B.C. regulator alleges company defrauded investors of $16 million

A sign at the B.C. Securities Commission office in downtown Vancouver is seen on Dec. 28, 2024. (CTV News)

B.C.’s financial markets regulator is alleging a $16 million fraud, along with other violations of the provincial Securities Act, by a B.C. corporation and two of its directors.

The B.C. Securities Commission published its allegations against Elixir Technology Inc., its founder William Peter McNarland and its director Mang Hei Jaclyn Wu on Thursday.

The allegations have not been proven, and legal representatives for the parties must meet at the commission’s office on Dec. 16 if they wish to be heard before a formal hearing is scheduled on the matter.

In a news release accompanying the publication of its notice of hearing, the BCSC said Elixir, which was previously known as Elixir Income Inc., “represented itself as a profitable financial technology company that was developing proprietary software and generating revenue by leasing the software and using it to trade securities.”

In fact, the regulator alleges, the company did not have a viable software leasing business. Nearly all of its income came from its trading accounts, which suffered “catastrophic” losses in the first quarter of 2020—amid a global market crash triggered by the onset of the COVID-19 pandemic—and never recovered.

“McNarland described this time as ‘horrible,’” the BCSC’s hearing notice reads, adding that “the whole year was very bad.”

“According to Wu, everyone on the board was ‘in shock’ at the amount of the trading losses.”

Around the same time, according to the hearing notice, some of Elixir’s software was not functioning properly.

The document indicates company’s revenue in 2020 was negative $5.5 million because of the trading losses, and the company’s liabilities were almost double its assets during the period.

Despite this, Elixir allegedly raised roughly $16 million—C$14.6 million and US$1 million— from 113 investors between July 2020 and October 2022. It allegedly did so while claiming that its securities would pay interest and dividends between six and 11.5 per cent annually and failing to disclose its true financial situation to the investors.

As the controlling mind behind Elixir, McNarland is alleged to have authorized, permitted or acquiesced to the fraud, and the BCSC also alleges that Wu contributed to the fraud by recommending the company’s securities and referring investors to it, despite knowing its true financial situation.

The commission also alleges that Elixir made illegal distributions to 13 investors who did not qualify for an exemption from the requirement that the company provide a prospectus.

Even if the distribution of securities to these investors was not fraudulent, it was illegal, and McNarland and Wu authorized, permitted or acquiesced to the illegal conduct, the BCSC alleges.

Finally, the regulator also alleges that Wu made false or misleading statements during interviews with investigators in November 2024.