Back in June, the Ontario Securities Commission (OSC) sought to put small fund manager and exempt market dealer Stableview Asset Management Inc. into receivership, citing investor protection concerns. Now the regulator is alleging fraud.
The OSC will hear allegations on Jan. 13 against Stableview and the firm’s sole director and officer, Colin Fisher. The regulator alleges Fisher and the firm violated securities rules by ignoring the risk limits on clients’ discretionary accounts to finance a failing micro-cap company, Clarocity Corp.
“In order to prop up this penny stock company, the registrants continued to gamble client money on it, repeatedly throwing good money after bad in a vicious cycle of ever-increasing risks and losses for the investors,” the OSC said in its allegations.
It also alleged that the firm didn’t disclose to clients that it received consulting fees from the company, or that their accounts were over-concentrated.
“Clients placed their trust in Fisher and gave Stableview discretionary authority to manage their hard-earned savings. Fisher and Stableview blatantly disregarded the investment restrictions they promised to follow and knowingly breached representations they made to their clients,” the OSC said in its allegations. “Their actions exposed clients to risks not contemplated by them and were fraudulent.”
None of the allegations have been proven. In a written statement Fisher’s lawyer, Janice Wright from Wright Temelini LLP, said her client “vigorously denies” the allegations “and intends to fully defend against them before the OSC.”
“To date, Mr. Fisher has not had an opportunity to explain the full circumstances surrounding what transpired,” she said.
The regulator’s concerns about Stableview arose in 2019, following a compliance review that found “numerous significant deficiencies.”
As a result, the OSC placed conditions on the firm’s registration, including trading and financial restrictions.
Earlier this year, the OSC asked a court to appoint a receiver over the firm and its funds’ assets.