Execs sanctioned in OSC settlement

A pair of corporate officers have agreed to pay $2.85 million, along with other sanctions, in a settlement with the Ontario Securities Commission (OSC), which alleged that they breached securities law in connection with disclosures provided after a corporate transaction. 

Ontario’s Capital Markets Tribunal approved a proposed settlement with Stan Bharti, former CEO and director of Medivolve Inc., and Neil Said, who also served as CEO at one point. The two admitted to permitting the company’s breaches of securities law that followed an acquisition in 2020.

According to the OSC, when the company acquired 40% of Amino Therapeutics Inc. in 2020, it announced that the price was paid in a combination of US$2 million in cash and 15 million Medivolve common shares. 

However, the OSC alleged that it wasn’t disclosed that only five million of the shares went to Amino’s owners, and that 10 million shares would be received by other parties — including three million shares that went to Bharti (valued at $915,000) and 2.8 million shares to Said (worth $854,000) through a numbered company.

As a result, the company’s disclosure contained material misstatements that breached securities rules — and, by allowing that violation, the officers themselves breached the securities law, the regulator charged. Bharti was a Medivolve director when the transaction closed, and Said was Medivolve’s CEO at the time.

In settling the case, they admitted to violating securities law and they agreed to sanctions. Bharti agreed to disgorge $915,000 and to pay a penalty of $785,000, along with $50,000 in costs, while Said agreed to a penalty of $200,000 and to disgorge $854,000, plus $46,000 in costs. Those sanctions have already been paid.

Additionally, Bharti was permanently banned from serving as a director or officer of an issuer or a registered firm, and Said was prohibited for five years.

The settlement noted that Bharti accepted responsibility for his misconduct and cooperated with the regulator.  

In approving the settlement, the tribunal said the proposed deal was “reasonable and in the public interest.”

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.