Coastal’s fraud ‘an abuse of investors’
After Alberta courts handed down two convictions in a pump-anddump scheme, the province’s securities watchdog was awarded all available funds from the Calgarybased company at the centre of the fraud.
In handing down its decision, a panel of the Alberta Securities Commission issued a scathing rebuke of Coastal Pacific Mining Corp.’s “dangerous” scheme.
The fraud “was the sort of misconduct and investor harm that can foreseeably undermine investor confidence in the capital market generally,” the panel wrote in its decision, released Wednesday.
The panel found “Coastal’s misconduct was serious, indeed a reprehensible abuse of investors and the capital market.”
In the decision, it panel said evidence shows Coastal received at least $1.1 million as part of the scheme, but the only assets it could realistically collect from the company were funds totalling $372,000 that were frozen in 2011.
The panel awarded the securities commission all of the funds as a penalty for the fraud and to help cover costs of the investigation and hearing. The panel also banned any future trading of Coastal shares.
Two Coastal partners, Caroline Meyers and Joseph Bucci, were previously convicted for their roles in the fraud.
Coastal, a shell company, had released a series of false and misleading statements, which attracted thousands of investors and artificially inflated the value of its stock, then traded on over-the-counter markets in the United States.
The firm went from having no value or trading activity to reaching share prices exceeding 50 cents with 60 million shares traded, said the securities commission. After the promotional campaign ended, the stock became nearly worthless.
Last June, Meyers, who had pleaded guilty to charges under securities laws, was handed Alberta’s first prison sentence for taking part in a pump-and-dump scheme. She was given a two-year prison term.