2 men banned for life from selling securities in B.C. after watchdog rules companies misled investors

A group of companies in B.C., Alberta and Ontario have been ordered to pay a total of $32.8 million for making misrepresentations to hundreds of investors, illegally selling securities and unregistered trading.

A British Columbia Securities Commission panel ordered the founders of FS Financial Strategies — Aik Guan "Frankie" Lim and Scott Thomas Low — to pay $2 million each, and forever banned them from B.C.'s investment markets, according to a statement issued by the BCSC Wednesday.

In addition, the companies' former general manager, Darrell Wayne Wiebe, was order to pay $75,000 and banned him from B.C.'s investment markets for at least 10 years.

The statement also said Lim, Low and Wiebe ran the company FS Financial Strategies and six other companies, a group referred to as the FS Group, which was mainly in the insurance business.

The FS Group started with a single office in Vancouver that was modelled as a café, and eventually opened nine offices across the Lower Mainland, two in Alberta and one in Ontario, and employed 114 employees.

FS Strategies Services sold securities in the form of subscription agreements, promising an annual return of eight per cent.

Other companies in the FS Group persuaded investors to buy securities in the form of unsecured loan agreements, with promises of annual interest up to 12 per cent, payable monthly.

The statement also said Lim, Low and the FS Group admitted to raising over $47 million from 389 investors between 2012 and 2017 without disclosing that the FS Group was not profitable.

Investors "unlikely" to get money back

"The seriousness of the misconduct was magnified by the significant amount of money and large number of investors involved, and the duration of the misconduct," the BCSC panel said.

The panel said the group was not earning enough money to cover its expenses and to pay investors their promised return. It was covering the shortfall by raising more money from investors and it is unlikely the FS Group can repay investors.

A temporary order was issued against the FS Group in 2017, after which the Insurance Council of British Columbia either suspended or terminated the licenses of Lim, Low, Wiebe and each FS company that was licensed to sell insurance.

The statement said Lim and Low have admitted the loss of the licenses "effectively closed" the FS Group.

"Investors were harmed when they invested in FS Group without knowing facts that they ought to have in order to make informed investment decisions," said the BCSC panel.

Lim, Low and the FS Group admitted to the misconduct in a 2019 Agreed Statement of Facts.

According to the BCSC, Wiebe admitted to "acquiescing" in the FS Group's misconduct in a separate agreement.  

In February this year, the panel ordered the FS Group to pay a total of $32.8 million in disgorgement — the return of a wrongfully made gain — representing the amount they obtained from investors, minus the amount that has already been repaid.

The $2 million each against Lim and Low, and $75,000 against Wiebe, are administrative penalties.