Looks like the ESL gang has stuck again!
BCSC asks judge to compel Tak to answer questions
2017-09-22 10:47 ET - Street Wire
Also Street Wire (C-BTH) Breathtec Biomedical Inc
Also Street Wire (U-NEWG) Newgen Biohpharma Corp
by Mike Caswell
The B.C. Securities Commission is looking to question a Burnaby man about trading in two listings, Newgen Biopharma Corp. and Breathtec Biomedical Inc. The regulator says that it is investigating some unspecified activity with those companies and is looking closely at Vancouver brokerage Mackie Research Capital Corp. The investigation has led to the Burnaby man, who is named Harish Tak.
Details of the BCSC's investigation are contained in a petition that the regulator filed in the Supreme Court of British Columbia on Wednesday, Sept. 20. The petition seeks a court order that would compel Mr. Tak to answer questions from investigators. According to the BCSC, he has so far refused to do so.
It is far from clear what the BCSC intends to ask Mr. Tak, although it is no secret that one of the companies the BCSC mentioned, Newgen, is a regulatory target. The company, which trades on the OTC Markets, attracted a suspension from the U.S. Securities and Exchange Commission on March 28, 2017. The regulator said that there were questions about the identity of the company's major shareholder and about undisclosed control persons.
(The SEC's halt came with Newgen trading at $1.56, which gave the company a $35,256,000 market capitalization. (All figures are in U.S. dollars.) Against this, the company reported total assets of $201,356 and liabilities of $230,002 in its Jan. 31, 2017, balance sheet.)
The SEC did not state specifically what its concerns were with regard to Newgen's major shareholder, but at the time of the halt the company was in the midst of a change of business (which it later abandoned). It had recently changed its address to the Philippines from Seattle. It had also listed a man named Jerwin Alfiler as its new president and largest shareholder.
The halt also came just days after a related search that BCSC staff carried out at the downtown Vancouver office of Mackie Research Capital. On that date, investigators attended the firm to seek records connected to Newgen. The BCSC has not said exactly what it was looking for, nor has it made any allegations against Mackie or its employees. The regulator has, however, identified the targets of that investigation. They are Mr. Alfiler and a group of Mackie employees: Shane Parhar, Zia Hirji and Afsheen Somji. Also named was Mr. Tak's brother, Karan.
(The four Mackie employees have since objected to the search, saying that BCSC enforcement staff failed to disclose their grounds for entering Mackie. The matter went before a BCSC panel, which agreed. On Sept. 6, 2017, the panel ordered investigators to hold off on examining the seized items until the validity of the search could be determined. The panel also directed enforcement staff to disclose the material they relied on to establish the grounds for the search.)
While it is clear that the BCSC is very interested in Mackie and its employees, the regulator's interest in Mr. Tak appears more pedestrian. In Wednesday's petition, the BCSC says that he is not a target of the investigation. The petition states that the investigation is limited to determining if there was illegal trading activity by Mackie and to determining if the firm properly supervised its employees. According to the BCSC, Mr. Tak had an account at Mackie and traded Newgen through that account.
As part of its effort to question Mr. Tak, the BCSC issued a subpoena and had Mr. Tak attend an interview on Aug. 24, 2017. According to the petition, Mr. Tak arrived with his lawyer and refused to answer any questions. The refusal came after the BCSC informed him that anything he said could be shared with the U.S. government. (There is no indication that anybody in the U.S. is investigating Mr. Tak.)
The BCSC says that Mr. Tak's refusal to answer questions makes him liable in the same way as somebody who has committed contempt of court. On that basis, the regulator is seeking a court order that will compel him to answer questions. The interview would take place at the BCSC's office.
The BCSC's petition also states that the regulator is looking into trading and a distribution of securities with Breathtec Biomedical, which trades on the Canadian Securities Exchange. The regulator says little else about Breathtec, and the company appears to have nothing in common with Newgen outside of the BCSC investigation. Breathtec claims to be developing a portable device that will take a sample of a patient's breath and screen for early signs of cancer and other diseases. Breathtec closed at 11.5 Canadian cents Thursday, down a penny.
Newgen became a very sparse trader after the SEC's suspension ended. It was last at 0.31 cent