An Alberta Securities Commission (ASC) panel has found that two former senior officers of Blue Range Resource Corp. misled investors by inflating reports of the company’s natural gas production and reserves.

The panel found former CEO J. Gordon Ironside and former CFO Robert W. Ruff failed to make fair, accurate public disclosure of material information during 1997 and 1998.

The panel found that the pair:

  • Failed to follow Generally Accepted Accounting Prinicples (GAAP) when they withheld material information from their outside auditor in the conduct of Blue Range’s audit to avoid proper classification of several facilities leases.
  • Materially overstated natural gas reserves by 8.9% by disclosing raw versus sales gas volumes.
  • Used a “management adjustment” of 13.6% to inflate disclosed natural gas sales production volumes.
  • Issued a press release announcing 30% increases of new natural gas production without disclosing that production overall was forecast to decline by 20%.
  • Engaged in a business activity of significantly overcontracting natural gas sales without disclosure of this added risk to the market.

The panel’s decision was released yesterday after a long and complex hearing. The panel sat for 137 days over four years and considered over 1,600 exhibits and more than 20,000 pages of transcript.

The panel found that Ironside and Ruff showed indifference to the functioning of the capital market in an ongoing practice of material misrepresentations and by failing to disclose material facts and material changes.

In its decision, the panel stated: “We expect, as does the market, that senior officers and directors will have exercised care in satisfying themselves that the information they release to the public is accurate and presents a fair and complete picture of the public company.”

The panel also dismissed a number of allegations against Ironside and Ruff contained in the ASC’s Notice of Hearing.

In the next phase of the proceedings, the panel will consider whether it is in the public interest to impose sanctions. A date for these proceedings will be set early next year.