A cross-country legal dispute is unfolding in B.C. Supreme Court, pitting a suspended Bay Street brokerage against an Okanagan pot grower.
Jacob Securities Inc., a Toronto investment dealer that shut down late last year, is suing THC BioMed Intl. Ltd., a federally licensed and publicly traded cannabis company based in Kelowna, alleging the pot producer breached an agreement by delivering worthless copies of share certificates.
In a notice of civil claim filed in October, Jacob Securities names THC BioMed and its subsidiaries, alleging the companies entered a settlement agreement in September 2015 to resolve a legal action started four months earlier in Ontario. That agreement provided for the delivery of 4,660,000 common shares in THC to Jacob, the lawsuit alleges, but nine months after THC delivered the purported share certificates last year, Jacob realized they were not originals but colour photocopies, which “cannot be traded and have no value.”
None of the allegations have been tested in court.
THC’s response, filed in November, alleges the settlement agreement was entered into as a result of Jacob’s “false pretences, fundamental misrepresentations and omissions.” THC had engaged Jacob to act as an agent for an equity financing and to publish a research report, the response says, adding that if THC had “been aware of the true status of (Jacob) with its regulatory authority, they would not have entered into the settlement agreement.”
That regulatory authority, the Investment Industry Regulatory Organization of Canada, had placed Jacob under scrutiny over the previous two years, unbeknownst to THC, according to court filings.