“Dean claims that his role in the fraudulent scheme was ‘relatively minor.’ He is wrong. He had an essential role in the market manipulation and, because of his actions, investors were harmed.” — B.C. Securities Commission
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B.C.’s stock market regulator has permanently banned Vancouver resident Faiyaz Ahmad Dean from the province’s investment markets following a U.S. court judgment against him in a $45-million stock fraud.
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While Dean has not faced securities charges for his activities here, a B.C. Securities Commission panel said it imposed the permanent ban March 29 against Dean under its authority to reciprocate orders by other securities regulators, self-regulatory organizations, exchanges and courts, in Canada and abroad.
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Dean, who agreed to stop practising law in B.C. several years ago, did not defend himself against charges brought by the U.S. Securities and Exchange Commission in 2018 for assisting a pump-and-dump stock fraud involving a company called Biozoom Inc. The SEC alleged the scheme generated illicit proceeds of US$34 million, about $45 million in Canadian currency.
In a pump and dump scheme, penny stocks are artificially inflated by those who have secretly bought a controlling interest in the stocks and then sold for profit at the expense of the unsuspecting investors. A penny stock is considered any stock less than $5.
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Because Dean did not defend himself, the United States District Court for the Southern District of New York entered a default judgment against Dean in November 2019 that barred him dealing in penny stocks and included a US$160,000 penalty.
U.S. court documents show the SEC accused Dean of playing an “essential” role in the financial fraud, including finding a shell company to purchase shares for the South American and American defendants involved in the scheme. The accusations also included Faiyaz taking steps to conceal the other defendants identities and acting as an intermediary to allow the financing of a promotion to pump up the price of the stocks.
The SEC says Dean received nearly US$120,000 from the scheme.
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Dean also faces criminal charges in the U.S. related to the same case.
In its decision in B.C., a securities commission panel noted that Dean’s misconduct was extremely serious.
“Dean claims that his role in the fraudulent scheme was ‘relatively minor.’ He is wrong. He had an essential role in the market manipulation and, because of his actions, investors were harmed.”
The panel noted that Dean did this while being licensed as a lawyer and sworn to uphold the law. Dean’s actions display contempt for securities regulations and he continues to be a serious risk to investors and British Columbia’s capital markets, added the panel.
The panel ruling bans Dean from trading in securities, being a director or officer of a company or acting as a promoter or advising companies.
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Dean is also facing disciplinary proceedings of the Law Society of B.C. for which a hearing has not yet been scheduled.
In June 2021, the society cited Dean for using or allowing the use of his firm’s trust account to receive or disburse US$1.1 million and $170,000 in Canadian currency from more than a half a dozen unnamed companies without providing any substantial legal services, making reasonable inquiries about the source of the funds and the purpose of the funds.
The citation also noted the U.S. court default judgment.
Dean, a Canadian citizen, is currently licensed to practice in Washington State, and is a non-practising lawyer in British Columbia.
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