The B.C. Securities Commission (BCSC) is temporarily prohibiting a group of more than 50 purported “consultants” buying or selling the securities of 11 companies listed on the Canadian Securities Exchange (CSE), alleging that they participated in a scheme that is abusive to the capital markets, the BCSC announced Monday.
This commission is also prohibiting the listed companies from raising capital under the consultant exemption, and banning all CSE-listed firms from using the exemption to sell shares to the collection of “consultants.”
Temporary orders are designed to halt possibly abusive conduct, while giving the regulator’s staff time to complete an investigation.
The BCSC has scheduled a hearing for Dec. 7 to determine whether to extend the orders. The commission has not brought formal allegations against any of the companies or people involved, nor have its allegations been proven.
The orders arises from an ongoing BCSC investigation into transactions between the purported consultants – which Executive Director Peter Brady refers to as “the BridgeMark Group” – and B.C. companies operating in the cannabis, cryptocurrency, mining and alternative energy sectors.
The commission alleges that four companies, after selling a total of $17.9 million worth of shares to members of BridgeMark earlier this year, returned $15.3 million to members of the group. BridgeMark then sold those securities in the market, often at prices far below what its members had paid, netting about $6.2 million.
The four companies subsequently issued news releases saying they had raised a certain amount of money by selling their shares, even though they had paid most of the purchase amount back to BridgeMark, the BCSC alleges.
The commission alleges that the securities sales to BridgeMark were illegal because they improperly used the consultant exemption to avoid filing a prospectus, a formal document that provides details of an investment. It is concerned that BridgeMark members are not consultants, that they provided little or no consulting services to the issuing companies, and engaged in the scheme for their own profit — conduct the commission describes as “abusive to the capital markets.”
The BCSC is concerned that BridgeMark engaged in similar transactions with seven other companies. Altogether, BridgeMark purchased a total of more than 252 million securities from 11 listed companies between February and August, paying $50.9 million. The temporary order prohibits the 11 CSE-listed companies from using the consultant exemption to sell their shares.