Despite being served notice of proceedings, NovaTech FX was a no-show at a securities fraud hearing in Ontario.

The Ontario Securities Commission issued a NovaTech FX securities fraud warning last December.

On February 16th the OSC converted this warning into a temporary cease trading order.

On March 2nd a hearing was held before the Capital Markets Tribunal. The purpose of the hearing to determine whether the order should be extended beyond 15 days.

NovaTech FX failed to make an appearance.

A decision on the OSC’s request was published via order on May 1st.

In the order we learn that NovaTech FX was informed of the March 2nd hearing;

Staff’s affidavits of service indicated that Staff served Nova Tech, its registered agent, and its sole director, shareholder, and beneficial owner with notice of, and materials associated with, this hearing.

Staff attempted to effect service by email and courier at various addresses that appeared to be the last known addresses.

While one such courier delivery was refused, there was no evidence before me that the other forms of service were not effective.

I therefore concluded that Nova Tech had been served with notice of this hearing and that I could proceed in its absence.

It’s unclear why the courier delivery was refused. But the takeaway is that NovaTech FX’s owners, Cynthia and Eddy Petion, were aware of the hearing and failed to show.

The hearing thus proceeded without NovaTech FX, with OSC staff arguing

that the Tribunal should extend the Temporary Order up until the completion of a merits hearing, a sanctions hearing or a settlement with Nova Tech in an enforcement proceeding that Staff had not yet commenced.

The court granted OSC’s request, extending the NovaTech FX cease trading order until

  1. ten days after OSC files a Statement of Allegations against NovaTech FX; or
  2. a period of 6 months beyond the granted extension order.

Nova Tech failed to meet its onus of providing satisfactory information that would argue against extending the Temporary Order.

I therefore concluded it is in the public interest to extend the Temporary Order.

It is looking like OSC is intending to escalate proceedings against NovaTech FX.

Staff submits that this Temporary Order proceeding is very transparent. More than 50 exhibits have been amassed from the investigation to date showing the scope of the evidence and the strength of Staff’s case against Nova Tech.

Staff submits that the investigation is complex. It is international in scope and further crypto asset trading techniques may be employed as the investigation progresses.

A settlement seems unlikely given NovaTech FX has thus far failed to participate in proceedings.

That and NovaTech FX is under regulatory scrutiny across the rest of Canada too.

The OSC has told the CMT that a further extension of the temporary cease trade order is “unlikely”, so it’s probable we’ll see something further in the next 6 months.

The pressing question is whether US federal authorities will take action against NovaTech FX during that time.

So far two US states have taken state-level securities fraud enforcement actions against NovaTech FX; California and Wisconsin.

The closest we’ve gotten to confirmation of a federal SEC investigation was via an EmpiresX court filing.

Cynthia and Eddy Petion are US nationals with ties to New York and Florida. The majority of NovaTech FX investors are also US-based.

The Petions haven’t been seen in public since late 2022. Whether they are still in the US is unclear.