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Mark Valentine was never “shut down” as the Ontario Securities Commission expected 20 years ago. Quite the opposite.

Since being permanently banned from serving on the board of directors or management team of any stock-issuing Ontario company in 2004, the OSC’s Capital Markets Tribunal said in a March 20 decision that Mr. Valentine has served as an officer and/or director at 38 different Ontario companies. Mr. Valentine, who rose to prominence during the dot-com boom of the late 1990s by running his own Bay Street brokerage firm while still in his 20s, also repeatedly violated a 15-year trading ban that was also imposed in 2004, the tribunal concluded.

The 2004 decision followed the 2002 collapse of Thomson Kernaghan & Co. Ltd., where Mr. Valentine was board chair and single largest shareholder. Shortly before declaring bankruptcy, TK conducted an internal investigation that found Mr. Valentine made “questionable” trades, had “failed to provide any documents to support still other trades” and that “an entire series of trades had no supportable rationale.”

Just a few weeks after the bankruptcy declaration, with regulators continuing to probe former TK executives, Mr. Valentine was arrested in Germany as part of a years-long FBI sting investigation into stock fraud and money laundering. Accused of offering an undercover federal agent a “hidden commission” on an US$8-million trade, the then 32-year-old Mr. Valentine was extradited to Miami, where he spent a weekend in jail and was forced to wear a tracking bracelet before he eventually pled guilty to securities fraud in 2004 and returned to Toronto.

Kelley McKinnon, the OSC’s then chief legal counsel, told The Globe and Mail at the time that Mr. Valentine’s conviction in the United States and regulatory actions against him in Ontario would effectively “shut him down” in the U.S. and Canada.

The March 20 tribunal decision shows the opposite turned out to be true.

While some of Mr. Valentine’s 38 companies existed primarily to hold certain assets, such as an airplane and real estate, the tribunal said, at least two of them – Thaler Ventures Ltd. and Pinnacle Global Partners Ltd. – were substantial businesses. According to his LinkedIn profile, Mr. Valentine has been the chief executive officer of Thaler Ventures since 2002, which an unnamed former employee said in testimony before the tribunal had employees and an office in Toronto.

“Its banking activity was more significant than many of the corporations about which we heard testimony,” the tribunal said. “For example, in 2015, it received a single transfer into its bank account of over $2-million. In 2015 and 2016, millions of dollars flowed through its bank accounts.”

Similarly, PGP received in excess of US$11-million in 2015 and 2016. The tribunal said much of that financial activity was related to stock-secured financing or equity loan transactions that involved Mr. Valentine, which was a direct violation of his 15-year trading ban.

Mr. Valentine assisted an unnamed “business associate and friend” with trading $1.36-million worth of stock in Toronto-based Flyp Technologies Inc. in 2018. The tribunal found his “involvement in the Flyp sale was more than a casual favour to a friend.”

In what the tribunal said was a further violation of his trading ban, Mr. Valentine was also paid millions of dollars for helping to arrange loans to borrowers who pledged stock as collateral. Mr. Valentine admitted that his positions with 38 companies violated his lifetime ban from holding those roles and that his participation in the Flyp stock sale violated his 15-year trading ban.

However, he disputed the allegation that his involvement in several stock-secured financing transactions violated the trading ban, arguing his actions did not meet the legal definition of a “trade” or “trading.” The tribunal rejected that argument, finding “each of the stock-secured financings involved at least one clear ‘trade.’”

During a compelled interview, Mr. Valentine said he received a percentage of the profit made when the stock was eventually sold, but that he “had little memory of the amounts he received as compensation.”

“He stressed, however, that there was no contractual obligation on which his compensation was based: It was ‘a fluid number,’ ‘not a fixed cost percentage.’ He stated it was ‘verbal for everybody,’” the tribunal said. “In each case, when questioned, he was only willing to narrow it down to something greater than $1-million but less than $10-million.”

The tribunal decision is the result of an investigation that began in 2020 for “potential breaches” of Mr. Valentine’s restrictions. It represents the latest blow to Mr. Valentine’s reputation, whose star once shone so brightly that, as part of his 1998 compensation, his firm gave him a Ferrari with a vanity licence plate that read “giddy up.”

A hearing date “regarding sanctions and costs” will be scheduled no later than April 19, the tribunal said.

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