British Columbia Securities Commission

British Columbia Securities Commission

August 08, 2011 18:00 ET

BCSC Executive Director's Bulletin: Securities Regulator Issues Notice of Hearing Seeking Orders Against West Vancouver Man for Illegal Insider Trading

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 8, 2011) - The executive director of the British Columbia Securities Commission has issued a notice of hearing alleging that a West Vancouver man breached securities laws when he purchased securities in an Alberta company that was planning to hire a new president and CEO.

The notice alleges that Jerome John Rak (Rak) had knowledge of Velo Energy Inc.'s plan to hire Arthur Millholland, the former president and CEO of Oilexco Inc, when he purchased 172,000 shares in the company.

The notice also alleges that:

  • In late July or early August 2009, Millholland heard about an opportunity to consider a reverse merger with a shell company.
  • On August 4, 2009, Millholland attended a meeting in West Vancouver with Rak and others to discuss the possibility of Millholland merging with Velo and becoming its president and CEO.
  • On August 5, 2009, Millholland began drafting the news release that would announce he had become the new president and CEO of Velo. On August 6, 2009, Millholland sent the draft news release to Rak.
  • At the end of the day on Friday, August 7, 2009, Velo issued the News Release. Velo's share price closed that day at $0.20 per share. On August 10, 2009, the next trading day, Velo's share price rose to a high of $0.495
  • Between August 4 and August 7, 2009, Rak was in a special relationship with Velo and had knowledge of the plan for Millholland to take over Velo and become its new president and CEO.
  • Rak bought 172,000 shares of Velo on August 5, 6 and 7 through a B.C. company called Belmont, a purported energy investment company.

These allegations have not been proven. Counsel for the executive director will apply to set dates for a hearing into the allegations before a panel of commissioners on September 19, 2011 at 9:00am.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the notice of hearing on our website www.bcsc.bc.ca by typing Rak or 2011 BCSECCOM 371 in the search box. Information regarding disciplinary proceedings can be found in the Enforcement section (www.bcsc.bc.ca/enforcement.asp) of the BCSC website.

Please visit the Canadian Securities Administrators' Disciplined Persons List (www.securities-administrators.ca/disciplinedpersons.aspx?id=74) for information relating to persons disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).

If you have questions, contact Richard Gilhooley, media relations, 604-899-6713. For public inquiries, call 604 899 6854 or 1 800 373 6393 (toll free).

Learn how to protect yourself and become a more informed investor at www.investright.org.

Contact Information

  • British Columbia Securities Commission
    Richard Gilhooley
    Media Relations
    604-899-6713 or (Canada) 1-800-373-6393
    www.bcsc.bc.ca