ASC bans, fines fraudster

An Alberta Securities Commission (ASC) hearing panel permanently banned the perpetrators of an investor fraud and ordered over $500,000 in monetary sanctions against them.

Previously, the panel found that Logan Keith Shaw and his company, 1681502 Alberta Ltd., defrauded investors when they raised approximately $940,000 from the investors, ostensibly to invest in a Mexican taxi business, but instead used most of the money (over $800,000) to buy a house in Vernon, B.C., for Shaw and his now ex-spouse.

Following a hearing on sanctions, the panel ruled that both Shaw and his company should be permanently banned, and it ordered almost $563,000 in monetary sanctions against Shaw, including a penalty of $150,000, almost $284,000 in disgorgement and $129,000 in costs.

According to the panel’s decision, ASC staff sought a $300,000 penalty, along with permanent bans, disgorgement and costs.

Shaw argued for less severe sanctions, but the panel noted that his submissions were somewhat confusing.

In its ruling, the panel said the misconduct “was very serious and deliberate.”

“It exposed investors and the capital market to harm, and caused actual harm, while giving Shaw a significant financial benefit,” it said. “His claimed experience with the capital market meant that he should have known better, and he also engaged in misconduct which was so egregious that no capital-market experience was needed to know that it was wrong.”

The panel called the market ban “the most important sanction in this case. Shaw’s serious misconduct showed that he should never again be in a position of raising money from investors.”

While ASC staff sought a $300,000 penalty, the hearing panel ruled that a $200,000 penalty was appropriate in the case, and it reduced that amount to $150,000, citing evidence of Shaw’s “financial and health issues.”

On disgorgement, while over $800,000 of investor money was diverted, one investor recovered $524,000 in a court proceeding, reducing the disgorgement order against Shaw to $283,780.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.