T H E M A NliDBA November 20,2012 S£ C UR I T I E S
C D ..... \'-1 15B I ON
IN THE MATTER OF: THE SECURITIES ACT - and IN THE MATTER OF: IMAGIN DIAGNOSTIC CENTRES INC. and PATRICK J. ROONEY REASONS FOR DECISION
OF
THE MANITOBA SECURITIES COMMISSION
Panel: Acting Chair: Ms. L.M. McCarthy Commission Members: Ms. K.E. Hughes Mr. D.H. Smith Appearances: Ms. K.G.R. Laycock Counsel for the Commission Mr. P.J. Rooney (by telephone) Representing both Respondents
Background On April 18, 2012, a Notice of hearing ("NOH") was issued giving notice of the intention of The Manitoba Securities Commission ("MSC") to hold a hearing pursuant to section 148.4 of The Securities Act ("Act") , naming IMAGIN Diagnostic Centres Inc. ("IMAGIN") and Patrick J. Rooney ("Rooney") as respondents ("Proceedings") . The matter was heard by a panel of the MSC on September 26,2012. The Proceedings were adjourned to October 24,2012 . In the interim, a written submission was made by IMAGIN and Rooney and a written response submitted by MSC staff counsel ("Staff") . The proceedings were initiated by way of section 148.4 of the Act, Inter jurisdictional enforcement, reproduced below (emphasis added) : Inter-jurisdictional enforcement 148.4(1) After providing an opportunity to be heard, the commission may make one or more orders under subsections 8(1) , 19(5), 31 .3(1) , 139(2), 148(1) and 148.3(1) against a person or company that (a) has been convicted of a criminal offence arising from a transaction , business or course of action related to securities; (b) has been found by a court inside or outside Manitoba to have contravened this Act, the regulations or a decision of the commission or the Director, or the securities laws of another jurisdiction; (c) is subject to an order made by a securities regulatory authority in Canada or elsewhere imposing sanctions, conditions, restrictions or requirements on the person or company; or (d) has agreed with a securities regulatory authority in Canada or elsewhere to be subject to sanctions, conditions , restrictions or requirements . The sections of the Act referred to in 148.4(1) that are relevant to the Proceedings are reproduced below (emphasis added) : Removal of exemptions 19(5) Notwithstanding subsections (1) and (2), the commission may, where in its opinion such action is in the public interest, (a) order that subsection (1) does not, with respect to such of the trades referred to in that subsection as are specified in the order, apply to the person or company named in the order; and (b) order that subsection (2) does not, with respect to such of the securities referred to in that subsection as are specified in the order, apply to the person or company named in the order. Order suspending trading 148( 1) If the commission considers that it is in the public interest, it may, with or without conditions, order that trading in securities by or of a person or company cease permanently or for a specified period. Except as allowed by subsection (2) or (3), the commission shall not make an order without a hearing . Orders respecting directors and officers 148.3(1) If the commission considers it to be in the public interest, the commission may, after a hearing, make one or more of the following orders: 2
an order that a person must as a director or officer of an issuer; (b) an order that a person is prohibited from being a director or officer of an issuer; (c) an order that a person be appointed as a director or officer of an issuer. submits that all that is for the MSC make a reciprocal order is of the originating Ontario Securities Commission ("OSC") Order, that an order another jurisdiction is in proof that public interest test is satisfied. The only submitted by staff was OSC June 30,2011 against IMAGIN and Rooney. On behalf of both respondents, Rooney submitted as evidence \III the Reasons and Decision of the OSC in the original matter against himself and IMAGIN, and \III the Alberta Secu Commission's ("ASC") Withdrawal Notice of Discussion agrees that 148.4( 1) permits the issuance a reciprocal order based on mere of an order by a regulator in another jurisdiction; 148.4(1), however, does not automatically that a reciprocal order be Sections 19(5),148(1), 148.3(1) under if it is considered to in existence of an order in another jurisdiction has not the panel information to determine public in Manitoba. No other was subm by Staff. I-'r()cE!eaings, the reasons and of the , provides some insight issue public interest: .... Staff's allegations do not to the cancer diagnosis technology of IMAGIN's business or the use of derived the distribution IMAGIN's securities. Staffs allegations only to registration issues. does not dispute the admission that IMAGIN dealt with accredited . Staff contends that the accredited investor exemption from registration was not ava to IMAGIN it was a market intermediary. 3
panel can from the Ontario decision that there were no allegations regarding misappropriation of funds, and that the investors approached to invest in IMAGIN shares were the ASC Notice of Withdrawal of Notice of Hearing that the complied with the applicable Alberta securities laws in of the distributions that the made to Alberta residents The panel can, again, infer from the not to pursue a reciprocal that the existence of the OSC order did not, in itself, a public interest concern in Alberta. Staff's submission included reasons for decision of British Columbia a reciprocal in Patricia McLean matter. Paragraph 11 "Securities legislation in Canada is uniform in all material " (emphasis added). ASC Notice Withdrawal of of Hearing (Exhibit 5 in the Proceedings) shows, however, legislation across is not identical: "AND NOTI THAT while the Ontario Securities Commission in a decision dated 31 August 2010 (the Decision) found that respondents Ontario laws in respect of certain distributions made by in and from Ontario, Staff have concluded, on a facts contained in the Decision, that complied with the applicable Alberta securities laws in of the distributions that the Respondents to Alberta laws differing the applicable Onta laws time of the impugned distributions." In his submission, Rooney indicates that IMAGIN shares were sold in Manitoba, and that the relevant were followed. Panel received no evidence to support or disprove compliance with Manitoba securities law. "Conduct in Manitoba" section in Staff's submission indicate to the that was trading activity in Manitoba. Reciprocal provide protection for investors and markets outside the sanctioning jurisdiction so that the misconduct in one jurisdiction cannot be duplicated in another jurisdiction. In this we know that the activity that was carried in Ontario was carried in Alberta. The same activity that broke the rules in Ontario, however, complied with the in Alberta If activity in Manitoba complied with Manitoba securities laws, panel not see a for sanctions the if the activity did not comply with Ma its own 4
processes that would determine and recommend what, if any, sanctions were appropriate. Decision The panel, in considering the evidence submitted in addition to the OSC order, has not concluded that it is in the public interest to issue the proposed order against the Respondents, and does not approve the issuance of the requested reciprocal order. “L.M. McCarth Chair “K.E. Hughes Member “D.H. Smith”_____________________ Member 5
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