Investment company founders pay nearly $800,000 in ASC fines

The founders of a defunct Calgary-based investment company have paid nearly $800,000 in fines after admitting to breaching Alberta securities laws.

Jay Modi, Arti Modi and Rajeeve Singh incorporated Omniarch Capital Corp. in 2009 for the purpose of soliciting, accumulating and using investment funds for indirect investment into downgraded and discounted residential mortgage-backed securities in the U.S. Between 2010 and 2015, Omniarch raised about $127 million from investors before going into CCAA creditor protection in 2016.

In a settlement reached with the Alberta Securities Commission earlier this month, all three of Omniarch’s founders admitted to breaching Alberta securities laws by making misleading statements to investors. Investors were not told, for example, that Omniarch would make loans to related parties. Investors were also misled as to the professional experience of Jay Modi and Omniarch’s fund managers in handling investments.

As part of the settlement agreement, the individual respondents paid the ASC a total of $795,000 and are prohibited from trading in or purchasing securities; acting as a director or officer of an issuer; and participating in other aspects of the securities industry for varying periods — 20 years for Jay Modi, 10 years for Arti Modi, and three years for Singh.

In separate proceedings in relation to the CCAA matter, the Court of Queen’s Bench approved a Plan of Arrangement intended to increase recoveries by creditors including investors.

The terms of this Plan of Arrangement, which include a repayment schedule and other forms of compensation to investors, were taken into consideration by the ASC in determining the terms of this settlement agreement.