Businessman fined $55,000 for selling securities illegally

‘I had sought legal and factual advice — and it was poor advice,’ Yawrenko says

An Edmonton businessman has agreed to pay a $55,000 fine after admitting to illegally distributing securities.

Shane David Yawrenko, head of Edmonton-based Umbrella Merchant Services, admitted to raising money from investors without filing proper paperwork.

The $55,000 settlement with the Alberta Securities Commission (ASC) was signed July 12 and released to media on Monday.

Umbrella, which was incorporated in 2013, purported to be raising money for a business venture in Mexico related to point-of-sale technology and advertising for taxi cabs, the settlement states. The business is still in operation.

Between May 2013 and July 2016, the company raised around $2.13 million from at least 33 investors, many of them Alberta residents, who signed subscription agreements for common shares of Umbrella.

Yawrenko admitted to doing so without filing a prospectus or a preliminary prospectus — a breach of the provincial Securities Act.

“Companies need to register their securities and file proper disclosure documents with us, or register an exemption,” ASC spokeswoman Hilary McMeekin said.

“Companies have to follow the rules and register their securities before they sell them directly to investors. Otherwise they have to use a registered dealer,” she added.

“In this case Mr. Yawrenko and his company did not file that paperwork, did not register themselves as selling securities ... they sold directly to investors.”

Yawrenko said in an interview Monday that he had received legal advice that he did not need to file a prospectus — the legal document that provides details about an investment offering.

“It’s very simple. I had sought legal and factual advice — and it was poor advice — on not filing a prospectus,

Companies have to follow the rules and register their securities before they sell them directly to investors.

and I got fined,” he said.

“They had to make an example and here’s the example,” he added.

Neither Yawrenko nor Umbrella has been previously sanctioned by the ASC, the settlement states. He also agreed to a number of restrictions on securities trading for a period of five years.

“Double check the checker, really,” he said. “That’s what it came down to.”

McMeekin said a portion of the fine would go toward “market oversight” programs.