Details emerged as one person sued another over the matter
Two Ontario individuals have been sanctioned by the Canadian Investment Regulatory Organization (CIRO) for failing to disclose material information about the change of control of a registered investment firm.
The issue relates to an agreement in 2020 between Antony Kin San Chau and Aziz Fatehali Khamisa for the latter to acquire the entire shareholding of TeamMax Investment Corp. - a firm operating in Ontario and registered with the Mutual Fund Dealers Association (MFDA) - from the former.
While Khamisa provided the MFDA with the Share Purchase Agreement signed by the two men, detailing the $320,000 payment that Khamisa would make to acquire control of the firm, which at the time was owned and controlled by Chau, the regulator was not made aware of the existence by either individual of a ‘Spirit Agreement’ which gave details of Chau’s ongoing involvement in the firm once sold.
This second agreement gave Chau control of the firm’s Advisors Network, veto over any further sale of the firm’s shares, and bank account signing authority. The regulator said this agreement gave Chau control of material aspects of TeamMax’s operation and business.
In its investigation, during interviews with Khamisa he revealed that the Spirit Agreement had been drafted by Chau and benefitted him exclusively. It also emerged that Chau had told Khamisa not to tell the MFDA about the agreement.
Regulator action
This week Chau was given a $60,000 fine and a permanent ban from conducting securities related business while in the employ of or associated with any Dealer Member of CIRO registered as a mutual fund dealer. He is also required to pay $6,000 in costs.
Last month Khamisa had a $40,000 fine issued to him by a CIRO hearing panel and a one year prohibition on his authority to conduct security related business while in the employ of or associated with any Dealer Member of CIRO that is registered as a mutual fund dealer; and a five year ban on being an officer, director or acting in a supervisory capacity including without limitation acting as Ultimate Designated Person, Chief Compliance Officer, Branch Manager or Compliance Officer, while in the employ of or associated with any Dealer Member of CIRO registered as a mutual fund dealer.
TeamMax was found in violation of rules regarding compliance oversight in March 2023, resulting in the firm receiving a $60,000 fine and being required to pay $10,000 in costs.
Chau has a history of regulatory investigation and sanctions and was banned for five years in 2022 for violations relating to Know Your Client regulations.
