Regulator too easy-going on speculators?

Two Calgary land speculators have received a slap on the wrist from the province’s regulator despite raising nearly $30 million by selling securities outside the law

Calgary land speculators Mariano Giuseppe Serpico and Kevin Gary Allan agreed to a settlement with the Alberta Securities Commission last week that will see the two men pay a total of $110,000 in fines and costs to the securities regulator.

Their breach involved selling undivided interests of land to potential investors without the use of either a preliminary or final prospectus. However, Serpico and Allan got off relatively lightly because of their cooperation with the ASC, including accepting responsibility for their wrongdoings.

“The Respondents state that while recognizing and accepting responsibility for the Admitted Contraventions, at no time were the Respondents deliberately or intentionally intending to contravene Alberta securities laws,” stated the ASC settlement agreement.
“Rather, the Respondents were attempting to operate within the parameters of Alberta securities laws, and believed that their actions were in accordance with Alberta securities laws.”

The duo’s business model revolved around finding undeveloped land on the outskirts of Southern Alberta towns. They would then buy the land through La Terra Ventures Inc., financing those purchases through the sale of undivided interests of land. By providing “proactive planning” to speed up the development of those lands, ultimately they hoped to turnaround and sell the land for a profit. It’s not known whether any of the investors made money on the sale of land by the duo.

Serpico and Allan raised $28.4 million from investors between 2008 and 2012 using this model. At no time did they believe that they were contravening Alberta securities laws but the ASC didn’t see it that way.

“La Terra’s sale of UDIs constituted trades in investment contracts, a form of security under the Act,” stated the ASC settlement agreement. “UDI purchasers invested in a common enterprise with the goal of making a profit.”

Two other La Terra directors are expected to appear in September on charges they also participated in the violation of Alberta securities laws.