SEC says jurors' hockey allegiance not relevant
2014-11-12 12:53 ET - Street Wire
Also Street Wire (U-*SEC) U S Securities and Exchange Commission
Also Street Wire (U-SPPH) Spencer Pharmaceutical Inc
by Mike Caswell
With one week before the trial of Montreal's Jean-Francois Amyot begins in Boston, lawyers for the U.S. Securities and Exchange Commission have asked the judge to prevent Mr. Amyot from turning the jury selection process into a "fruitless side-show." They say Mr. Amyot, 40, has proposed several unsuitable questions for prospective jurors. Among them are a query about the lively Boston-Montreal hockey rivalry and a blunt question about any bias toward French Canadians.
The SEC says that Mr. Amyot, who is representing himself at the trial, is going beyond proper attempts at uncovering any biases a juror could have. While there is nothing wrong with inquiring about regional or ethnic issues, Mr. Amyot's question list will produce a time-consuming exercise that will achieve no results, according to the SEC. Among his questions are one in which he proposes asking the juror if he is a hockey fan and, in particular, a Boston Bruins fan. If so, Mr. Amyot proposes asking if the hockey rivalry between the Bruins and the Montreal Canadiens would influence the juror. The SEC says the question is pointless, as the trial has nothing to do with hockey. Delving into the strength of a juror's allegiance to the Boston Bruins is simply a "time-consuming, and ultimately fruitless, side-show."
The jury selection process is part of a case in which the SEC accuses Mr. Amyot of running a $5.8-million pump-and-dump. (All figures are in U.S. dollars.) The regulator claims that he and others were behind a 10-month manipulation of a pink sheets company called Spencer Pharmaceuticals Inc. in 2010. The scheme included a bogus $245-million takeover offer for the company from an overseas buyer, the SEC says. The regulator claims that Mr. Amyot dumped millions of unregistered shares during the promotion.
As part of the trial preparation, the SEC filed a brief on Monday, Nov. 10, that mostly dealt with housekeeping issues such as documents the lawyers will use at trial. Part of the brief, however, contained an objection to nine of the 13 questions that Mr. Amyot has proposed asking prospective jurors as part of the jury screening process. According to the SEC, the questions are mostly a misguided attempt to solicit possible biases.
For example, one question states that Mr. Amyot is a French Canadian, and asks if the juror is biased against such a person. The SEC says it is not opposed to uncovering possible prejudices, but there is a very slim likelihood that a prospective juror would openly admit to such a bias in an open courtroom. As the SEC sees it, there are more artful ways to ask this, which it proposes to do by asking about a juror's familiarity with the French language and about religious and philosophical beliefs.
Other questions by Mr. Amyot are similarly irrelevant, according to the SEC. In one, he says that he lived in the Bahamas, a known tax haven, for about 18 months, and asks the juror if he has any bias against living in the Caribbean or not paying taxes. The SEC says questions in open court surrounding a juror's biases toward the Caribbean or tax-free havens are just as unlikely to elicit any useful answers as the question about biases toward French-Canadians. Moreover, Mr. Amyot is not on trial for violating U.S. tax laws, the SEC points outs.
The SEC plans to address the questions and any other late-arising issues at a final pretrial conference before the judge on Wednesday, Nov. 12. The trial is set to begin on Monday, Nov. 17.
The Spencer pump-and-dump charges
The allegations against Mr. Amyot are contained in a civil complaint the SEC filed against him and others on Dec. 17, 2012, in the District of Massachusetts. In addition to Mr. Amyot, the complaint named as defendants Maximillien Arella, 46, of Montreal, and Ian Morrice, 52, of Ottawa. Mr. Arella was Spencer's president and Mr. Morrice was its corporate secretary.
Most of the complaint cited the men for a $245-million takeover offer that Spencer claimed to have received in November, 2010. That month, Spencer announced that it had received an offer at 97 cents per share from a Kuwaiti company headed by "His Excellency Dr. Bandar Al-Dhafiri." The takeover, however, was pure fiction, the SEC said. As the regulator saw it, there was no evidence Dr. Al-Dhafiri was a real person and it was not plausible that anybody would have paid $245-million for Spencer. The company did not own any legitimate drug delivery technology, according to the complaint.
During the scheme, companies that Mr. Amyot controlled sold millions of unregistered shares, for gains totalling $5.8-million, according to the SEC. The complaint sought appropriate civil penalties, disgorgement of ill-gotten gains, and orders permanently barring all three men from penny stocks and from serving as an officer or director of a public company. In filing the case, the SEC acknowledged the assistance of Quebec's securities commission (which has since filed separate charges against Mr. Amyot and others).
For his part, Mr. Amyot contends that he did nothing wrong. In a July 30, 2014, memorandum he said that as far as he knew the takeover offer for Spencer was genuine. He also denied that he sold any stock during the scheme, and said that others received the profits the SEC complained of.
Mr. Arella and Mr. Morrice settled the case without a trial, each agreeing to five-year bans and to pay $50,000. The pair did not admit any wrongdoing in settling.
Spencer, which went to 60 cents during the scheme, has since rolled back 1:25 and last traded at 0.01 cent.
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