Non-registered rep faces sanctions, disgorgement: OSC

On November 29, 2012, the OSC held a hearing to consider whether it was in the public interest to make a sanctions order against Mohinder Ahluwalia.

The OSC says Ahluwalia raised “at least $1.6 million… through the sale of Electrolinks Corporation shares to 89 persons or companies” from July 2004 to May 2006. He also held himself out as engaging in the business of trading in securities and sold Electrolinks shares to members of the public in Ontario and other jurisdictions.

The OSC adds that he “wasn’t registered in any capacity with the commission” during the relevant time, however.

In addition, it says, “Electrolinks was not a reporting issuer and the Electrolinks shares were not qualified by a prospectus.”

Though the OSC reveals buyers were told the company “was in the process of going public and that they could expect a substantial return on their investment once that process was complete,…[it] never became a public company nor did it make any distributions to the Electrolinks investors. [It] ceased business in 2008 and was dissolved on February 10, 2010. The Electrolinks investors suffered a complete loss of their investment.”

The staff has requested the following sanctions against Ahluwalia:

(a) an order pursuant to paragraph 2 of subsection 127(1) of the Act that the respondent cease trading in securities permanently;

(b) an order pursuant to paragraph 2.1 of subsection 127(1) of the Act that the acquisition of any securities by the respondent is prohibited permanently;

(c) an order pursuant to paragraph 3 of subsection 127(1) of the Act that any exemptions contained in Ontario securities law do not apply to the respondent permanently;

(d) an order pursuant to paragraph 6 of subsection 127(1) of the Act that the respondent be reprimanded;

(e) an order pursuant to paragraph 7 of subsection 127(1) of the Act that the respondent resign all positions that he may hold as a director or officer of any issuer;

(f) an order pursuant to paragraphs 8, 8.2, and 8.4 of subsection 127(1) of the Act that the respondent be prohibited permanently from becoming or acting as a director or officer of any issuer, registrant or investment fund manager;

(g) an order pursuant to paragraph 8.5 of subsection 127(1) of the Act that the respondent be prohibited permanently from becoming or acting as a registrant, as an investment fund manager or as a promoter;

(h) an order pursuant to paragraph 9 of subsection 127(1) of the Act that the respondent pay an administrative penalty of $150,000;

(i) an order pursuant to paragraph 10 of subsection 127(1) of the Act that the respondent disgorge to the Commission $486,000 obtained as a result of his non-compliance with Ontario securities law; and

(j) an order pursuant to section 37 of the Act, that the Respondent be prohibited permanently from telephoning from within Ontario to any residence within or outside Ontario for the purpose of trading in any security or any class of securities.

The OSC says Ahluwalia’s view is the “proposed sanctions are too severe and will cause him financial hardship.”

He’s also requested “a trading carve-out from any sanctions order barring him from participation in our capital markets, so that he can trade with his own funds and earn a living,” adds the OSC.

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