A widespread B.C.-based cannabis, cryptocurrency and mining stock scandal has expanded into Alberta, this time involving a company traded on the TSX Venture Exchange.
The Alberta Securities Commission (ASC) has issued a limited cease trade order against a number of members of the BridgeMark Group, a group of consultants/investors who are under investigation by the B.C. Securities Commission (BCSC), and have been hit with limited and temporary trading bans, for allegedly manipulating share distributions through the use of allegedly phoney consulting agreements.
The ASC said late last month it is similarly investigating whether Prize Mining Corp. contravened Alberta securities laws relating to continuous disclosure and capital raising exemptions.
“Prize breached the Securities Act (Alberta), and acted contrary to the public interest, by making misrepresentations and failing to comply with its continuous disclosure obligations,” claimed the ASC on Jan. 3.
Prize entered a deal in July 2018 to issue $6.5 million worth of new shares to 18 BridgeMark Group consultants while simultaneously agreeing to $5.5 million worth of prepaid services for marketing and investor relations, the ASC claimed.
The claim mirrors allegations set out by the BCSC, which claims at least 11 Canadian Securities Exchange (CSE)-listed companies issued about $51 million worth of shares to so-called consultants, under consultant exemptions, but repaid most of the money in consulting agreements. The companies touted the fundraising activity as investor interest. BCSC says actual consulting didn’t occur. The consultants, dubbed the BridgeMark Group by the BCSC, then immediately flogged the shares for an overall profit to retail investors, who were then left with devalued shares.
It’s unknown if the Prize consultants sold off their shares, although the stock is now trading at $0.04.
A preliminary ASC hearing for these unproven allegations was expected to commence today.
Should the BCSC and ASC allegations be proven, it would raise serious questions about the credibility of any company BridgeMark Group members have been involved with, as well as how the exchanges are monitored.
At the centre of the scandal is chartered accountant Anthony Jackson, the principal of BridgeMark Financial Corp. who is closely associated with many respondents.
Now, Jackson’s wife, Lisa Jackson, a West Vancouver realtor, is a respondent to the ASC order, which bans all respondents from trading Prize shares.
Also named in the order are other BridgeMark Group members: Justin Edgar Liu, Detona Capital Corp., Tryton Financial Corp., and Rockshore Advisors Ltd. (formerly Cam Paddock Enterprises).
The ASC claims Liu and Jackson brought the deal to Prize.
Seungkap Kim, Kyung Kim Yoon, Feisal Somji and David Schmidtare also respondents to the ASC order, as is Prize president and CEO Michael McPhie.
On Dec. 27, Somji and Schmidt resigned from Prize’s board of directors.
Schmidt is also cited by the BCSC for his “consulting” agreements with Sway Capital Corp. He was also listed as president of Kootenay Zinc Corp., one of the 11 penalized CSE companies. Jackson is Kootenay’s former CFO.
A junior mining issuer, Prize claims to be “focused on the exploration and development of the Manto Negro Copper Property in Mexico and the Kena Gold Property in B.C.”
The ASC claims Prize “failed generally to disclose the deal, and to provide disclosure of a material change or changes.
“Prize engaged in conduct that was clearly abusive of investors and the capital market.”
On Jan. 7 the BCSC also filed a cease trade order against Prize for failing to file annual financial statements last August. Prize issued a statement the next day claiming it is working on filing a statement to apply to have the cease trade order revoked. It also stated it had moved its head office from Calgary to Vancouver as of Jan. 4.
Normally if a company wants to raise money from investors it needs to file a public prospectus – detailed financial documentation of its business aimed at protecting investors. But for startups there are legal money-raising exemptions. For example, accredited investors, consultants and even close friends can invest privately without such a prospectus, as they are assumed to better understand risks of a particular company.
Glacier Media has reached out to McPhie for comment.