The Alberta Securities Commission is accusing a Calgary man of engaging in a series of trades that amounted to market manipulation.

The ASC has issued a notice of hearing alleging that David De Gouveia breached Alberta securities laws and acted contrary to the public interest by creating a false or misleading appearance of trading activity in, and an artificial price for, the securities of a junior mining firm, Magellan Minerals Ltd. The allegations have not been proven. A hearing has been set for April 11.

According to the allegations, in late October or early November 2008, the president and CEO of Magellan engaged De Gouveia to act as a corporate advisor to the company, and he was granted options to purchase 200,000 shares of the firm.

Between November 3, 2008, and April 30, 2009, the ASC says that De Gouveia actively traded the company’s shares in his personal accounts, making 135 purchases and 56 sales. ASC staff allege that he engaged in a pattern of trading that involved various hallmarks of market manipulation such as: upticks (trading at a higher price than the immediately preceding trade); high closes (trading at the highest price for that day); wash trades (acting as both seller and purchaser in the same transaction); and uneconomic trades (selling shares and then immediately buying shares at a higher price).

As a result, the ASC charges that De Gouveia breached the Securities Act and acted contrary to the public interest “by engaging in a course of conduct that contributed to a false or misleading appearance of trading activity in and an artificial price for the securities” of Magellan.

The ASC says that, in January 2009, De Gouveia’s trading account was flagged by the compliance department of his broker dealer for unusual trading patterns involving the Magellan shares. In March 2009, he was asked to exit the broker dealer and his two trading accounts were closed.