Statement of Allegations: In the Matter of Swift Trade Inc. and Peter Beck

Statement of Allegations

R.S.O. 1990, c. S.5, AS AMENDED

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A.     The Parties

1.     Swift Trade Securities Inc. (“STSI”) was incorporated in 1997 and began operating as an Investment Dealers Association (“IDA”) member in 1998 providing access to U.S. markets for investors to trade their own capital. In September, 2002 STSI registered an affiliated Ontario Limited Market Dealer called Biremis which remained inactive until March, 2003 when it was renamed Swift Trade Inc. (“Swift Trade”). In 2003, STSI changed its business model, began hiring proprietary traders to trade capital of its clients and transferred its operations from its IDA member dealership into Swift Trade.

2.     Swift Trade’s head office is located at 55 St. Clair West, Toronto, Ontario.

3.     Since 2003, Swift Trade has provided software and an electronic trading platform that links its clients’ traders through its affiliated U.S. dealer, Biremis Corp. with access to U.S. markets.

4.     Trieme Corporation (“Trieme”) was incorporated in Ontario on January 31, 2005 for the sole purpose of trading securities on its own behalf. Peter Beck (“Beck”) is the sole shareholder and beneficial owner of Trieme.

5.     Barka Co. Ltd. (“Barka”) was incorporated in Cyprus on January 22, 2004 for the sole purpose of trading securities on its own behalf. At the time of incorporation, Pavlos Aristodemou (“Aristodemou”) was the sole shareholder.

6.     Beck resides in Toronto, Ontario. Beck is co-founder and president of Swift Trade and he owns 70.5% of BRMS Holdings Inc., which owns 100% of Swift Trade. Beck has been registered with the Ontario Securities Commission (the “Commission”) since 1998. Since September 18, 2002, Beck has been registered as a director and trading officer of Swift Trade. From November 9, 2004 to August 22, 2006, Beck was designated as the compliance officer for Swift Trade.

B.     Background

7.     In 2006, Swift Trade had approximately 55 corporate accredited investor clients. All of the clients, except one, were incorporated internationally and operated in one of approximately 30 different international jurisdictions. Each client hired independent contractor traders (“Traders”) to trade the client’s capital using the Swift Trade software and electronic trading platform. The majority of Swift Trade’s clients each operated out of one international office, with the number of Traders in each office varying from one to over 30.

8.     All trades in U.S. markets for all Swift Trade clients are executed by Swift Trade head office through its affiliated U.S. dealer, Biremis, Corp.

9.     In total, there are approximately 2,000 Traders executing trades on behalf of Swift Trade clients worldwide. None of these Traders are registered with the Commission.

10.     In 2006, Barka employed approximately 1,100 Traders on its behalf, making it Swift Trade’s largest client. Barka operated approximately 50 international offices and 30 offices in Canada, of which 11 were in Ontario.

C.     Compliance Review

11.     Staff of the Registration and Compliance Section of the Capital Markets Branch of the Commission (“Compliance Staff”) conducted a compliance field review of Swift Trade in August, 2006 at Swift Trade’s head office. The purpose of the field review was to gain an understanding of Swift Trade’s operations, business model, clients and employees.

12.     During the course of the field review, Compliance Staff were advised several times that Barka was Swift Trade’s largest client, and as a result, Compliance Staff focussed a number of questions on Barka and its relationship to Swift Trade in an effort to understand Swift Trade’s operations and its relationship with its clients.

13.     As a result of concerns raised by the field review, Staff of the Commission (“Staff”) requested Beck and several Swift Trade officers to attend for examinations and to provide further information pursuant to section 31 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the “Act”).

D.     Examination of Peter Beck

14.     Beck attended at the offices of the Commission with legal counsel on December 11, 2006, and was examined under oath by Staff (the “Examination”). Prior to the commencement of the Examination, a five-page memorandum (the “Memorandum”) outlining the background, operations and trading practices of Swift Trade was provided to Staff by legal counsel for Beck.

15.     Due to the fact that Barka accounted for more than half of the Traders executing trades through Swift Trade, a significant portion of the Examination focused on Barka and its ownership.

16.     During the Examination, Beck advised Staff as follows:
  1. Swift Trade had only two clients operating offices in Canada, one is wholly- owned by Beck, Trieme, and the other was identified as Barka, a Cypriot company wholly-owned by Aristodemou;
  2. Barka became Swift Trade’s first client in 2004 under its proprietary trading business model. Aristodemou was a wealthy lawyer in Cyprus who was the sole beneficial owner of Barka;
  3. Aristodemou received the profits from Barka’s trading activity, and Swift Trade only received a commission for services.
17.     The “fact” that Aristodemou was the sole owner of Barka was restated in the Memorandum that indicated that Barka is 100% owned by a wealthy lawyer in Cyprus.

E.     Misrepresentations to Staff

18.     Throughout the Examination, Beck maintained that Aristodemou was the directing or controlling mind behind Barka, and that either Barka and/or Aristodemou received all profits from the trading activities. In other words, Barka and Swift Trade were in a traditional arms length client/dealer relationship. At no time, did Beck indicate that his wife or his father had any control over, or interest in the actions of Barka.

19.     Staff allege that Beck made statements regarding the beneficial ownership of Barka and by necessary implication, Swift Trade’s operations, that, in material respects, at the time and in light of the circumstances under which they were made, were misleading or untrue, and/or Beck failed to state facts that were required to be stated or that were necessary to make the statements not misleading.

20.     Staff allege that at no time during the examination did Beck ever mention his wife or father were the beneficial owner(s) of the shares of Barka.

21.     Staff allege that Aristodemou was merely a nominee shareholder acting upon the directions of others and was not the directing or controlling mind of Barka.

22.     Staff allege that Barka was never in a traditional arms length client/dealer relationship with Swift Trade.

23.     It appears that Beck made representations to Staff regarding Barka, Aristodemou and the nature of that relationship that, in a material respect, at the time and in light of the circumstances under which they were made, were misleading or untrue, and/or Beck failed to state facts that were required to be stated or that were necessary to make the statements not misleading.

F.     Conduct Contrary to Ontario Securities Law and Public Interest

24.     As a director, trading officer and registrant, Beck has a significant obligation to fully and truthfully respond to Staff inquiries on his own behalf and on behalf of Swift Trade, and has engaged in a course of conduct contrary to section 122 of the Act and the public interest.

25.     The Respondents’ conduct was contrary to Ontario securities law, and contrary to the public interest.

26.     Staff reserve the right to make such other allegations as Staff may advise and the Commission may permit.

DATED the 7th day of December, 2007