The B.C. Securities Commission has banned a Vancouver businessman from the capital markets for 14 years for misrepresenting funds raised in a private placement related to the Bridgemark Group consulting case.
Robert Earle Dawson, the former CEO of BLOK Technologies Inc., is prohibited from acting as a director or officer of a public company and barred from stock promotion, consulting, and management work in connection with the securities or derivatives market, according to a commission statement Monday.
As well, Dawson’s former colleague David Malcolm Alexander, the company’s CFO, has been issued a likewise ban, but only for three years, and fined $25,000.
Dawson, from Vancouver, and Alexander, from West Vancouver, came to an agreement with the commission with their hearing set to commence Monday. The commission noted Dawson would not be fined as he “isn’t able to pay a financial sanction that would normally be part of a settlement.”
It’s understood that the commission has outstanding allegations against BLOK itself, as well as James Joseph Hyland, its former vice-president and director. However, the commission stated Monday BLOK is in the process of being dissolved.
In 2018, BLOK, then purporting to be investing in blockchain technology, raised $5.4 million but ended up spending $4.5 million of the funds on consulting fees, the commission stated.
Both Dawson and Alexander misrepresented that “the company would retain just a small portion of funds raised through a private placement,” the commission stated.
BLOK was one of 11 penny stock firms, along with over two dozen consultants and their respective companies, formerly cited in the Bridgemark Group consulting case for alleged illegal distribution of securities and conduct abusive to the capital markets.
Then, BCSC executive director Peter Brady alleged the companies raised over $50 million in private placement proceeds from the consultants only to return much of the money back to the consulting firms as consulting fees “when little or no consulting services had been or were intended to be performed.”
Those administrative charges — once considered the largest proceeding in the commission’s history — were dropped but the commission circled back to many of the companies for the alleged misrepresentations.
Three companies, Beleave Inc., New Point Exploration Corp. and Speakeasy Cannabis Corp. have already admitted to such violations. In addition to BLOK, the commission has hearings scheduled this year for three other companies (Affinor, Green 2 Blue and Preveceutical).
The arrangements included the consultants buying most of the shares in a cash swap and then selling them to retail investors, some of whom have launched an ongoing (and to date, partly successful) class-action lawsuit against the now former Bridgemark Group respondents.
The commission also circled back with amended hearing notices against four individuals it alleges played a key role in the consulting and trading arrangements of some of the companies.
West Vancouver residents (and their respective companies) Anthony Kevin Jackson (BridgeMark Financial Corp. and Jackson & Company Professional Corp.), Justin Edgar Liu (Lukor Capital Corp. and Asiatic Management Consultants Ltd.) and Cameron Robert Paddock (Rockshore Advisors Ltd.) are alleged, in the amended hearing notice, to have conducted themselves contrary to the public interest as company directors and performed illegal insider trading.
The trio face a hearing this September, following lengthy delays.
A fourth accused, Robert John Lawrence, has already admitted to illegal insider trading and been fined $200,000 with three-year trading prohibitions.