Thursday, September 13, 2018
By NEIL HARTNELL
Tribune Business Editor
A Bahamas broker/dealer has paid a $35,000 fine to settle allegations it was operating as an unregistered entity in violation of a Canadian province's securities laws.
Seton Securities International, whose principal is New Providence resident, Jay Gottlieb, signed off on a September 7, 2018, deal with the Alberta Securities Commission after a client used its accounts to trade "tens of thousands of shares" in a company whose stock had been suspended.
The settlement agreement, a copy of which has been obtained by Tribune Business, disclosed that Seton's difficulties began when it received an application from Alberta resident, Lambert (Bert) Joseph Lavallee, to open a Bahamas-based securities trading account.
Lavallee, who has been accused by the Alberta regulator of insider trading, used the Seton account to help generate $137,000 from the sale of shares in North America Frac Sand (NAFS), a Canadian company he controlled.
The trades occurred between May 16, 2016, and September 29, 2017, despite the Alberta Securities Commission's imposition of a cease trade order on NAFS stock. The regulator also alleged that Lavallee never disclosed his interest in, and control of, NAFS in its regulatory filings despite being required by law to do so, and exploited this - and his access to inside information on the company - to reap profits from trading in its shares.
"Lavallee also executed a non-solicitation acknowledgement and agreement in favour of Seton," the Commission's settlement with the Bahamian broker/dealer stated. "In it, Seton affirmed it was not registered to trade in securities, or act as a broker/dealer or investment advisor, in Alberta.
"Between approximately May 2016 and September 29, 2017, Lavallee traded tens of thousands of securities of North America Frac Sand. From May 25 to 30, 2017, Lavallee traded thousands of shares of NAFS through an account with Seton in the Bahamas for proceeds exceeding $32,000.
"NAFS was cease traded by the Commission on May 16, 2016, for accounting-related deficiencies and disclosure. The CTO Order is still in place."
Seton admitted to breaching the Canadian province's securities laws "by acting as a dealer in Alberta without registration", but said it had been unaware of the order that froze trading in NAFS shares.
The settlement agreement also acknowledged the Bahamian broker/dealer's co-operation with the Canadian regulator's probe, which was assisted by local regulator, the Securities Commission of the Bahamas.
Tribune Business efforts to contact Mr Gottlieb and Seton proved fruitless over the past two days. The company's website is not properly functioning, and did not supply contact details for the Bahamas broker/dealer.
A February 2014 list of the Securities Commission's licensees gave an address of 432 Bay Street for Seton, but the contact number was permanently engaged when this newspaper called multiple times.
Seton's registered personnel were named as Mr Gottlieb, Craig Spivey and Endric Deleveaux.