December 15, 2010 Securities

Montréal – The Autorité des marchés financiers (AMF) has launched penal proceedings against Sebouh Melkonian and Sam Grinfeld in the Court of Québec (Criminal and Penal Division), district of Montréal, and is seeking fines totalling $234,000.

In 2008, Sebouh Melkonian and Sam Grinfeld, of the private brokerage firm J.G. Frostt Corporate Finance Management Inc., approached a company in Laval that was seeking capital to ensure its future. Their goal was to raise $700,000 from the public on the U.S. Pink Sheets stock exchange. Investors were solicited to purchase shares in the Laval company. Neither the brokerage firm nor the two individuals were registered with the AMF, in particular, as securities dealers. As a result of the respondents’ actions, 19 investors lost approximately $120,000. Furthermore, their actions contributed to the bankruptcy of the company, which hoped to raise capital in December 2008 for its development.

Sebouh Melkonian fined $202,000

The AMF filed 22 charges against Sebouh Melkonian for aiding J. G. Frostt Corporate Finance Management Inc. to act illegally as a dealer (5 counts) and to make illegal distributions (15 counts), for making representations that a security would be listed on an exchange, without having obtained AMF approval (one count), and for making misrepresentations in connection with seeking financing (one count). The AMF is seeking fines of $202,000 for these offences.

Sam Grinfeld fined $32,000

Sam Grinfeld faces three charges: one count for illegal practice, one count for illegal distribution and one count for making false and misleading representations to an investor. The AMF is seeking a fine of $32,000.

The fines sought are two to four times higher than the minimum fines set out in the Act. The AMF cites the following aggravating factors as grounds for seeking the higher fines: the subjective seriousness of the offence, the abuse of trust, the investors’ losses and exemplary reasons.

The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec’s financial sector.

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