The British Columbia Securities Commission has reached a settlement with a former stock picker and his company that permanently bans him from the province’s capital markets, and includes a Supreme Court order that enables investors to seek to recoup their losses.

In the settlement agreement, Albert Stephen Budai, a former B.C. resident, admitted to defrauding investors. Budai and StockDepot Information Services Corp. also admitted to illegal trading and distribution of securities as well as making misrepresentations to investors.

Between December 2001 and January 2004, StockDepot and Budai, the company’s majority stockholder and president, raised approximately $1.4 million by issuing company shares to 49 investors — 25 in B.C. — without registration or filing a prospectus.

Budai admitted he committed fraud through a practice called “scalping” in which he bought and then sold the rising shares of companies he profiled in subscription-based publications and on a radio talk show. Budai did not tell his readers or radio show listeners that he was going to sell, or had sold, his shares after profiling the companies.

He also admitted he committed fraud when he bought Internet domain names that he then sold to StockDepot at inflated prices without disclosing to investors that he received monies from the sale.

Under the settlement agreement, Budai and StockDepot are permanently banned, with exceptions, from trading or purchasing securities. Budai is also permanently prohibited from acting as a director or officer of any issuer, except a private issuer in which he or his immediate family members are the sole shareholders, and he cannot engage in investor relations activities in his lifetime.

The executive director did not assess a $250,000 fine in the public interest against Budai because he has provided satisfactory evidence that he cannot pay the penalty. However, Budai and StockDepot consented to an order from the Supreme Court of British Columbia, sought by the BCSC, that may help investors partially recoup their losses without having to pursue expensive and time-consuming civil litigation on their own.

The court order, granted on October 9, requires StockDepot to give to the BCSC all profits from the sale of its domain names. Under the Securities Act, when money is collected, the BCSC will notify the public who can then make a claim through the court for their losses.

The court also cancelled Budai’s shares in StockDepot, ordered StockDepot to repay investors all the money collected from the purchase of its securities, and ordered Budai to compensate or make restitution to investors.