A British Columbia Securities Commission (BCSC) panel has found that a Canadian and two U.S. citizens engaged in market manipulation of shares in a company quoted on the U.S. Over-the-Counter Bulletin Board (OTCBB).

In addition, the BSCS ruled that an advisor that handled trades for other participants in the scheme did nothing wrong.

The BCSC hearing panel found that North Vancouver resident Mark McLeary, and two U.S. citizens, Robert Hainey, and Jerry Williams, manipulated the price of Sungro Minerals Corp., which was traded on the OTCBB. It found that Williams and Hainey promoted Sungro shares on online message boards, and that McLeary directed the selling of shares that were purchased primarily by message board members. It also found that McLeary made false or misleading statements to commission staff.

Rhe panel dismissed allegations against McLeary’s brother, a former banker, Timothy McLeary; and, Erik John Benson, an investment advisor. The BCSC has accused McLeary of facilitating the manipulation. It did not claim that Benson knew anything about the manipulation; instead, it alleged that he should have known that trades he carried out for two others that have already settled with the commission contributed to an artificial price for the shares. The panel found the allegations against them were not proven.

“We find that the “warning signs” listed by the executive director do not prove that Benson reasonably should have known of the manipulation,” the panel said, adding, “There was no evidence that Benson was aware that the demand for Sungro shares was being created by Williams and the core group.”

“In several instances where requests caused Benson concern, such as potential insider trading and share ownership issues, he sought advice from the Canaccord compliance department and followed that advice,” it said, concluding that the facts are not sufficient to establish that Benson should have known that carrying out client trade instructions contributed to an artificial price for Sungro shares.

Back in 2012, two other men settled with the BCSC, admitting that they should have known that their actions led to a misleading appearance of trading activity in, or an artificial price for, Sungro shares. Several others admitted that they gave false or misleading statements to BCSC investigators about their trading in Sungro shares.

The panel has yet to hand down any sanctions on the allegations that were proven. It directed McLeary, Hainey and Williams to make submissions on sanctions.