On September 10, 2009, the OSC issued both a statement of allegations and a notice of hearing—pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended—in the matter of MP Global Financial and Joe Feng Deng.
The commission conducted the hearings on the merits in 2010, and it issued its reasons and decision on the merits in this matter on August 19, 2011.
It concluded in its merits decision that all the respondents contravened Ontario securities law and acted contrary to the public interest. The OSC’s sanctions and costs hearing was held on June 21, 2012.
The commission ordered that:
(a) pursuant to clause 2 of subsection 127(1) of the Act, each of the respondents shall cease trading in any securities for a period of 15 years from the date of the sanctions decision, with the exception that Deng may trade on his own behalf in his own account, solely through a registered dealer (which dealer must be given a copy of this Order);
(b) pursuant to clause 2.1 of subsection 127(1) of the Act, the acquisition of any securities by any of the respondents is prohibited for a period of 15 years from the date of the sanctions decision, with the exception that Deng may acquire securities on his own behalf in his own account, solely through a registered dealer (which dealer must be given a copy of this Order);
(c) pursuant to clause 3 of subsection 127(1) of the Act, any exemptions in Ontario securities law do not apply to any of the respondents for a period of 15 years from the date of the sanctions decision;
(d) pursuant to clause 6 of subsection 127(1) of the Act, each of the respondents are reprimanded;
(e) pursuant to clause 7 of subsection 127(1) of the Act, Deng shall immediately resign all positions he may hold as a director or officer of any issuer;
(f) pursuant to clause 8 of subsection 127(1) of the Act, Deng shall be prohibited from becoming or acting as a director or officer of any issuer for a period of 15 years from the date of the sanctions decision;
(g) pursuant to clause 8.1 of subsection 127(1), that Deng resign all positions he may hold as a director or officer of any registrant;
(h) pursuant to clause 8.2 of subsection 127(1), that Deng be prohibited from becoming or acting as a director or officer of any registrant for a period of 15 years from the date of the sanctions decision;
(i) pursuant to clause 8.3 of subsection 127(1), that Deng resign all positions he may hold as a director or officer of an investment fund manager;
(j) pursuant to clause 8.4 of subsection 127(1), that Deng be prohibited from becoming or acting as a director or officer of an investment fund manager for a period of 15 years from the date of the sanctions decision; and
(k) pursuant to clause 8.5 of subsection 127(1), that Deng be prohibited from becoming or acting as a registrant, as an investment fund manager or as a promoter for a period of 15 years from the date of the sanctions decision;
(l) pursuant to clause 9 of subsection 127(1) of the Act, both MP and Deng shall pay an administrative penalty of $250,000 to the OSC, such amount to be allocated to or for the benefit of third parties;
(m) pursuant to clause 10 of subsection 127(1) of the Act, MP and Deng shall jointly and severally disgorge $2,193,873 to the commission, such amount to be allocated to or for the benefit of third parties; and
(n) pursuant to section 127.1 of the Act, MP and Deng shall jointly and severally pay costs of $150,000 to the OSC.
Additionally, the hearing panel noted this was not a case of deliberate fraud. The reasons and decision notice says, “The respondents’ behaviour was not predatory or rapacious, however it is conduct of serious concern where Deng took large amounts of funds from investors, and then was not forthcoming with said investors when all of their funds were lost.”
Read the reasons and decision document.