Decision in brief: First Global Data Ltd, Enforcement Proceeding, Sanctions and Costs, June 22, 2023
In an earlier decision, the Tribunal decided that First Global Data, Global Bioenergy Resources Inc., Nayeem Alli, Maurice Aziz, Harish Bajaj and Andre Itwaru violated Ontario securities law. In more than 100 separate transactions during an eight-month period in 2015, 80 investors invested about $4.46 million in First Global, an Ontario public company. Alli and Itwaru were the executives in charge of First Global. The fundraising was carried on by Global Bioenergy Resources Inc., a private Ontario company, and Aziz and Bajaj, who were the executives in charge of the company. One investor loaned an additional $450,000 to Global Bioenergy Resources directly. The investors lost all their money.
In the earlier decision, the Tribunal decided that Global Bioenergy Resources and its executives had defrauded investors by making false promises about how the money would be used for natural resource projects in Colombia. The Tribunal also decided that First Global and its executives did not follow the rules about members of the public investing in securities.
The Tribunal focused on three separate sets of transactions in making its decision: the $4.46 million invested in securities of First Global, the additional $450,000 loaned to Global Bioenergy Resources, and financial statements that First Global issued, in which First Global overstated its revenue by more than $12 million. Some of the respondents were more involved than others in the different kinds of misconduct.
In this decision, the Tribunal decided what sanctions and costs should be ordered against the respondents because of their misconduct. Generally speaking, the fraud committed by Global Bioenergy Resources, Aziz and Bajaj was more serious than the misconduct of First Global Data, Alli and Itwaru.
The Tribunal decided that the respondents must disgorge (give up to the Commission) the $4.46 million that was invested in First Global as follows: Global Bioenergy Resources, Bajaj and Aziz are jointly responsible for $2.95 million; and First Global Data, Alli and Itwaru are jointly responsible for $1.51 million, which is the amount that First Global kept from the fundraising. Staff of the Commission asked the Tribunal to decide that all of the respondents should have to jointly give up the total amount of money raised because they all played a part in the money raising, but the Tribunal distinguished between the parties to account for money that First Global kept, and money that was provided to Global Bioenergy Resources. Global Bioenergy Resources and Aziz are responsible for disgorging the additional $450,000 that was loaned to Global Bioenergy Resources by one investor.
The Tribunal decided that each respondent should pay an administrative penalty. These penalties were adjusted to account for the seriousness of each individual’s misconduct and involvement in the different transactions, as well as any mitigating factors: Global Bioenergy Resources ($825,000), Bajaj ($750,000), Aziz ($725,000), First Global ($300,000), Itwaru ($300,000), and Alli ($275,000).
The Tribunal decided that the respondents should be restricted from participating in Ontario’s capital markets. This restriction is permanent for Global Bioenergy Resources, Bajaj and Aziz, mainly because they committed fraud. The restriction is time-limited for First Global, Itwaru and Alli. First Global is restricted from participating in Ontario’s capital markets for seven years. Itwaru and Alli are restricted for five years, except that they are not allowed to be directors or officers of any company for seven years. Alli and Itwaru are allowed to trade securities in registered accounts (like a Registered Retirement Savings Plan or Tax-Free Savings Account) after they pay the monetary amounts ordered against them.
Finally, the Tribunal dealt with costs. The Tribunal decided that First Global Data, Itwaru and Alli are jointly responsible for paying $523,088 in costs, Global Bioenergy Resources, Bajaj and Aziz are jointly responsible for paying $452,723, and Global Bioenergy Resources and Aziz are jointly responsible for paying an additional $104,474.