The Ontario Securities Commission said Tuesday that it has settled with Robert Levack, chief compliance officer at Sextant Capital Management Inc. and one of the four people allegedly involved with participating in an investment fraud through the Sextant Strategic Opportunities Hedge Fund. See agreement.
Mr. Levack has agreed to pay a penalty of $15,000. He is prohibited from becoming or acting as a director or officer of any company or becoming an investment manager for 10 years, and will co-operate with any ongoing proceedings related to his former employer. The agreement comes as a hearing is set for Monday, June 7, for Otto Spork, who was manager of the hedge fund, as well as his daughter Natalie Spork and brother-in-law Dino Ekonomidis. See previous Fund Watch blog.
The OSC said that the hedge fund bought shares of Iceland Glacier Products, a private company in Luxemburg which made up 90 per cent of the fund's portfolio by Nov. 30, 2008. "This investment concentration was prohibited by the [Securities]Act and is inconsistent with the investment strategy and restrictions set out in the Sextant Canadian fund's offering memorandum," the agreement said.
Mr. Levack "breached his duties" by failing to ensure the fund conformed to its offering memorandum and Ontario Securities laws, and from prohibiting the investment in the glacier company even though he knew that Mr. Spork, who was a substantial shareholder in Sextant Capital Management, also held a "significant interest in Iceland Glacier Products through his holding company Riambel holding SA."
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