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BCSC Panel Finds That Former Burnaby Residents Committed Fraud and Other Securities Law Violations

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/19/14 -- A British Columbia Securities Commission panel has found that two former residents of Burnaby, B.C., and the Burnaby company they co-founded, breached multiple securities laws.

The panel found that Yan Zhu (also known as Rachel Zhu), Guan Qiang Zhang, and Bossteam E-Commerce Inc. committed numerous securities-related infractions, including fraud, illegally distributing securities, and withholding information from BCSC investigators and instructing their employees and investors to do the same. None of the respondents has ever been registered in any capacity, and Bossteam has never filed a prospectus in B.C.

Bossteam described itself on its websites, in documents, and in presentations as an online advertising business. A primary part of the business was its website with platforms, including one where advertisers could post links to their own webpages as advertising to be viewed by others. Beginning in November 2011, Zhu and Zhang offered shares in Bossteam for sale to the public. Before investors could purchase shares, they were required to first become a Bossteam member and sell at least $2000 worth of advertising, either to themselves or a third party. The panel found that the respondents illegally distributed these securities without first having filed a prospectus.

In its decision, the panel also found that Zhu, Zhang, and Bossteam committed fraud when they created the false impression that Bossteam members and well-known local and international businesses were paying Bossteam to advertise on its websites. This was untrue, as the majority of ads appearing on Bossteam's websites were associated with Bossteam's own accounts, and not to accounts for parties that had paid Bossteam to post their links.

The panel also found that Zhu, Zhang, and Bossteam withheld information concerning monies paid by Bossteam "members" for securities, thereby disrupting commission staff's investigation and obstructing justice. Furthermore, the panel found that Zhang and Zhu instructed Bossteam employees and members to tell commission investigators that Bossteam was only selling advertising, and to refer to Bossteam shares as "consumer credits" to attempt to conceal their true nature.

Describing Zhang's and Zhu's conduct, the panel wrote, "The prohibited acts caused deprivation. The purchasers of Bossteam securities paid over $14 million for ad packages, shares and consumer credits. They risked losing all they paid because Bossteam had few paying advertisers and little actual advertising revenue."

The panel directed the parties to make submissions on sanctions according to the schedule set out in the findings.

You may view the findings decision on our website www.bcsc.bc.ca by typing Yan Zhu, Rachel Zhu, Guan Qiang-Zhang, Bossteam E-Commerce Inc., or 2014 BCSECCOM 325 in the search box. Information regarding disciplinary proceedings can be found in the Enforcement section of the BCSC website.

Please visit the Canadian Securities Administrators' Disciplined Persons List for information relating to persons disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).

About the British Columbia Securities Commission (www.bcsc.bc.ca)

The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:


--  A securities market that is fair and warrants public confidence
--  A dynamic and competitive securities industry that provides investment
    opportunities and access to capital

Learn how to protect yourself and become a more informed investor at www.investright.org.

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