The British Columbia Securities Commission has settled with two men who admitted to participating in an alleged market manipulation involving a US over-the-counter issuer.
In two separate settlement agreements with BCSC staff, BC residents Malkeet Singh Bains and Narvinder Singh Patric Virk each admitted that he reasonably should have known that his actions led to a misleading appearance of trading activity in or an artificial price for Sungro Minerals Inc shares. Sungro, a Nevada corporation that originally had its head office in Surrey, BC, is quoted on the US over-the-counter bulletin board.
Bains specialises in insurance broker services and was the sole official director of Sungro during the relevant period. In his settlement agreement, Bains admits that in 2007 he took direction to set Sungro up as a "shell company" from a financial planner with experience starting public companies. In 2009, when it became clear the company could not be sold as a shell, Bains and the financial planner agreed to sell some of the shares and split the proceeds.
Bains also admits that at the behest of the financial planner, he recruited several of his friends as seed shareholders and instructed them to sell their shares at specified prices on specific dates in June and July of 2009.
One of these friends was Virk, who admitted in his settlement agreement that he became a Sungro seed shareholder and recruited several of his family members and friends at the suggestion of Bains. Virk also admits that he sold his shares, at specified prices on specific dates between June 12 and June 22, 2009, at the direction of Bains.
In July 2009, BCSC staff issued a temporary order cease trading Sungro, and a notice of hearing alleging market manipulation. The notice of hearing was amended in August 2011 to include Bains and Virk, as well as several other additional respondents.
For his misconduct, Bains will pay the commission CAD125,000 and is prohibited, with limited exceptions, from purchasing or trading securities for 25 years. He is also prohibited, for the same period of time, from becoming or acting as an officer or a director of any issuer, becoming or acting as a promoter, acting in a management or consultative capacity in connection with the securities market, and engaging in investor relations activities.
Virk has agreed to pay the commission CAD100,000 and is prohibited, with limited exceptions, from purchasing or trading securities for 25 years. He is also prohibited, for the same period of time, from becoming or acting as an officer or a director of any issuer, becoming or acting as a promoter, acting in a management or consultative capacity in connection with the securities market, and engaging in investor relations activities.
The executive director previously issued orders against five of the seed shareholders, who admitted in a settlement agreement that they had made false or misleading statements to BCSC investigators about their purchase of Sungro Minerals shares .
The executive director also settled with Karnjit Singh Bahd. As part of his settlement, Bahd admitted to lying to investigators.
The temporary order, originally issued by the executive director and confirmed by a commission panel, prohibits trading in Sungro Minerals until a hearing is held and a decision is rendered.