Complaints, Lawyer Discipline and Public Hearings

 

Citation Authorized:  June 7, 2018

Yvonne Hsu

Citations are authorized by the Law Society of BC's Discipline Committee and list allegations against a lawyer that will be considered at a discipline hearing. Please note that allegations in a citation are unproven until a discipline hearing panel has determined their validity.

Nature of conduct to be inquired into:

1.  Between approximately May 2009 and February 2014, in the course of acting for one or both of PO and C Services Inc. in a finance and securities matter, you did not perform all legal services to the standard of a competent lawyer, contrary to one or more of Chapter 3, Rules 1, 2 and 3 of the Professional Conduct Handbook in force until December 31, 2012 and thereafter contrary to one or more of rules 3.1-2 and 3.2-1 of the Code of Professional Conduct for British Columbia, and in particular you failed to do one or more of the following:

(a)  acquire and apply relevant knowledge or skills of securities law and regulatory requirements (collectively, the “Regulatory Requirements”) and the practices and procedures by which the Regulatory Requirements can be effectively applied;

(b)  make reasonable inquiries to obtain information regarding exemptions to the Regulatory Requirements which information was necessary to provide legal services to your clients;

(c)  make reasonable inquiries of your clients to obtain sufficient information to prepare documents to be used in raising funds and issuing securities in compliance with the Regulatory Requirements;

(d)  keep your clients reasonably informed about their obligations to comply with the Regulatory Requirements and how to do so; and

(e)  prepare documents competently or in compliance with the Regulatory Requirements.

This conduct constitutes professional misconduct pursuant to s. 38(4) of the Legal Profession Act.

2.  Between approximately May 2009 and February 2014, in the course of acting for one or both of PO and C Services Inc. in a finance and securities matter, you engaged in activities that you ought to have known assisted in or encouraged dishonesty or fraud, contrary to Chapter 4, Rule 6 of the Professional Conduct Handbook in force until December 31, 2012 and thereafter contrary to rule 3.2-7 of the Code of Professional Conduct for British Columbia, and in particular you did one or more of the following:

(a)  made changes to disclosure documents used to solicit funds from investors (the “Disclosure Documents”) requested by your client PO, including the removal of information regarding commissions payable to PO;

(b)  prepared investment documentation for your client C Services Inc. in which:

(i)  investors seeking to invest in C Corp. would not acquire C Corp. shares directly, but would receive shares of [numbered company] Ltd. as security for their interests in C Corp. shares, whichC Corp. shares were to be held in trust for the investors by C Services Inc., when the shares of [numbered company] Ltd. had no value; and

(ii)  investors seeking to invest in CR Corp. would not acquire CR Corp. shares directly, but would receive shares of [numbered company] Ltd. as security for their interests in CR Corp. shares, which CR Corp. shares were to be held in trust for the investors by C Services Inc., when the shares of [numbered company] Ltd. had no value;

(c)  allowed trust accounts at the law firm through which you provided legal services to be used to receive and disburse investor funds;

(d)  failed to make any or reasonable inquiries with respect to one or more of the following:

(i)  whether your clients were registered to sell securities;

(ii)  the companies to receive investor funds, C Corp. and CR Corp., including the directors, officers and share structures of those companies;

(iii)  significant differences among versions of Disclosure Documents given to investors;

(iv)  whether C Services Inc. owned the shares that it purported to sell to investors;

(v)  whether the shares issued to investors as security for their investments were validly issued;

(vi)  the rates and forms of returns described to investors;

(vii)  the levels of investment risk described to investors; and

(viii)  whether investor funds were paid to C Corp. or CR Corp., the entities for which the funds were purportedly raised.

This conduct constitutes professional misconduct pursuant to s. 38(4) of the Legal Profession Act.