Securities regulator examining B.C. links to Panamanian firm
Panama, the country under the spotlight for harbouring offshore tax havens, is also home to secret stock-trading accounts held by British Columbians under investigation by the B.C. Securities Commission.
A commission hearing is scheduled later this year into allegations that Verdmont Capital S.A., a Panamanian company founded by former B.C. investment advisers Glynn David Fisher and Taylor Kennedy Housser, broke provincial securities laws by trading in stocks on behalf of B.C. residents without being registered here.
The Verdmont Capital case involves the accounts in Panama of more than 100 British Columbians and stock transactions of at least $46 million.
The B.C. Securities Commission (BCSC) said it has already complied with a demand from the Canada Revenue Agency to hand over the names and files of the account holders. The federal tax agency is interested in investigating whether people are trying to avoid paying taxes in Canada.
The BCSC’s key concerns when British Columbians trade in offshore accounts, which is not in itself illegal, is that secrecy allows trades to be hidden from the regulator, particularly for insiders. The offshore accounts can also be used to hide schemes to raise the price of penny stocks for unsuspecting investors, while those pumping up the price secretively sell their stocks.
As a result of the BCSC investigation into Verdmont Capital, the commission has already found that North Vancouver-resident Mark Aaron McLeary failed to disclose insider trades he made through his Panamanian accounts with Verdmont. He used a Panamanian company, Pecado Capital S.A., created for him by Panamanian law firm Gray & Co., which allowed him to keep his identity secret, according to BCSC documents.
A penalty for the insider infraction against McLeary is expected to be determined by the middle of the year.
McLeary has already had penalties levied against him in 2015 by the BCSC of nearly $900,000 for a stock manipulation scheme in the over-the-counter stock market in the U.S. He was also permanently banned from B.C.’s stock markets in that decision.
Verdmont officials in Panama did not respond to emailed questions from The Vancouver Sun, and McLeary could not be reached for comment. Verdmont’s website now only includes a notice in Spanish, dated March 28, that says the company is ceasing operations.
Lang Evans, manager of BCSC’s special investigations unit, said in the Verdmont case they were helped when, in an unusual move, the Panamanian regulators handed over account records at the request of the commission.
The BCSC launched a special offshore investigation initiative in 2012.
The B.C. investigation effort comes at a time when more focus is being put on the use of offshore tax havens and accounts — largely revealed through large data dumps leaked to media outlets — and growing public concern that people and companies avoid paying billions in taxes and use accounts to trade stocks illegally.