The Ontario Securities Commission (OSC) in Canada has approved a settlement agreement with Alex Tapscott and NextBlock Global Limited (NextBlock) in connection with misleading statements they made in offering memoranda provided to prospective investors in 2017.
“We will not tolerate market participants who play fast and loose with the facts when providing offering memoranda to prospective investors, including marketing decks,” said Jeff Kehoe, Director of Enforcement at the OSC. “This dishonest behaviour robs investors of the opportunity to make informed investment decisions and undermines confidence in our markets.”
As a part of the settlement, NextBlock has agreed to pay an administrative penalty of CAD $700,000 plus $100,000 toward the costs of OSC Staff's investigation. Additionally, Tapscott will pay an administrative penalty of $300,000.
“This settlement reinforces an important message: We will take action to address misleading disclosure and the serious harm it causes to Ontario investors and our markets, even if investors suffer no financial losses,” added Mr. Kehoe.
In settling this matter, Tapscott and NextBlock (the respondents) admit they made misleading statements in slide decks provided to more than 100 prospective investors in a private placement that raised approximately $20 million from 113 accredited investors over a two-month period in June and July 2017. The slide decks were the only materials provided to investors and positioned prominent blockchain figures as NextBlock's advisors when, in fact, these individuals had not agreed to act as its advisors and had not consented to be included in the slide decks. Of note, one individual had never been approached by Tapscott to act for NextBlock in any capacity.
Tapscott has also agreed to perform community service by delivering ethics presentations to students at Canadian business schools, which will highlight the importance of complying with Ontario securities law. Additionally, Tapscott offered to publish an open letter about the impact and consequences of his misconduct in a national news publication. OSC Staff accepted this offer and included it as a term of the settlement. Together with a significant monetary sanction, these terms serve to deter other market participants from engaging in similar misconduct.
The OSC said they appreciated the assistance of the U.S. Securities and Exchange Commission in the investigation of this matter.
Also published on Medium.