329,700 in commissions for their fundraising activities.