The Ontario Securities Commission (OSC) today handed down penalties in a corporate hijacking case.
Last year, an OSC panel found that Alexander Khodjaiants and Alena Dubinsky breached securities laws and violated the public interest when they participated in a corporate hijacking scheme, which involved reincorporating defunct firms and issuing new shares that could then be manipulated.
(See Investment Executive, Couple helped perpertrate fraud: OSC, September 17, 2013.)
The commission ruled that, while they didn’t direct the scheme, they facilitated it by opening trading accounts and allowing trading to take place. As result, it found that they participated in an illegal distribution, and perpetrated a fraud on investors, but it ruled that allegations of market manipulation were not proven.
Today, the commission handed down its sanctions in the case. It ordered that Khodjaiants and Dubinsky both cease trading for 15 years; it levied a $100,000 penalty against Khodjaiants and a $75,000 penalty against Dubinsky; ordered that they disgorge over US$1 million; and, that they pay $263,708 in costs. It also ordered permanent cease trade orders against various corporate respondents.
Khodjaiants and Dubinsky did not appear at the sanctions hearing, and they were not represented by anyone at the hearing. The commission found no mitigating factors in the case.
It said that the “securities law violations committed by each of the individual respondents were serious and their behaviour was egregious.” And, it noted that their failure to attend the hearing means there’s no evidence of them recognizing the seriousness of their conduct, or expressing remorse.