Nine shell companies in New Brunswick are under investigation by securities regulators there after it was discovered that they are trading on foreign stock exchanges.

The New Brunswick Securities Commission reports that at least nine of 74 companies that are incorporated at the same address in Shediac, N.B., are under investigation.

NBSC staff allege that none of the companies appear to have employees, operations, or any material presence in the province, and they say that “some of the information provided by these companies raises serious concerns about their legitimacy”.

Additionally, the NBSC reports that during its initial investigation, its staff found that several of the companies were trading, or were applying to trade, on the securities exchanges in Frankfurt, Berlin or Vienna.

An NBSC panel will hold a hearing to consider a request for an interim cease trade order on May 28. So far, nothing has been proven.

“These companies have incorporated in New Brunswick and appear to be engaging in questionable activities in other countries,” said Rick Hancox, executive director of the NBSC. “As a securities regulator, we recognize that we operate in a global environment and we have an obligation to act to protect the integrity of the capital markets and the reputation of New Brunswick as a place to do business.”

“We have notified the regulators in these other jurisdictions in an effort to stop any potential harm to investors,” said Hancox. “Although it appears that New Brunswick investors are not being targeted at present, we must be certain that New Brunswick does not become a breeding ground for companies that may pose a risk to investors in other jurisdictions.”

Additionally, the NBSC says that a number of the companies registered at the same address have failed to respond properly to its demands for information. These companies have been added to its online caution list.

Hancox adds that the NBSC has had discussions with the corporate registry unit of Service New Brunswick about its concerns, and Service New Brunswick is looking into the issue, too.