Two 小蓝视频 stock promoters have been fined $200,000 each and banned from working in securities for failing to properly disclose information, concealing financial losses and making false and misleading statements during their time with now-dissolved mineral exploration company Arian Resources Corp.
The 小蓝视频 Securities Commission announced the penalties Feb. 22 against Zahir “Zip” Dhanani and Robert Naso, who were both former company officers between 2014 and 2017. An independent commission panel determined the company failed to make proper disclosures and made false statements about executive compensation contrary to the 小蓝视频 Securities Act.
Key findings include how Arian did not disclose risks and challenges related to an agreement it made to buy shares in an Albanian company that held rights to a copper mine. Compounding matters, the company lost $800,000 when it paid a promoter for work Dhanani, then CEO, knew would not be provided. This left the company with inadequate funds to invest in the Albanian copper mine.
“Arian mischaracterized most of the Promoter Loss as payments for other services, which was patently false,” alleged the commission’s executive director Peter Brady.
The company also failed to disclose a $285,715 “related party” payment to Dhanani’s 76-year-old mother in April 2014.
The panel found the case “at the high end of the range of seriousness of misconduct relating to the failure to make required disclosure.”
In its ruling, the panel characterized the losses and lack of disclosure as a “disaster” for the company that would have been apparent to Dhanani and Naso, however, “the key information was kept from the investing public until the total impairment of Arian’s only material asset was eventually disclosed.”
Dhanani and Naso have no history of securities misconduct, the panel noted. Brady did not submit evidence of personal enrichment by the pair and there were no mitigating factors, according to the panel’s decision following an October 2020 hearing.
While not citing any specific harm to investors, the panel wrote “false or misleading disclosure misleads investors regarding the facts relevant to their investment decisions, and may distort the fair trading price of an issuer’s securities and undermine investor confidence in the integrity of the capital markets.”
The panel — consisting of Gordon Johnson, George C. Glover Jr. and Marion Shaw — found the case similar to that of Mountainstar Gold Inc. CEO Brent Johnson, who was fined $150,000 for providing false and misleading information.
The “deliberate or negligent manner in which the Dhanani and Naso dealt with Arian’s disclosure” was enough for the panel to deem the pair “unfit to be directors and officers of issuers or to otherwise participate in the public markets,” the panel ruled.
As such, Dhanani and Naso were specifically banned from becoming directors or officers of any share issuing company and from relying on exemptions from the Securities Act; from acting as a registrant or promoter; and from advising or consulting in the securities and derivatives market. They are allowed to buy and sell stocks for personal purposes, the panel ruled.
