The Ontario Securities Commission announced a settlement with Agoracom Investor Relations Corp. resulting in a $150,000 fine and sanctions against two company officials, including a ban on investing in, or trading stock of, any of Agoracom's clients.
Friday's settlement came after the OSC levelled a revised statement of allegations this week against Agoracom, its vice-president of operations Apostolis (Paul) Kondakos and company founder George Tsiolis.
The case arose last April, when the OSC alleged that much of the chatter on Agoracom's popular online penny-stock discussion forum was the work of its own employees using more than 670 fake names to talk about companies' shares. Some employees were required to post at least two anonymous messages a day and were told their pay would be docked if they did not meet this target.
It was later revealed that Mr. Kondakos monitored the site's "private messaging" service and intercepted messages between users "for the purpose of gathering information about reporting issuers and issuers in which he was personally invested."
"In my opinion the sanctions are appropriate … to the conduct at issue," OSC Commissioner Carol Perry said when approving the settlement.
The sanctions also require the company to post a link to the settlement on its website for six months so that the public is aware of the case before doing any business with the company.
In reaching the settlement agreement, the OSC said it took Mr. Kondakos's and Mr. Tsiolis's "dire" financial situation into account. Litigator Tamara Center said "staff is of the view that a total of $150,000 in monetary payments is significant and reflective of the severity of [the officials']conduct."
The two men started acting against the public's interest in September, 2006. In March, 2009, it was revealed that some of the postings on Agoracom's forum were fake, and management posted a notice acknowledging the issue and promising it would not continue. The OSC found that the fake postings continued until July, 2009.
Earlier this week, the company's former chief financial officer was sentenced to two years in prison for writing himself unauthorized cheques from Agoracom accounts, totalling approximately $160,000.
Mr. Kondakos and Mr. Tsiolis were found to have no connection to those actions, but they had to hire legal counsel because they were defrauded, and the cost of doing so was factored into their settlement with the OSC.
Ms. Perry said the two men accepted the severity of the charges against them and noted they took the case seriously, showing up at all hearings.
With files from Janet McFarland
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