Former Calgary company that raised $127M from investors fined $795K

A person types on a computer keyboard in Los Angeles, on Feb. 27, 2013. (AP Photo/Damian Dovarganes)

Calgary — The Alberta Securities Commission (ASC) has concluded an investigation into a former Calgary investment firm and ordered the owners to pay a fine of less than one per cent of the amount they raised from investors.

Jay Modi, Arti Modi, and Rajeeve Singh were owners of Calgary-based OmniArch, an investment company that operated between 2010 and 2015.

The ASC says the trio accumulated approximately $127 million through nine offering memoranda but broke the law by making misleading statements to investors and "not stating all of the facts."

"Investors were not told, for example, that OmniArch would make loans to related parties. Investors were also misled as to the professional experience of Jay Modi and OmniArch’s fund managers in handling investments," the ASC said in a release.

As a result of a settlement agreement, Jay and Arti Modi, who are siblings, and Singh, who is Arti's wife, admitted to breaching Alberta securities laws by misleading investors.

"For Alberta’s capital market to function efficiently and to ensure investor protection, investors need to know that they can trust and rely on the information they are given," said Cynthia Campbell, enforcement director with the ASC. "By overstating management’s financial knowledge and failing to adequately disclose how investor funds would be used, the respondents in this case did not paint an accurate picture for their investors, many of whom suffered significant losses."

The respondents have been ordered to pay $795,000 and must abide by the following conditions:

The ASC says the suspensions are in place for 20 years of Jay Modi, 10 years for Arti Modi and three years for Rajeev Singh.

According to documents, the investment company only paid out approximately $42 million in returns.

Further details on the settlement agreement can be found on the ASC's website.