B.C.'s Supreme Court has ordered a former cannabis company executive to pay more than $7.4 million after he engaged in a high-stakes financial workaround designed to bypass U.S. securities regulations.
Handed down Feb. 12, the decision from Justice Simon R. Coval found Nicholas Vita was fully liable for a debt he guaranteed through an offshore margin account, despite the man's claims that the arrangement was an illegal sham.
In 2019, Vita was CEO of two cannabis companies, Columbia Care LLC and Columbia Care Inc., when they closed a major deal with the Canadian financial services firm Canaccord Genuity Corp. to take the company public on the Canadian stock exchange. Vita and Columbia Care's executive director and chairman Michael Abbott raised the idea of leveraging their shares in the businesses as collateral for a multimillion-dollar loan.
Known as a "margin account," such a loan allows the account holder to borrow against the value of the securities it deposits as collateral. Both sides agreed that as a Canadian company, Canaccord could not open a margin account for Vita personally because he is a U.S. citizen subject to U.S. regulatory laws, according to Coval's ruling.
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