ALBERTA SECURITIES COMMISSION SETTLEMENT AGREEMENT AND UNDERTAKING

Transcription

1 ALBERTA SECURITIES COMMISSION SETTLEMENT AGREEMENT AND UNDERTAKING Citation: Gateway Village II Limited Partnership, Re, 2012 ABASC 442 Date: Docket: ENF Securities Act, R.S.A. 2000, c. S-4, as amended (Act Gateway Village II Limited Partnership, Iron-Gate Acquisitions Limited Partnership, Samir Sawhney and Adeeb Azizi Agreed Facts Introduction 1 The staff of the Alberta Securities Commission (respectively, Staff and Commission conducted an investigation into allegations that Gateway Village II Limited Partnership (Gateway, Iron-Gate Acquisitions Limited Partnership (Iron-Gate, Paramount Group of Companies, Paramount Mutual Fund Trust, Paramount Mortgage Corporation, Paramount Investments Inc. and each of their predecessors, related entities and affiliates, Samir Sawhney (Sawhney and Adeeb Azizi (Azizi breached Alberta securities laws, as that term is defined in the Act, regarding certain trades and distributions in securities and acted contrary to the public interest. 2 The investigation confirmed and each of Gateway, Iron-Gate, Sawhney and Azizi admit that they breached the sections of the Act set out below and acted contrary to the public interest. 3 Solely for securities regulatory purposes in Alberta and elsewhere, and as the basis for the settlement and undertaking set out below, each of Gateway, Iron-Gate, Sawhney and Azizi make the admissions and undertakings set out below in this Settlement Agreement and Undertaking (Agreement. 4 Terms used in this Agreement have the same meaning as provided in the Alberta securities laws, a defined term in the Act v2

2 - 2 - Parties 5 At all material times, Gateway and Iron-Gate were corporate bodies formed pursuant to the laws of Alberta. Both companies were involved in real estate acquisitions, leasing and sales. 6 Gateway and Iron-Gate were two of several entities controlled by Sawhney and Azizi carrying on the business of real estate acquisition, leasing and sales through an organization known as The Paramount Group of Companies (Paramount, headquartered in Edmonton, Alberta. 7 The other projects initiated by Sawhney and Azizi under the Paramount umbrella included Laurentian Estates Limited Partnership, Diamond Ridge Limited Partnership, Meadow Mews Limited Partnership, Glenridge Mews Limited Partnership, Village Acres Limited Partnership, Astoria Greens Limited Partnership, Plaza Acquisitions Limited Partnership, Clareview Village Limited Partnership, Village Acres II Limited Partnership, Paramount Lands Limited Partnership, Tricenter Acquisitions Limited Partnership, Anthony Henday Limited Partnership, Clareview-Argyll II Limited Partnership, Empire Assets Limited Partnership and St. Albert Crossing Limited Partnership. 8 At all material times, Sawhney and Azizi were the principals and guiding minds of Paramount and the entities under the Paramount umbrella, including but not limited to Gateway and Iron-Gate. 9 Sawhney, a Professional Engineer by training, was at all material times, and still is, the President and Chief Executive Officer of Paramount. Azizi is also a senior officer of Paramount. Circumstances 10 Through Sawhney, Azizi and a person or persons affiliated with Paramount, Gateway and Iron-Gate distributed securities in July and August 2007 raising approximately $15.3 million and $18 million from 388 and 342 investors, respectively, most of whom were Alberta residents. 11 Neither Sawhney or Azizi has ever been registered with the Commission s Executive Director to trade securities. 12 No prospectus has ever been filed with the Commission s Executive Director in respect of securities of any of the Paramount entities including Gateway and Iron-Gate. 13 For Gateway, Iron-Gate and each of the other investments under the Paramount umbrella, investors executed Subscription Agreements (Subscription Agreements pursuant to which they agreed to purchase limited partnership units. Gateway, Iron-Gate, Sawhney and Azizi acknowledge that the sale of limited partnership units in those circumstances constituted trades in a security as that term is defined in the Act.

3 Sawhney and Azizi supervised the sales of securities to the investors and both were personally involved in the sale of securities to many of the investors, which included meeting with them, providing and explaining the Subscription Agreements and arranging payment from the investors for the securities for which they subscribed. 15 Gateway, Iron-Gate, Sawhney and Azizi further admit that none of them was registered to deal or trade in securities pursuant to s.75 of the Act as it read at the applicable time. Further, as the trades involved securities that had not been previously issued, they constituted distributions as defined in the Act. Gateway, Iron-Gate, Sawhney and Azizi admit that Gateway, Iron-Gate and the other issuers under the Paramount umbrella did not file a preliminary prospectus or prospectus with the Commission in relation to those distributions, nor did they receive a receipt for such prospectuses. Gateway, Iron-Gate, Sawhney and Azizi further admit that certain of the purchasers of the limited partnership units did not qualify under any exemption to the registration and prospectus requirements in the Act. 16 Gateway, Iron-Gate, Sawhney and Azizi admit that the sale of the limited partnership units of Gateway, Iron-Gate and the other entities under the Paramount umbrella constituted in such instances prohibited distributions of securities and that they authorized, permitted, acquiesced and participated in the prohibited trading and distribution of those securities. Breaches 17 Gateway, Iron-Gate, Sawhney and Azizi admit that they breached sections 75 and 110 of the Act by trading and distributing securities of Gateway, Iron-Gate and other Paramount entities without being registered to do so and without the issuers having filed a prospectus with the Commission in circumstances where no exemption from the registration and prospectus requirements was available. Other Circumstances Relevant to Settlement 18 In participating in the distribution of securities as aforesaid, Gateway, Iron-Gate, Sawhney and Azizi purported to rely on certain prospectus and registration exemptions contained in National Instrument , Prospectus and Registration Exemptions (NI and in particular the accredited investor and family, friends and business associates exemptions provided for therein. 19 Gateway, Iron-Gate, Sawhney and Azizi state that throughout the course of the distributions of securities as aforesaid, Paramount, through Sawhney and Azizi, had retained qualified legal counsel to advise them on the legal requirements of distributing securities to investors. In each case, the investors executed Subscription Agreements referencing the applicable exemption and the issuer made the requisite filing with the Commission of the forms required by NI Gateway, Iron-Gate, Sawhney and Azizi state that in many instances they misunderstood or misinterpreted the requirements of NI pursuant to which an investor would

4 - 4 - qualify as either an accredited investor or a close family member or close business associate. 21 Gateway, Iron-Gate, Sawhney and Azizi cooperated with Staff throughout the investigation, and had previously corresponded with Staff respecting the eligibility of investors to subscribe for securities of Gateway and Iron-Gate in This Agreement has saved the Commission the time and expense associated with a contested hearing. Similarly, Gateway and Iron-Gate are both active, ongoing projects and this Agreement saves them the expense and time associated with a contested hearing. Settlement Payments and Undertakings 23 Based on these facts and admissions, Sawhney and Azizi, on their personal behalf and on behalf of Gateway and Iron-Gate, will jointly pay to the Commission the amount of $130,000 in settlement of all allegations against them, any other persons employed by or associated with Paramount who dealt personally with investors and each of Gateway, Iron-Gate and the other entities operating under the umbrella of Paramount, plus $20,000 to compensate for investigation costs. Sawhney and Azizi agree that they are jointly and severally responsible for this obligation to pay a total of $150,000 to the Commission. 24 Sawhney and Azizi further undertake to the Executive Director of the Commission not to use any of the exemptions contained in Alberta securities laws for a period of five years commencing on the date of this Agreement or cause any issuer of which they are directors or principals to benefit from any exemption for a period of five years from the date of execution of this Agreement, and to comply in the future with all Alberta securities laws. Administration 25 Gateway, Iron-Gate, Sawhney and Azizi acknowledge that they have sought and received legal advice and that the admissions herein have been made voluntarily. 26 Gateway, Iron-Gate, Sawhney and Azizi waive any right existing under the Act, or otherwise, to a hearing, review, judicial review or appeal of this matter. 27 Gateway, Iron-Gate, Sawhney and Azizi make these admissions and undertakings solely for the purpose of proceedings relating to the regulation of securities in Alberta and elsewhere. They acknowledge that this Agreement may be referred to solely for securities regulatory purposes in Alberta or other jurisdictions. They do not make these admissions and undertakings for the purpose of or use in any other kind of proceedings. 28 This Agreement resolves all issues outstanding as of the date of this Agreement involving Gateway, Iron-Gate, Sawhney, Azizi, Paramount (including the entities named in

5 - 5 - paragraph 7 above and any of their employees or agents, and Staff will take no further steps against any of those parties arising from these facts. 29 This Agreement may be executed by facsimile and in counterpart. Signed by the duly authorized signatory of GATEWAY VILLAGE II LIMITED PARTNERSHIP at Calgary, Alberta this 12 day of October, 2012, in the presence of: Ryan C. Bosch Signed by the duly authorized signatory of IRON-GATE ACQUISITIONS LIMITED PARTNERSHIP at Calgary, Alberta this 12 day of October, 2012, in the presence of: Ryan C. Bosch Signed by SAMIR SAWHNEY at Calgary, Alberta this 12 day of October, 2012, in the presence of: Ryan C. Bosch GATEWAY VILLAGE II LIMITED Per: SAMIR SAWHNEY, Director IRON-GATE ACQUISITIONS LIMITED PARTNERSHIP Per: SAMIR SAWHNEY, Director SAMIR SAWHNEY

6 - 6 - Signed by ADEEB AZIZI at Calgary, Alberta this 12 day of October, 2012, in the presence of: Chelsie Lysenchuk ADEEB AZIZI ALBERTA SECURITIES COMMISSION Calgary, Alberta, October 18,2012 W.E. Brett Code, Q.C. Director, Enforcement