Divisional Court Dismisses Appeal in the Matter of Patrick Fraser Kenyon Pierrepont Lett, Milehouse Investment Management Limited and Pierrepont Trading Inc.

Divisional Court Dismisses Appeal in the Matter of Patrick Fraser Kenyon Pierrepont Lett,
Milehouse Investment Management Limited and Pierrepont Trading Inc.

TORONTO – By reasons dated February 15, 2006 , the Ontario Divisional Court dismissed the appeal of the Ontario Securities Commission decision on the merits In the Matter of Patrick Fraser Kenyon Pierrepont Lett, Milehouse Investment Management Limited and Pierrepont Trading Inc. The Divisional Court decision related to the appeal by Lett, Milehouse and Pierrepont of a decision of the Commission dated March 18, 2004.

The Commission had found that Lett, Milehouse and Pierrepont (the Respondents) traded in securities without registration, contrary to section 25(1) of the Ontario Securities Act. The Commission found that the Respondents, none of whom were registered under the Act, offered a high yield program that had such characteristics sufficient to constitute an "investment contract" and, as such, a "security" as defined in the Act. The Commission also found that the Respondents' actions constituted acts in furtherance of a trade on the basis that the Respondents accepted $21 million from seven investors, attempted to forward the funds to purchase a bank guarantee or debenture in order to gain access to the high yield program and repeatedly provided proof of funds letters to third parties.

On May 7, 2004, the Commission ordered that Milehouse and Pierrepont cease trading in securities for 15 years, that Lett cease trading in securities for 10 years, that Lett resign from any positions he holds as director or officer of any reporting issuer or registrant and is prohibited from any such position for 15 years, that Lett be reprimanded and that Lett pay the costs of staff's investigation and hearing in the amount of $150,000.

The Respondents appealed the following two findings made by the Commission: 1) that the high yield program was a security and 2) that the activities of the Respondents were in furtherance of a trade. In dismissing the appeal, the Divisional Court noted that the "two crucial findings made by the Commission reasonably arose from the agreed upon facts. Accordingly the appeal must be dismissed."