Canadian Regulators Fine, Bar Norshield Pair

Aug 11 2010 | 11:29am ET

The two top executives of collapsed Canadian hedge fund Norshield Asset Management have been fined more than C$2 million each and permanently barred from the securities industry.

John Xanthoudakis, the owner and CEO of the hedge fund, which went under five years ago, and Dale Smith, its president, “failed to deal fairly, honestly and in good faith with investors,” the Ontario Securities Commission ruled in March. This week, the regulator slapped the two with a pair of C$1 million fines each, for the aforementioned failure and for failing to maintain proper books and records. The two were also fined C$125,000 each for misleading OSC staff, and are jointly responsible for C$295,000 in costs associated with the OSC probe.

A third Norshield executive, Peter Kefalas, was barred from registering with the OSC for two years, but was not fined.

Investors lost some C$159 million when Norshield collapsed. According to the OSC, the hedge fund promised to invest its assets in U.S. hedge funds, but actually invested in offshore funds.

“The task of surfacing value has been complicated by missing or incomplete records, multiple jurisdictions, competing claims and intercorporate transfers,” the OSC said.


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