Vancouver man who misled investors agrees to $70K penalty

The B.C. Securities Commission logo in an undated file photo.

The director of a now-dissolved medical device company has admitted to misleading investors in a settlement agreement with B.C.'s securities regulator.

Vancouver resident Hassan Seyed Salari has paid the B.C. Securities Commission $70,000 in accordance with the settlement, the commission announced in a news release Monday.

Salari was the sole officer and director of a company called Lenis Medicals Ltd., a medical device company that was developing a "needle-free injector" that "used high-velocity mechanical power to inject medication below the skin," according to the settlement agreement, which took effect Oct. 18, but was published online Monday. 

The settlement stems from a "private placement memorandum" Lenis issued in May 2018, which was the basis for the company raising $1.9 million between August and October of that year.

The memo included four statements that were either untrue or omitted important information, according to the settlement.

Those false or misleading statements included:

• Listing the company's "patent value at cost" as $4.3 million, when no patent had been issued for the device and there was no reasonable basis for that valuation
• Failing to disclose approximately $1 million in liabilities the company owed
• Claiming the proceeds of the private placement would be used on inventory and manufacturing components for the device, when some of the proceeds were ultimately used for other purposes
• Claiming that Lenis had "initiated" registration of the device with the U.S. Food and Drug Administration, when no such application had been filed

According to the settlement agreement, an Arizona-based company purchased Lenis in June 2019.

"As a result of this transaction, the investors either exchanged their securities of Lenis for units of the purchaser or had their investments repaid," the settlement reads.

The agreement also notes that, by settling with the BCSC, Lenis and Salari avoided "a potentially lengthy hearing," something it describes as a "significant mitigating factor."

In addition to the $70,000 penalty, the settlement imposes several restrictions on Salari's future conduct.

He must resign as a director or officer of any issuer or registrant, other than an issuer owned by his family's trust.

He is also banned for seven years from becoming or acting as a director or officer of any issuer or registrant, becoming or acting as a registrant or promoter, acting in a management or consulting capacity in the financial markets, engaging in promotional activities on behalf of an issuer or himself, and relying on any exemptions in the Securities Act.