Hamilton developer Harry Stinson fined $600,000 for breach of securties law

By

Published December 28, 2023 at 11:49 am

via Linkedin

A Hamilton-based developer has been fined $166,000 for his company’s breach of securities law when they raised money from investors for a hotel project.

Between November 2016 to March 2020 Harry Stinson and his companies raised about $13.177 million through the sale of securities for the Buffalo Grand Hotel, a massive seven-acre, 500-room resort in New York. During this time, the Capital Markets Tribunal found that Stinson did not inform investors about the project, did not stop trading when ordered and failed to keep proper records of the money raised.

For this project, Stinson bought the hotel to be rebranded, remodelled, renovated, and converted into a hotel and condominium. Due to this remodel, the hotel remains closed. To fund the project, Stinson used three “forms of agreement;” unit purchases, option-to-purchase agreements, and a wholesale room block agreement.

Depending on the category of subscription agreement, an investor could also have an obligation or option to acquire a suite in the Hotel on conversion, by rolling over their investment and receiving title to a suite, and to further receive profit participation rights in connection with the leaseback of the suite,” the tribunal explained. 

Stinson began soliciting investment in November 2016 and bought the hotel in July 2018. However, the project stalled due to cash flow problems in March 2019. He was ordered to stop trading securities connected to the project a year later. The project hit another hurdle in December 2021 when a fire broke out in the hotel.

The tribunal investigation into the project concluded two years later. Stinson was fined a $600,000 administrative penalty and ordered to return the $13 million to investors. He’s also been banned from trading securities in the Ontario market. However, he will be allowed to retain ownership of his companies.

“While their misconduct was not fraud, it was serious. Stinson should have known better because he has been sanctioned for similar conduct in the past,” the tribunal wrote. While Stinson requested three years to finish and sell the hotel before he repaid investors, the tribunal denied the request. “There was not enough proof of when or if this would happen,” the tribunal said.

He must also pay the Ontario Securities Commission a $166,000 for their work to investigate the hotel.

Stinson has operated as a developer since the 1980s and has come to be known as Toronto’s “condo king.” He’s perhaps best known for the condo/hotel at 1 King St. in Toronto, a 51-storey tower connected to the heritage Dominion Bank building. This project caused Stinson to file for bankruptcy protection in 2007 due to a $11.8 million disagreement with financier David Mirvish.

In 2008, Stinson agreed to buy the Royal Connaught Hotel in Hamilton for $9.5 million with the plan to restore and expand the building. He planned to build a 100-storey condo building, Connaught Towers, but the plan was ultimately cancelled. If completed it would have been the tallest condo tower in Canada.

He moved to Hamilton during this time and remains a resident of the city.

inthehammer's Editorial Standards and Policies advertising