BCSC sanctions CTO breach

A U.S.-based company and its former CEO are facing sanctions from the British Columbia Securities Commission (BCSC) for breaching the regulator’s cease trade order against the company, which was imposed in 2014.

A BCSC hearing panel found that the company, Green Hygienics Holdings Inc., issued $5.4 million worth of shares between 2019 and 2021, and a couple of promissory notes that raised $3.1 million in 2020 and 2021, in violation of a cease trade order that was still in effect against the company. 

In 2014, the BCSC imposed a cease trade order against the company — which was an over-the-counter (OTC) reporting issuer in B.C. — for failing to file its annual information form for the year ended July 31, 2014.

The regulator also found the the company’s president and sole director, Ronald Wayne Loudoun, breached the cease trade order by allowing the company’s issuances — and that he also personally breached the restriction by transferring 250,000 of the company’s shares, and facilitating trading by two investors.

“The breaches of the [cease trade order] in this case were not inadvertent,” the panel noted in its decision — adding that Loudoun was aware of the restriction on the company as early as 2017. 

“We agree with the executive director that an unwillingness to comply with the directives of a regulator in a highly-regulated industry must be viewed as a significant risk to our capital markets,” it said.

Additionally, the panel found that investors were harmed, and Loudoun and Green Hygienics enriched, by the misconduct.

As a result, the panel ordered $50,000 in sanctions against Loudoun and banned him from the market for six years. It also ordered a $20,000 penalty against the company.

Neither of the respondents participated in the BCSC’s proceedings against them.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.