Advisor Reprimanded, Issued $1.05 Million Penalty

The Nova Scotia Securities Commission approved a settlement with John Alexander Allen today, June 29, who admitted to violating the Securities Act and engaging in unfair practices.

Mr. Allen was registered with the commission from January 1993 to September 2007, and was registered as a mutual fund salesperson with Keybase Financial Group from March 23 to Sept. 4, 2007.

During this time, Mr. Allen encouraged and advised clients to use significant loans to fund their investment strategies. He forged client loan applications by inflating clients' net worth and fabricated information about clients' employment. Mr. Allen also forged clients' new account opening forms by exaggerating the extent of their investment knowledge. The clients were not provided copies of any of this documentation.

Mr. Allen engaged in unfair practices, violating section 44A(2) of the act. He failed to deal fairly, honestly and in good faith with his clients, failed to maintain books and records to properly record clients' transactions and financial affairs, and failed to record the information required to determine clients' general needs and objectives and the suitability of investments violating sections 30(1), 31(4) and 61 of the Securities Regulations.

Under the order and settlement agreement, Mr. Allen will pay an administrative penalty of $1.05 million to the commission. He will also pay $7,000 in investigation and proceedings costs. Mr. Allen will also be reprimanded and permanently prohibited from becoming a registrant, investment fund manager or promoter, or from acting as a director or officer of any issuer. He will be ineligible for any exemptions under Nova Scotia securities laws.

The Nova Scotia Securities Commission is the provincial government agency responsible for regulating trading in securities in the province. To view the order and settlement agreement, visit www.gov.ns.ca/nssc/compliancenforce/enforproceedings.asp .