Executive Summary: Key Legal and Evidentiary Issues

• Funds raised through secured debentures were misused, contrary to the promises made in offering documents.

• The Tribunal found that Jiubin Feng knowingly made misleading representations to investors in both English and Mandarin.

• At least $3.39 million was diverted to other Feng-controlled projects, establishing the actus reus of fraud.

• The appellants’ arguments about limited English proficiency and lack of intent were rejected based on credibility findings.

• Mitigating factors were considered but did not materially affect the sanctions due to the deliberate nature of the misconduct.

• Disgorgement and administrative penalties were upheld as proportionate and consistent with regulatory jurisprudence.

The facts and outcomes of the three appellate decisions

Feng v. Ontario Securities Commission, 2025 ONSC 2268

Jiubin Feng and CIM International Group Inc. appealed decisions by the Ontario Capital Markets Tribunal that found they had committed securities fraud contrary to section 126.1(1)(b) of the Securities Act. The Tribunal found that the appellants raised $10 million from 36 investors in Ontario, Hong Kong, and the UK by promising the funds would be used exclusively for the Bayview Creek real estate development project. Instead, at least $3.39 million of the funds were diverted to other projects or back to CIM, causing CIM to default on interest payments to investors.

The Tribunal imposed significant sanctions: administrative fines of $500,000 each, disgorgement of $7,630,000 jointly, and payment of $206,769.34 in costs. Feng was permanently banned from market participation, except for limited trading in personal registered accounts—contingent on full payment of all financial sanctions.

On appeal, the Ontario Divisional Court reviewed both the merits and the sanctions decisions. It affirmed the Tribunal’s findings, concluding that the legal standards for fraud were correctly applied and that there were no palpable and overriding errors of fact. The Tribunal’s finding that Feng personally made false representations in Mandarin to investors and signed documents he understood was supported by credible witness testimony and documentary evidence. Feng’s arguments regarding limited English proficiency, lack of direct involvement, and evidentiary discrepancies were rejected.

In terms of sanctions, the Court upheld the Tribunal’s discretion to impose strong penalties, stating they were appropriate for egregious but not the most egregious fraud. The Tribunal’s decision not to reduce sanctions based on claimed inability to pay was also upheld, as Feng had failed to provide supporting evidence. The Court concluded that both specific and general deterrence justified the sanctions and found no departure from comparable cases.

The appeal was dismissed in its entirety, and the appellants were ordered to pay $15,000 in costs to the Ontario Securities Commission.