Weizhen Tang, convicted of defrauding investors of $20-million, talks to reporters while on a lunch break during a sentencing hearing in Toronto, Jan. 9, 2013.
An Ontario Securities Commission hearing panel has permanently banned convicted fraudster Weizhen Tang from trading securities or working as a registrant in the financial industry, saying he has shown "absolutely no recognition" of the seriousness of his misconduct and has even outlined a plan to continue investing for his clients.
In a ruling released Friday, the OSC concluded the findings from Mr. Tang's 2013 criminal fraud conviction are sufficient to prove he should not be allowed to continue to operate in Ontario's capital markets.
Mr. Tang, who called himself a "Chinese Warren Buffett" while raising $50-million from investors, was convicted in 2013 after Justice Alfred O'Marra of the Ontario Superior Court said there was "overwhelming evidence" that Mr. Tang made false representations to investors, falsified their account statements and used money from later investors to make payments to earlier investors, which is typical of a Ponzi scheme.
He received a six-year jail sentence and was ordered to pay a fine of $2.8-million within five years of his release or else serve five more years in jail if the fine is not paid. Mr. Tang's conviction was upheld by the Ontario Court of Appeal. He was released on parole in July.
The OSC said Mr. Tang told the regulator he would like to be able to continue trading to earn back all of the money lost by his clients, and should not be subject to any bans from working in the securities industry. He also said he is innocent of any wrongdoing and has been unjustly persecuted by a few disgruntled investors and by the police, the Crown and the OSC.
The OSC panel said it was concerned by Mr. Tang's desire to continue trading, noting his company, Oversea Chinese Fund, had just $1,400 in its accounts when it was shut down by regulators.
"If Tang were permitted to trade again, he would have to solicit funds from a new generation of investors who need to be protected by the commission from the serious risk of fraud," the commissioners said.
The ruling said Mr. Tang's misconduct "was so abusive" that the panel was "compelled to conclude that unless he is permanently banned, his future conduct would be detrimental to the integrity of Ontario's capital markets."
The panel's ruling bans Mr. Tang for life from trading securities or derivatives, working as a registrant in the financial industry, or serving as a director or officer of a company or investment firm.
Mr. Tang told the OSC hearing that he personally suffered financial hardship along with his investors and said the bank foreclosed on his house and he has no employment, but he said he is also committed to repaying his investors' losses. He also said his clients want him to resume trading on their behalf.
One of Mr. Tang's investors testified before the OSC, saying it would be "good news" if Mr. Tang could continue to trade, although the hearing panel said he also testified he would not give Mr. Tang more money to invest in the future. Mr. Tang also provided four letters from others saying they wanted him to trade on their behalf.
The OSC panel said there are no mitigating factors in Mr. Tang's case, noting that his "persistent and belligerent defiance in the face of incontrovertible evidence" of fraud and his insistence of being allowed to continue trading "raise a significant concern in our minds about the harm that he is likely to cause to investors in the future if given the opportunity."
During his criminal trial in 2013, some victims provided impact statements saying they lost their life savings in Mr. Tang's scheme. Some said they borrowed money and remortgaged their homes to raise funds to invest in Oversea Chinese Fund, which required a minimum $150,000 investment, and one woman testified she was so devastated she thought about "how to die" so her family could collect her life insurance.
Mr. Tang told investors he would only invest 1 per cent of their funds in risky holdings and the rest would be kept in low-risk securities such as government bonds. Instead, he made risky investments and used some investors' funds to pay off earlier investors while falsifying online account statements to show steady growth in returns on a daily basis, even during the 2008 financial crisis.
Investigators discovered he had transferred approximately $2.84-million of investor funds to himself.
Janet McFarland