Vancouver man must pay nearly $1M in settlement with BCSC

Canadian cash is shown. (Shutterstock.com)

A Vancouver man who illegally distributed shares in his father's company must pay nearly $1 million in penalties under a settlement with the regulator of B.C.'s financial markets.

Geoffrey Rajay Sidhu has already paid $50,000 to the B.C. Securities Commission under the terms of the settlement, and must pay another $900,000 within six months. 

The commission initially brought its allegations against Sidhu and the company in May 2021, accusing them of defrauding an investor of $1.75 million in addition to illegally distributing the securities. 

The fraud allegation was not proven. The settlement's agreed statement of facts acknowledges only the illegal distribution allegation.

According to the settlement, Sidhu met the investor in November 2015 and helped her invest $1.75 million of the proceeds of a $2 million mortgage in Bracetek Industries Group Ltd.

Sidhu's father was Bracetek's sole officer and director. The company developed, manufactured and sold proprietary braces used in residential and commercial construction, the technology for which it licensed from companies controlled by Sidhu, according to the settlement.

After receiving the investor's money, the settlement indicates, Bracetek paid $900,000 in licensing fees to Sidhu's companies.

In the settlement, Sidhu agrees that Bracetek distributed its shares without filing a prospectus – the formal document that describes the details of an investment. He also acknowledges that he "acted in furtherance of Bracetek’s trade to the investor and therefore he illegally distributed securities."

In addition to the $950,000 in penalties he must pay to the BCSC, Sidhu is also prohibited from trading or purchasing securities unrelated to his own accounts for seven-and-a-half years. He is also prohibited from acting as a director or officer of any issuer of securities other than the six such companies he currently oversees.

The BCSC says in a news release that once it receives the remaining $900,000 from Sidhu, it will publish a notice and allow the investor to make a claim for payment.