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BC Court of Appeal upholds ruling that bankruptcy cannot erase millions in fines.

“We don’t want debtors to undermine their deterrent effect by simply going bankrupt and avoiding debt.” — Doug Muir, Director of BC Securities Commission Enforcement Division

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The BC Court of Appeals upheld a lower court’s ruling that bankruptcy would not relieve a stock manipulator of a $19 million fine owed.

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Thalbinder (Thal) Singh Poonian and his wife, Shailu (Sharon) Poonian, were fined by the BC Securities Commission in 2015. This is because a court in 2015 found that investors were involved in a loss-making pump-and-dump equity scheme. Millions.

They haven’t paid part of the fine.

The BC Securities Commission (BCSC) has applied to the court for an order that amounts owed by the Poonians will not be released by a petition or discharge granted in bankruptcy. The lawsuit is part of an intensified effort over the past few years to increase the collection of fines.

The BC Supreme Court ruled in favor of the BCSC in 2021, the Poonians appealed that decision, and a lower court judge ruled that the penalties issued by the court fall under federal bankruptcy and exemption from bankruptcy law. He argued that his decision was erroneous. As judgments arising from misuse of trustees that continue after bankruptcy.

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In a 28-page unanimous decision earlier this month, the BC Court of Appeals dismissed the Poonians’ appeal, ruling that the immunity included the Poonians’ securities-related penalties.

“Judge Peter M. Wilcock, Judge of the Court of Appeals, believes that the judge’s characterization of the conduct that led to the lower tier judgment is correct, and calls this action ‘almost fraudulent.’ I disagree with appellant’s characterization.”

However, the Court of Appeals did not rule that all orders and penalties issued by the Securities Commission necessarily met the waiver rule.

Cody Reedman, the Poonians’ Vancouver attorney, said in an email Monday that they are currently reviewing the decision and next options.

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Decisions of the BC Court of Appeal can be appealed to the Supreme Court of Canada, which must hear the appeal.

The Poonians had previously sought bankruptcy as a way to have a trustee manage and sell their assets and settle their debts. The Poonians’ net worth was only $3,189.16.

Doug Muir, head of the BC Securities Commission’s enforcement arm, said the regulator is pushing for a petition to continue the penalties after bankruptcy.

“We don’t want debtors to undermine their deterrent effect by simply going bankrupt and avoiding debt,” Muir said.

He also said that if Poonian and others are in a position to pay later, they would like the ability to collect fines, especially since the money will be returned to the victims.

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Over the past few years, BCSC has made such legal efforts. It also began using new legislative powers to improve the collection of penalties. The law change, according to a 2017 Postmedia study, found that over 10 years he had more than $500 million in fines uncollected by his BCSC.

Muir said that the new powers are aiding the collection efforts, but that it will take some time before the full effects of the new powers are realized.

A BCSC court found that between 2007 and 2009, it engaged others to secure a majority position in oil and gas company OSE Corp. Penalized the Poonians after ruling that they had sold shares to the house. .

Prices have inflated including deals between them. The shares were sold with the help of the Phoenix Group, which advised people in debt.

Investors in Phoenix Group alone lost $7.1 million.

A Securities Commission court found that Thal Poonian was the mastermind and that his wife was extensively involved in the scheme.

ghoekstra@postmedia.com

twitter.com/gordon_hoekstra

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BC Court of Appeal upholds ruling that bankruptcy cannot erase millions in fines.

Source link BC Court of Appeal upholds ruling that bankruptcy cannot erase millions in fines.

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