Decision in brief: Mughal Asset Management Corporation, Enforcement Proceeding, Merits, November 1, 2023
In this enforcement proceeding, OSC staff says Usman Asif and his two companies, Mughal Asset Management Corporation and Lendle Corporation, committed securities fraud. Asif raised $3 million from investors. He told them that Mughal was an investment firm and that Asif would invest their money. Instead, he never invested any of their money. He used Mughal, and later Lendle, to operate a scheme where money from new investors was used to pay earlier investors so it would seem like their money was invested. He also used their money to fund his lifestyle and personal expenses.
OSC staff also says that Asif lied to the OSC investigators, did not provide documents he was supposed to provide, shared confidential OSC documents, told a witness what they should say to OSC staff, and told another witness to ignore OSC staff.
During the merits hearing, Asif and his two companies admitted most of what OSC staff says Asif did, with a few exceptions. One of the exceptions was how much money was paid back to Mughal investors. Asif asked for more time to find bank records that might show that more money was repaid than what staff said was repaid. The Tribunal made another decision, explaining why he was not allowed more time.
Before the hearing was finished, one of the three adjudicators removed themselves from the panel after they accidentally reviewed the transcript of a confidential conference where the parties tried to reach agreement on the facts to be presented at the merits hearing. As a result, the panel that made this decision is made up of only two adjudicators.
The Tribunal decided that Asif and his two companies committed fraud. The Tribunal also found that Asif lied to OSC staff during their investigation, shared confidential OSC information, and interfered with the OSC’s investigation.
As a result of this decision, the Tribunal will hold a hearing to decide what sanctions and costs should be ordered against Asif, Mughal and Lendle because of their conduct.