Alberta regulators have ordered television producer Neil Chandran to pay $400,000 in penalties after concluding he improperly raised funds for entertainment projects – including a Las Vegas boxing match – that never occurred.
An Alberta Securities Commission (ASC) panel said Mr. Chandran and his companies Energy TV Inc. and Chandran Holdings Media Inc. illegally sold securities to investors without a prospectus or appropriate use of prospectus exemptions.
In a statement of admissions in the case, Mr. Chandran acknowledged he raised $39-million from at least 210 investors between 2007 and 2009, promising them returns of 800 per cent to 1,000 per cent annually in some cases.
One of Mr. Chandran's companies raised $750,000 to stage and promote a World Boxing Federation title match in Las Vegas, which never occurred, the ASC said. Investors were promised returns of 50 to 75 per cent within five days of the event.
The sanctions decision said some participants in some of the fundraising offers received returns on their investments, but most lost all of their invested money.
"The respondents raised a considerable sum through the mentioned trades and distributions, most of which were illegal. They were able to do so quickly and with seeming ease," the ASC panel said in a decision released Friday.
"From this, we perceive a distinct risk of a recurrence of the misconduct found here, unless strong protective measures are imposed to deliver both specific and general deterrence."
In addition to ordering a $400,000 penalty, the hearing panel banned Mr. Chandran for life from working as a registrant in the financial industry, from trading securities in Alberta with limited exceptions, and from serving as an officer or director of a registered company. He was also ordered to pay $60,000 toward the ASC's costs.
Mr. Chandran argued he did not know the distributions he was marketing to Alberta investors were securities that would be subject to Alberta securities rules.
But the hearing panel said Mr. Chandran was sanctioned in 2006 by California regulatory authorities and ordered "to desist and refrain" from selling securities in the state over an unrelated business venture, and that experience should have alerted him to the need to be attentive to rules around raising capital from investors.
"Chandran was put on notice in a very clear and direct way of the need, when contemplating the raising of capital from investors anywhere, first to learn, then to understand and adhere to, whatever laws might apply," the panel said of his California sanction.
Chandran Holdings and Energy TV employed up to 100 people at their peak, but Mr. Chandran said the business failed due to the 2008 economic downturn. The Canadian operations were wound down, and Mr. Chandran has moved to Las Vegas.
The hearing panel said the fact that Mr. Chandran no longer lives in Alberta was not a mitigating factor in its decision, but said it did consider the fact Mr. Chandran appeared to recognize the seriousness of his actions and said the case did not involve a sham business, but one that had actual operations.