What is an Interim Cease Trade Order? We often get calls from investors wondering what it means when the ASC “cease trades” a company or an individual. They’re often referring to an enforcement order called an Interim Cease Trade Order (ICTO). The ASC has the authority to issue an ICTO to protect investors by stopping the selling, trading and distributing of securities of the parties in question while the ASC investigates allegations set out in a Notice of Hearing. If ordered, the ICTO may remain in effect until a hearing of the matter is concluded and a decision is made by an ASC panel. How does this ICTO protect investors? It does not allow any new investors to participate in something that could possibly prove to be an illegal, or even fraudulent investment opportunity. So what does an ICTO mean if you are an existing investor and want out of the investment? First and foremost, the ASC does not want to stand in the way of you getting your money back. We encourage you to seek independent legal advice to explore what options are available to you. A company or individual that is the subject of an ICTO is free to ask the commission for permission to return funds to the purchasers without violating the ICTO. However, if the companies and individuals plan to sell more securities to raise the money to repay existing investors, they are not allowed under the ICTO to do so. So if you are an investor whose investment is the subject of an ICTO, keep in mind that it does not: - stop the company from conducting its day-to-day business – for example, if the investment opportunity involves the building or buying of real estate, then the companies and individuals may continue to do so;
- freeze assets of the companies or individuals (that may be the result of the use of a different enforcement tool called a Freeze Order);
- result in penalties being paid to the ASC; or
- prevent the company/individual from borrowing funds that are not related to the selling or trading of securities (such as getting a bank loan or applying for a line of credit).
To see if a company or individual is the subject of an ICTO, visit our Enforcement section and click on Decisions and Orders. If you have any questions about ICTOs, give me a call on our public information line at (403) 355-4151, toll-free: 1-877- 355-4488 or email me at inquiries@asc.ca. Comment on this blog... | About this Blog We’ve created this blog to present you with answers to some of the more popular questions we receive from investors. We'll have different subject matter experts blogging about what they know best and we'll update it as new blogs arise. We hope you'll find it interesting and helpful. Today's Blogger Hello, Don Rodgers here and I am the Public Information Officer for the Alberta Securities Commission (ASC). Before coming to work for the ASC, I was a trader and taught technical analysis. I also wrote for two on-line investment websites. As such, I have a great deal of interest in the securities industry and a desire to help answer questions which you may have.
Here are some links I think you’ll find helpful: • Enforcement Terms
• Decisions and Orders
• News Releases
• File a complaint
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