The Ontario Securities Commission is seeking to ban Terrence Bedford from trading securities or working in the financial industry following his fraud conviction and prison sentence.
Mr. Bedford was sentenced to two years in federal penitentiary in 2013 after he pleaded guilty to running a fraudulent trading scheme that cost investors $5-million (U.S.) between 2006 and 2011.
The OSC said Monday that it now wants to permanently ban Mr. Bedford from trading securities in Ontario or working as a registrant in the financial industry based on his prior conviction. The commission also wants to permanently ban him from serving as an officer or director of a registered company.
In his guilty plea in court in 2013, Mr. Bedford acknowledged he had misled investors into believing his Hamilton-based investment firm, Greyhawk Equity Partners LP, was a highly profitable investment fund that was creating substantial returns for investors, when in fact the fund was in a "negative position at all times," the OSC said.
He admitted he created false documents for investors, including financial statements and auditor assurance letters. He claimed the fund had been audited by PricewaterhouseCoopers, but the documentation was forged and PwC was never the fund's auditor.
The OSC also said Mr. Bedford told investors their funds were secure and were earning excellent returns, but they had in fact been used to purchase and sell a variety of securities that consistently lost money.
Greyhawk was placed into bankruptcy protection in 2011, and court filings for the receivership showed Mr. Bedford had misleadingly told investors he had more than $200-million in assets under management. Records showed he had actually raised only $19.2-million between 2000 and 2011.
The court filings said the case came to light when an investor contacted PwC to notify the firm about a mistake in its audit report on Greyhawk, only to be told it had never audited the fund. PwC contacted the OSC, which launched an investigation.
The OSC prosecuted Mr. Bedford's case in provincial court where jail terms can be imposed, but it must now conduct an administrative hearing to impose market bans under the Ontario Securities Act. A hearing in the case is scheduled for July 22.