Episode #7: Who Filed the Securities Complaint against CMT & Paul Maines?

My last three episodes were a tad tedious, and perhaps not riveting story-telling; but unfortunately, if you want to understand the riveting stuff when we get there, you’ll have to first understand exactly who Steven Dowling is, and why he is so important to the CMT lawsuit.

Judge Campbell’s flawed ruling dismissing the CMT/764’s lawsuit relies heavily on what Dowling swore in his 2013 Securities Commission Affidavit, and there are countless false sworn claims in that document that are proven false by other documents Campbell chose to ignore.

Steven Dowling was a lawyer working in the Department of Justice under Robert Ghiz during the 2010-12 timeframe when the e-gaming and financial transactions projects were open files. One of his assigned clients was the PEI Securities Commission.

In September, 2012, Dowling initiated a Securities Investigation with the PEI Securities Commission against CMT and Maines. What prompted him to do that? Let’s see what Judge Campbell says about it:

Para 20: In early September, 2012, Steven Dowling (Dowling), in his role as counsel for the Prince Edward Island Superintendent of Securities, was contacted by Edward Curran, a registered representative and branch manager of the Charlottetown office of ScotiaMcLeod regarding what Curran perceived to be suspicious trading activity being undertaken by Paul Maines (Maines), who was alleged to be illegally soliciting investment in Financial Markets Technologies (FMT).

Dowling formally initiated the Securities Investigation on September 18, 2012. The very next day, Gary Jessop, CMT’s lawyer in Toronto, emailed Tracey Cutcliffe about the allegations (Cutcliffe had left government by that time, and was working as a consultant for CMT), repeating in his email what he had heard. Campbell cited what Jessop said in that email in his ruling:

Para 416: Again on September 19, 2012, Jessop emailed Cutcliffe: “I have just arrived. I have just been briefed on a few issues regarding unfounded allegations. I will need to deal with this this afternoon. I am trying to meet with the branch manager at Scotia Mcleod – the source of the allegations.

Here Campbell attempts to “confirm” the conclusion he draws from what Dowling said in his 2013 Affidavit with words from CMT’s own lawyer, who is seemingly agreeing that Scotia McLeod was the “source of the allegations,” which Jessop declares are “unfounded”.

Elsewhere in his ruling Campbell reiterated that point, and then took it a step further by accusing the plaintiffs (CMT/764) of making unsupported allegations:

Para 524: When that statement and other statements like it were made, the plaintiffs had no evidence whatsoever to support the allegation. In fact, their own information identified Curran as the source. Yet, that did not stop them from making their unsupported allegations in the statement of claim.

The Truth?

Scotia McLeod never instigated a complaint against CMT and Paul Maines with the PEI Securities Commission, despite what Dowling said about his conversation with Edward Curran, and despite the conclusion Judge Campbell drew from Dowling’s unsupported claim – remember, Dowling filed NO SUPPORTING DOCUMENTS with the Motion to Dismiss, so all Campbell relied on was his sworn affidavit.

Dowling may have had a conversation with Edward Curran about Paul Maines and CMT, but securities investigations that can ruin international companies like CMT/Simplex are not initiated on hearsay, rumours or tips from a local “registered representative” at Scotia McLeod. Security Investigations are very serious matters that can easily result in significant harm to the party being investigated. Securities matters are highly regulated. A decision by Scotia McLeod to file a complaint would involve a thorough investigation of allegations by competent legal compliance experts and senior officials within the financial institution, usually in “head office” off-Island.

The truth may never have been discovered on this important point if it had not been for a series of emails between Mark Rodd – a CMT investor – and Scotia McLeod personnel that Rodd filed in January, 2013 as “exhibits” with his Securities Commission Affidavit.

Rodd was contacted by Dowling sometime after Dowling initiated the Securities Investigation on September 18, 2012, and learned from Dowling that Scotia MacLeod had “…released information with respect to my portfolio without my knowledge or consent” (Rodd Affidavit, para 1).

Rodd then wrote a formal complaint dated January 4, 2013 to his Registered Representative at Scotia McLeod, Yousef Hashmi. Four days later, Rodd received an email from John De Pompa, Director of Compliance with Scotia McLeod in Toronto, informing him that the request for his information came from the PEI Securities Commission and Scotia McLeod was obligated to provide the documentation.

Rodd received a final email from De Pompa on January 31, 2012 wherein De Pompa confirmed that the securities complaint against CMT/Maines had not been initiated by Scotia McLeod, information which Rodd provided in his affidavit:

De Pompa’s exact words in the email were: “As previously stated, a complaint was not initiated by our office as it related to the September 18, 2012 Order.”

Capital Markets Technology (CMT) was “recruited” to PEI to establish a financial transaction “hub”. Just days before finalizing a formal agreement – after a 60 day period of negotiations and work (the MOU period) which was then extended for another 30 days to allow for that work to be completed in anticipation of a signed agreement – that entire deal with the PEI government was torpedoed by a totally-groundless Securities Investigation initiated by Steven Dowling without anyone ever having filed a complaint!

Why didn’t Campbell say anything about what Mark Rodd swore in his 2013 Securities Commission Affidavit WITH SUPPORTING DOCUMENTS which Rodd said he filed to “correct” Dowling’s false claims? The answer will become clearer in coming episodes when other events happening during this same time period are discussed.

The Consequences?

None.