An Abbotsford man previously found to have contravened the B.C. Securities Act has won the right to appeal that decision.
Colin Robert Hugh McCabe will now go before a B.C. Court of Appeal panel to determine whether the decision should be overturned on the basis that the B.C. Securities Commission (BCSC) did not have jurisdiction to sanction him for misconduct.
McCabe, 30, was permanently banned from B.C.’s capital markets in January of this year for publishing false stock reports in the monthly Elite Stock Report.
BCSC records at the time indicated that McCabe researched stocks, using publicly available information such as websites and news releases, and, if he thought they had a shot at being profitable, he would write about them in his newsletter.
The Elite Stock Report was distributed only by direct unsolicited mail in the U.S.
A BCSC panel found that between October 2009 and July 2010, McCabe published “greatly misleading reports” about three companies in order to inflate their stock price.
However, in his application to the court, McCabe said he wished to appeal the decision because the BCSC did not have jurisdiction to sanction him for the conduct.
He said Elite Stock Report was published and mailed in the U.S., there was no trading or exchange of affected securities in B.C., and the report published information exclusively about stocks traded exclusively in the U.S.
The BCSC maintained that it had jurisdiction over McCabe because he is a B.C. resident and it was his “authorship of the misrepresentations” that contravened the B.C. Securities Act.
The judge considering McCabe’s application agreed that this matter could form the basis for the appeal.
McCabe had also sought to have included in his appeal an order by the BCSC that he pay $4.3 million – almost $2.8 million he obtained as a result of his misconduct and an administrative penalty of $1.5 million.
He argued that the amount was too high, but the judge said the amount was appropriate and could not be included in the appeal.
This means that if the appeals panel upholds the decision that McCabe contravened the B.C. Securities Act, he will still have to pay the $4.3 million.
A date for the appeal has not yet been set.