BCSC reduces sanctions in $20 million scam

(August 27, 2003) In an unusual move, the British Columbia Securities Commission (BCSC) has imposed reduced sanctions against two men who sold $20 million worth of high-risk securities to 200 conservative clients.

Robert Lamblin was a principal of Langley-based mutual fund dealer Canadian Global Investment while Leonard Friesen was a salesperson employed by the firm.

Last year, the BCSC ruled that the pair violated investment suitability and conflict of interest rules by selling “speculative, illiquid and highly risky investments.” Many clients lost the bulk of their investment.

In May of this year, Lamblin was banned from the B.C. securities market for 15 years. In a decision released today, the commission said it has decided not to impose a fine against Lamblin, noting that he is currently in debt and may face more lawsuits in connection with Canadian Global Investment.

The commission says that although Lamblin is working in the carpet industry, recent injuries may affect his ability to be gainfully employed in the future. “We conclude that Lamblin has no ability to pay, with no likely prospect to ever pay — a significant administrative penalty.”

In addition, the 15-year ban against Lamblin, who is 58 years old, will effectively keep him out of the securities industry for the remainder of his working life, the panel added.

Regulatory orders are intended to be “preventative, not punitive,” said the panel.

In November 2002, Friesen was banned by the commission for two years and ordered to pay a $20,000 penalty.

In a written request to the commission, Friesen asked for a reduction, claiming that although working as a truck driver, he was having difficult dealing with the “financial devastation” he suffered as a result of his involvement with Canadian Global Investment and was unable to pay the $20,000 fine. Friesen says he lost $100,000 by investing in the firm’s securities.

The BCSC today agreed to reduce the fine to $5,000 and applied an additional one-year strict supervision condition against Friesen should he decide to re-enter the industry after his ban.

“We believe that a reduced administrative penalty, in addition to the restrictions on Friesen re-entering the securities industry for two years, is sufficient to deter Friesen from any market misconduct in the future,” the panel ruled.

Lamblin and the late Danny Bilinski were the key players in Canadian Global Investment, which is insolvent and has not been registered as a mutual fund dealer since February 2001.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca