OSC Panel Finds Crown Hill Capital Corporation and Wayne Lawrence Pushka Breached Fiduciary Duty

TORONTO, Aug. 26, 2013 /CNW/ - In a decision released today, an Ontario Securities Commission (OSC) panel found that Crown Hill Capital Corporation (CHCC) and Wayne Lawrence Pushka (Pushka) breached their fiduciary duty as set out in the Ontario Securities Act, in connection with several transactions.

In its decision, the Panel held that CHCC, as investment fund manager, and Pushka, as the directing mind and sole shareholder of CHCC, committed multiple breaches of their fiduciary duty to Crown Hill Fund (CHF) and its predecessor funds under ss. 116(a) of the Securities Act, and that they acted contrary to the public interest.

The Panel found that CHCC acted in bad faith and contrary to the best interests of predecessor funds of CHF in making amendments to one fund's declaration of trust and in making changes to the rights of the unitholders of another fund by means of a merger, so as to increase CHCC's powers and the management fees payable to it.

The Panel also found that CHCC acted in bad faith and contrary to the best interests of CHF in two transactions, which used the assets of CHF to substantially benefit CHCC, and ultimately Pushka, through increased management fees.  In the first transaction, CHCC caused CHF to make a loan of 10 per cent of its assets so CHCC could acquire another fund's management rights and failed to address the conflicts of interest involved.  In the second transaction, CHCC caused CHF to use more than 60 per cent of its assets to acquire indirectly management rights to the Citadel Funds.  The Panel found that the acquisition breached CHF's investment strategy and created substantial risks for CHF while benefits to its unitholders were "marginal".

The Panel found that Pushka "orchestrated" the various events and transactions and "manipulated them to obtain his intended outcomes...."  The Panel found that Pushka "misled" the independent directors of CHCC's Board of Directors and the members of the Independent Review Committee at times and, in any event, failed to make full disclosure to them.  Overall, the panel found that Pushka's conduct was "appalling for a person in a fiduciary relationship with CHF (and its predecessors)."

The Respondents are to contact the Secretary's Office of the Commission within 30 days of the Decision to schedule a date for a hearing with respect to sanctions and costs.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets. Cease trade orders prohibit individuals or companies from trading in securities. Investors are urged to check the registration of any person or company offering an investment opportunity and to review the OSC investor materials available at www.osc.gov.on.ca.

SOURCE: Ontario Securities Commission