A trio of investment firm directors with links to Bearspaw have paid nearly $800,000 in fines after an investigation by the Alberta Securites Commission (ASC) revealed they had breached Alberta securities laws.
Siblings Jay Modi and Arti Modi, as well as Arti’s spouse Rajeev Jagdish Singh, were the directors of the now-defunct OmniArch Capital Group. The investment firm operated out of Calgary from 2010 to 2015, according to the ASC, "for the purpose of soliciting, accumulating and utilizing investment funds for indirect investment into downgraded and discounted Residential Mortgage Backed Securities (RMBS) in the United States."
RMBS, the ASC stated, are asset-backed bond securities that represent a claim on the cash flows from a pool of underlying residential mortgages.
OmniArch went into creditor protection with the Companies Creditors Arrangement Act (CCRA) in 2016. A land title sent to AirdrieTODAY shows the Modis and Singh own property in Watermark – a community in Bearspaw.
In a news post on its website May 13, the ASC stated that between 2010 and 2015, OmniArch raised about $127 million through nine offering memoranda, which were signed by the three directors. Each contained a certificate stating that “[t]his Offering Memorandum does not contain any misrepresentations.”
In the settlement agreement and undertaking, the directors admitted to breaching securities laws “by making statements that were misleading and not stating all of the required facts,” according to the ASC, while acknowledging these falsehoods would have a significant impact on the market price or values of their investments
“Investors were not told, for example, that OmniArch would make loans to related parties," read the ASC’s statement. “Investors were also misled as to the professional experience of Jay Modi and OmniArch's fund managers in handling investments."
"The investigation confirmed, and the Respondents admit, that they breached those sections of the Act referred to in this Settlement Agreement and Undertaking, and that they acted contrary to the public interest," a portion of the settlement agreement and undertaking stated.
As part of the settlement agreement, the three paid the ASC a total of $795,000 and are prohibited from trading in or purchasing securities, acting as a director or officer of an issuer and participating in other aspects of the securities industry. Jay Modi is prohibited for 20 years, Arti Modi for 10 years and Singh for three years.
“For Alberta’s capital market to function efficiently and to ensure investor protection, investors need to know that they can trust and rely on the information they are given,” said Cynthia Campbell, enforcement director for the ASC. “By overstating management’s financial knowledge and failing to adequately disclose how investor funds would be used, the respondents in this case did not paint an accurate picture for their investors, many of whom suffered significant losses.
“Accurate disclosure of how an issuer intends to use investment funds is among the most important information investors can and should be given.”
