The B.C. Securities Commission has fined two former Burnaby residents $28 million after determining the pair illegally raised funds for an online business they used to defraud clients.
According to a decision released Monday (July 6) by the BCSC, Yan (Rachel) Zhu and Guan Qiang (Victor) Zhang defrauded clients out of more than $14 million.
The pair had developed an ecommerce site, Bossteam, allowing local and international businesses to pay money to post links to their company websites as advertising.
What clients didn’t know is that most of the ads appearing on Bossteam were associated with Bossteam’s own accounts — not accounts associated with actual advertisers.
The BCSC also determined Zhu and Zhang sold shares in Bossteam despite not being licensed to do so.
“Their activities were at the most serious end of the range of misconduct under the (securities) Act, caused serious harm to investors and damaged the integrity of our capital markets,” the BCSC panel wrote in its decision.
The two have been ordered to repay the $14 million their clients lost in addition to a $14-million administrative fine, bringing total penalties to $28 million.
