CALGARY, AB / ACCESSWIRE / November 14, 2019 / The following is provided in order to make available to the public enough detail to fully understand the matters contained in the News Release of the Alberta Securities Commission (the “ASC“) dated November 12, 2019 and involving John Charles Zang (“John“). John asked the ASC that the contents of any News Release be agreed to by both the ASC and himself. As shown by the ASC News Release, the ASC refused or neglected to allow John to include his comments and information in the News Release. It is common in the securities industry where a News Release affects the interests of more than one party to have the parties file a joint News Release.
This News Release is being disseminated to show that the conduct of John was far less nefarious than that which is implied by the ASC News Release.
Readers are urged to refer to the Settlement Agreement found at https://www.albertasecurities.com/-/media/ASC-Documents-part-1/Notices-Decisions-Orders-Rulings/Enforcement/2019/11/ZANG-John-Charles-SAU-20191112-5476802.ashx
John settled with the ASC on November 12, 2019 facing a hearing before the ASC scheduled to proceed from November 12, 2019 and to conclude well into January 2020. John previously incurred a serious stress related Stroke which was related to the stress arising from the ASC proceedings. As John stated “the stress of proceeding with an ASC adversarial hearing for approximately two months was not something which, health wise, was in my best interest.”
As contained in the Settlement Agreement with the ASC, the conduct which was agreed to as being in breach of the Securities Act was (as described in more detail below):
- John loaning US$47,136 to Kilimanjaro Capital Ltd. (“Kilimanjaro“);
- Despite it being required by applicable United States regulations, John obtaining a legal opinion from a United States lawyer; and
- Failing to identify and adequately respond to suspicious circumstances surrounding Kilimanjaro.
John was not a director, officer, lawyer, nor part of management for Kilimanjaro. As well, as agreed to by the ASC in the Settlement Agreement, John did not direct any trades or sales of Kilimanjaro shares after the cease trade order. In addition, the ASC acknowledged that profits received by John were “nominal”.
As stated by John “in my experience when ones sees an announcement of market manipulation and breach cease trade orders, one anticipates actual intentional improper conduct. I do not believe that can be said in regard to me in this matter. The Settlement Agreement, in my opinion, supports this view.” John further stated that “I was disappointed to see the contents of the ASC News Release. I anticipated a fair recital of the settlement and, as required by securities laws, I hoped that the ASC News Release would contain all material information.”
It is unfortunate that the ASC in its News Release refer to John as breaching laws relating to a “market manipulation”. In fact, there was no admission by John of any involvement in the commonly understood concept of “market manipulation”. What was agreed to by John and the ASC was that John:
Breached section 93(a)(i) [of the Securities Act (Alberta)] by indirectly engaging in a course of conduct that he ought to have known may contribute to an artificial price for the shares of Kilimanjaro by:
Loaning funds to Kilimanjaro that he ought to have known would be used by [name deleted] and/or Kilimanjaro to finance the Promotional Campaign.
(Settlement Agreement, paragraph 35.2) [Emphasis added]
In the Settlement Agreement, the ASC agrees that other than the loans John “played no role in the Promotional Campaign and [ASC] Staff’s investigation did not uncover any evidence that Zang was aware of the contents of promotional material that formed part of the Promotional Campaign” (Settlement Agreement, paragraph 38).
As stated above, John was not a director, officer, lawyer, nor part of management of Kilimanjaro at any material time. John indicates:
I was merely attempting to get a transaction completed with Kilimanjaro by which my oil and gas company could dispose of a significant negative cash flow asset which Kilimanjaro agreed to acquire. This asset was losing over $750,000 a year. I personally loaned just under US$50,000 to Kilimanjaro to assist it to be able to complete the transaction. I did not follow Kilimanjaro’s stock price nor did I follow the public disclosure of Kilimanjaro. I had no means or authority to stop Kilimanjaro from conducting its business as it wished. My goal was not related to Kilimanjaro whatsoever, my goal was to rid my company of a negative cash flow asset. I was simply trying to assist Kilimanjaro through my loans such that it would be able to complete its purchase of the bad asset.
John acknowledges that he did own shares in Kilimanjaro but his returns from those shareholdings were nominal (Settlement Agreement, paragraph 34).
In addition, to provide more detail as to the statement of the ASC that John breached the cease trade order issued by the ASC, as detailed below John did not, in fact, provide any instructions to sell Kilimanjaro shares after the cease trade order (Settlement Agreement, paragraph 36). The conduct agreed to in the Settlement Agreement giving rise to the aforesaid breach was simply as follows:
[John] obtaining a legal opinion from a United States attorney which enabled Kilimanjaro shares to be deposited with [a brokerage firm] and sold in the United States. (Settlement Agreement, paragraph 35.1).
For clarity, it should be understood that John did not, in fact, direct any trade or sale of Kilimanjaro shares in Alberta after the cease trade order. Rather, as indicated by the Settlement Agreement, John simply obtained a “legal opinion from a United States attorney”. John advises “it is common in the United States for a legal opinion to be provided in order for shares to be deposited with a brokerage firm. I proceeded to obtain that legal opinion in the US as was required by the laws of the US.” In fact, in this case it is acknowledged by the ASC in the Settlement Agreement (paragraph 28), the legal opinion was required pursuant to a United States legal requirement. It should be noted that there was no cease trade order in effect in the United States at that time.
The last admitted breach of John was his acting contrary to the public interest by “failing to identify and adequately respond to suspicious circumstances surrounding the management, business operations, and promotional activities of Kilimanjaro” (Settlement Agreement, paragraph 35.3).
In regard to this matter, as stated by John “my involvement in Kilimanjaro was simply to find a way to dispose of a crippling asset owned by my oil and gas company. I was not looking for any material gain from Kilimanjaro and, in fact, I did not obtain any material gain.” John goes on further to state “as is acknowledged by the ASC in the Settlement Agreement at paragraph 37, I was not a director, officer, nor was I part of management of Kilimanjaro. I had no legal means to govern the conduct of Kilimanjaro. I was, however, a director and officer of my company, I believe strongly in my duty to my shareholders. My efforts were to find a solution for my shareholders and were not intended to breach the Securities Act“. John recognizes the goal of the ASC to protect the public interest, but he also believes strongly in acting in the interests of his shareholders.
In addition, the ASC News Release requires clarity for those doing transactions with John. The ASC News Release seems to indicate that John may not trade or purchase securities subject only to very limited exceptions. In order to provide clarity, pursuant to the Settlement Agreement (paragraph 41.2) John is permitted to trade or purchase securities:
- in his self-directed RRSP;
- for his sole benefit, provided that any brokerage company used to facilitate such trades or purchases is provided a copy of the Settlement Agreement.
In addition, John is permitted to continue to act as a director or officer of Nextraction Energy Corp. (a public company) for a period of time. John also is permitted to act as a director or officer of “private companies”.
John also believes it is material to note that as part of the Settlement Agreement, the ASC required John to:
- withdraw his complaint against the ASC to the Alberta Privacy Commissioner;
- discontinue all motions and appeals or proceedings in any court; and
- withdraw any applications he has made to the ASC panel.
John advises that it was very difficult for him to agree to discontinue his appeals to the Alberta Court of Appeal and to withdraw his complaint against the ASC for the release of his medical information which may have been contrary to the Freedom of Information and Protection of Privacy Act (Alberta). John stated that:
My privacy is very important to me, especially when it relates to my medical information. There is no question that the ASC distributed my medical information to others (including in the United States). The only question is whether it was proper for the ASC to do so. As far as the appeals were concerned, I believe the provisions in the Securities Act requiring confidentiality are over broad and I believe they are, as was found by the BC Court of Appeal in regard to a similar provision in British Columbia, contrary to the Charter. I acknowledge that the Alberta Court of Queen’s Bench has indicated otherwise. I believe this is a matter that should be determined by the Alberta Court of Appeal and perhaps the Supreme Court of Canada. This provision seriously affects people’s right to speech.”
In addition, the appeal before the Alberta Court of Appeal related to the delay in having the Kilimanjaro matter set for hearing. The ASC investigation commenced in the spring of 2014. A Notice of Hearing was not delivered to John until the fall of 2017 and the hearing did not commence until the fall of 2018 (and it was subsequently adjourned to the fall of 2019). John stated that “the stress and physical effects of an ASC matter is very material. The stroke I suffered is evidence of this. I urge the ASC and/or the government of Alberta to find a means to move the ASC matters forward more quickly.”
It is hoped that the foregoing material information (which was not contained in the ASC News Release but is contained in the Settlement Agreement) will provide the public with the ability to discern the limited involvement of John in the Kilimanjaro matters.
As stated above, you are urged to review the Settlement Agreement yourself to understand the facts of this matter. If there is any inaccuracy contained in this News Release, you should rely on the Settlement Agreement which is incorporated herein by reference.
News Release Issued on behalf of Snow Peak Resources Ltd. for further information you can contact John Zang at firstname.lastname@example.org.
SOURCE: John Zang
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