Crestview Exploration Inc., headquartered in this building in downtown Calgary, is seen on June 10, 2020.Todd Korol/Todd Korol/The Globe and Mail
Crestview Exploration Inc., the Calgary-based gold exploration company at the centre of an investigation over an apparent “pump and dump” mailing campaign tied to the novel coronavirus, was also the target of an aggressive online stock promotion on both sides of the Atlantic.
Website posts and e-mailed stock tips promoting Crestview strongly resemble letters mailed across Canada this past spring that made false claims about the tiny gold explorer, which is registered in British Columbia.
Crestview’s chief executive, Glen Watson, told The Globe and Mail last month the company had nothing to do with the letters, and their dissemination had inflicted great damage.
Last month, the RCMP, the B.C. Securities Commission (BCSC) and the Alberta Securities Commission (ASC) said they had started an investigation into possible securities market violations, after Crestview’s share price gyrated wildly following the mailing of the promotional letters.
In April and May, letters in an envelope marked “CORONAVIRUS AFFECTING MARKETS: READ NOW,” were delivered by Canada Post. An author named James Campbell claimed Crestview’s shares were poised to explode by 500 per cent and said the company is “sitting on billions of dollars of precious metals.”
In fact, Crestview, which trades for pennies on the Canadian Securities Exchange, holds no precious metals reserves.
The Globe has since uncovered stock promotion campaigns around another development-stage mining company, Vancouver-based Blue Lagoon Resources Inc., that also caught the attention of securities market surveillance teams and have much in common with the Crestview letters.
Rana Vig, CEO of Blue Lagoon, says the various promotions have caused his company nothing but grief. “I have nothing to do with this. I want nothing to do with it,” he said.
The campaigns on both Crestview and Blue Lagoon pull back the curtain on the hard-to-police, lightly regulated world of stock promotion and the difficulties regulators in Canada and the United States face in trying to hold suspected scammers to account.
Blue Lagoon share crash
follows stock promotion
$1.10
Pennystockzone sent out
promotional email blasts
on Blue Lagoon June 10
and 12
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JOHN SOPINSKI/THE GLOBE AND MAIL
SOURCE: refinitiv
Blue Lagoon share crash
follows stock promotion
$1.10
Pennystockzone sent out
promotional email blasts on
Blue Lagoon June 10 and 12
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JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: refinitiv
Blue Lagoon share crash follows stock promotion
$1.10
Pennystockzone sent out
promotional email blasts on
Blue Lagoon June 10 and 12
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JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: refinitiv
As the Crestview letters were being distributed, the company’s share price surged but subsequently crashed. The pattern conforms to a pump-and-dump manipulation, in which individuals buy shares of a thinly traded stock, spread false information that pumps up the price and trading volume and then dump huge amounts of stock at inflated prices.
Around the time letters promoting Crestview were delivered in May, an aggressive online promotion push was also rolled out.
On May 16, an article written by an author named Jim Davis, with the headline “Gold glitters, and so could shares of Crestview Exploration Inc.,” was published on Toronto-based website TheDailyEdition.
“The current sanitary crisis,” Mr. Davis wrote, “has created many issues in the world, but it has also created a lot of opportunities in the stock market.”
Mr. Davis’s thesis – that investors should seize opportunity amid the stock market wreckage of the coronavirus – was the same one used by Mr. Campbell in the Crestview letter.
Both authors also claimed to be graduates of Harvard Business School.
The Globe has been unable to verify the existence of Mr. Davis. Last month, Crestview’s Mr. Watson told The Globe he says believes Mr. Campbell is fictitious.
TheDailyEdition did not respond to a request for comment.
In addition to the post on TheDailyEdition, Crestview was also heavily promoted on two British-based financial websites, Global Banking and Finance Review and Finance Digest.
Both sites published an authorless article with the headline “Here is why this Mining Stock could go up 500% fast.” The opening line, about opportunity amid the “current sanitary crisis,” was identical to the Crestview piece penned by Mr. Davis on TheDailyEdition.
The claim that Crestview could be “sitting on over $4-billion of gold!” is similar to the claim by Mr. Campbell in the Crestview letters, who said the company was “sitting on billions of dollars of precious metals.”
Editor Wanda Rich, who oversees content published on both Finance Digest and the Global Banking and Finance Review, said the Crestview articles were published in error and have since been deleted.
“Normally, we try and make sure that we aren’t running that kind of material,” she said. “We don’t want anyone to be misled.”
In an emailed statement, Mr. Watson said Crestview and its officers, directors and advisers “are in no part complicit” in any of the materials published on the British or Canadian websites that promoted the company.
Crestview isn’t the only small Canadian mining outfit that’s been the target of a recent damaging stock promotion.
In early June, the volume and price of Blue Lagoon Resources shares also perked up. Then, about two weeks later, the company lost more than a third of its value in two trading sessions amid extremely heavy volume.
“We just got hammered for no reason” Mr. Vig said.
But behind the scenes, something was going on that might explain it.
On June 13, TheDailyEdition’s Mr. Davis, the same author who promoted Crestview in May, published a piece on Blue Lagoon with the headline “Here is Why This Mining Stock Could Explode” and claimed it had gold and silver reserves worth “at least $800-million.”
In fact, Blue Lagoon has no reserves.
The company was also the subject of another vigorous promotion in Europe. Website PennyStockZone, which is purportedly based in the Czech Republic, blasted out alerts promoting Blue Lagoon to its subscribers with the headline “Don’t miss this gold stock!”
The author, named Joe Christy, claimed to have had success recommending three junior mining stocks in the past: Wallbridge Mining Co. Ltd., Alacer Gold Corp. and Liberty Gold Corp.. These were the same companies singled out by Mr. Campbell as examples of his stock picking prowess in the Crestview letter.
Market surveillance teams at OTC Markets Group, which trades over-the-counter stocks in the U.S., noticed the erratic trading in Blue Lagoon and got wind of the PennyStockZone promotions. OTC contacted the Blue Lagoon to see if it had authorized them. Mr. Vig said the company was also contacted by the Investment Industry Regulatory Organization of Canada (IIROC), which had similar queries.
Mr. Vig said the company told OTC and IIROC that Blue Lagoon had no connection with PennyStockZone. At the request of OTC Markets, Blue Lagoon put out a statement to that effect.
In an e-mail to The Globe, IIROC spokesperson Andrea Zviedris said the organization can’t comment on the specifics of any review.
PennyStockzone did not respond to a request for comment.
Just a coincidence?
Overlap in stock promotions
James Campbell on Crestview Exploration (letters sent
around Canada in April and May):
“Crestview is literally sitting on billions of dollars of
precious metals.”
“Gold has been the No1 safe haven throughout
human history.”
Past picks: Wallbridge Mining, Alacer Gold, Liberty Gold
Harvard Business School alumnus
Jim Davis on Crestview Exploration (May 16 article on
The Daily Edition):
“The current sanitary crisis has created many issues in
the world, but it has also created a lot of opportunities
in the stock market.”
“Crestview Exploration could be sitting on over
$4 billion of gold!”
Harvard Business School alumnus
Jim Davis on Blue Lagoon (June 13 article on
The Daily Edition):
“The current sanitary crisis has created a lot of opportun-
ities in the stock market if one knows where to look.”
Past Pick: Wallbridge Mining
Harvard Business school alumnus
Joe Christy on Blue Lagoon (June 10 Pennystockzone
email blast to subscribers):
“Gold has been the No1 safe haven throughout times,
and Blue Lagoon Resources is literally sitting on tons of it.”
Past picks: Wallbridge Mining, Alacer Gold, Liberty Gold
NIALL McGEE AND JOHN SOPINSKI/
THE GLOBE AND MAIL
Just a coincidence?
Overlap in stock promotions
James Campbell on Crestview Exploration (letters sent
around Canada in April and May):
“Crestview is literally sitting on billions of dollars of
precious metals.”
“Gold has been the No1 safe haven throughout
human history.”
Past picks: Wallbridge Mining, Alacer Gold, Liberty Gold
Harvard Business School alumnus
Jim Davis on Crestview Exploration (May 16 article on
The Daily Edition):
“The current sanitary crisis has created many issues in
the world, but it has also created a lot of opportunities
in the stock market.”
“Crestview Exploration could be sitting on over
$4 billion of gold!”
Harvard Business School alumnus
Jim Davis on Blue Lagoon (June 13 article on
The Daily Edition):
“The current sanitary crisis has created a lot of opportun-
ities in the stock market if one knows where to look.”
Past Pick: Wallbridge Mining
Harvard Business school alumnus
Joe Christy on Blue Lagoon (June 10 Pennystockzone
email blast to subscribers):
“Gold has been the No1 safe haven throughout times,
and Blue Lagoon Resources is literally sitting on tons of it.”
Past picks: Wallbridge Mining, Alacer Gold, Liberty Gold
NIALL McGEE AND JOHN SOPINSKI/THE GLOBE AND MAIL
Just a coincidence?
Overlap in stock promotions
James Campbell on Crestview Exploration (letters sent around Canada in April and May):
“Crestview is literally sitting on billions of dollars of precious metals.”
“Gold has been the No1 safe haven throughout human history.”
Past picks: Wallbridge Mining, Alacer Gold, Liberty Gold
Harvard Business School alumnus
Jim Davis on Crestview Exploration (May 16 article on The Daily Edition):
“The current sanitary crisis has created many issues in the world, but it has also created
a lot of opportunities in the stock market.”
“Crestview Exploration could be sitting on over $4 billion of gold!”
Harvard Business School alumnus
Jim Davis on Blue Lagoon (June 13 article on The Daily Edition):
“The current sanitary crisis has created a lot of opportunities in the stock market if one knows
where to look.”
Past Pick: Wallbridge Mining
Harvard Business school alumnus
Joe Christy on Blue Lagoon (June 10 Pennystockzone email blast to subscribers):
“Gold has been the No1 safe haven throughout times, and Blue Lagoon Resources is literally
sitting on tons of it.”
Past picks: Wallbridge Mining, Alacer Gold, Liberty Gold
NIALL McGEE AND JOHN SOPINSKI/THE GLOBE AND MAIL
The overlap in the Blue Lagoon and Crestview promotions raises the possibility that the same third party may have been behind both, and that Mr. Campbell, Mr. Davis and Mr. Christy could be the same person.
When The Globe asked the RCMP, BCSC and ASC whether they were exploring that possibility, all declined comment, citing the inability to speak during a continuing investigation.
Last month, Scott Reeves, Crestview’s lawyer, wrote in an e-mail to The Globe that the company had extensive discussions with regulators and the RCMP. Mr. Reeves said it was clear investigators are focusing on a “rogue individual in question attempting to manipulate Crestview stock for his own purposes.”
There are gaps in North American securities laws that make it easier than it should be for third parties to manipulate shares behind the scenes and potentially leave no trace in the process.
“If you’re promoting a security, you have to disclose if you were paid by the company or a third party,” said Cromwell Coulson, CEO of OTC.
“If you’re paid by a third party, you don’t have to disclose who the third party is, and you don’t have to disclose who you are, which is just ludicrous.”
In practice, that means a third party could buy a block of shares in a thinly traded stock, then hire a promoter to “spam out a bunch of complete lies” about the company, he said. But the identity of the promoter and the third party don’t have to be disclosed.
Unlike IIROC, OTC is not a self-regulatory organization. It doesn’t have the investigative powers of Washington’s Securities and Exchange Commission, but over the past few years it has been active in identifying potentially dubious stock promotions. When it notices unexplained price or volume movement on a stock, it routinely asks companies to disclose more information, particularly any relationships it may have with stock promoters. Canada has largely followed OTC’s lead in this arena.
“Promotion is not as reputable a profession as we would like it to be,” Mr. Coulson said.
“Regulators in Canada have been very positive about what we’re doing, about trying to get more disclosure when promotions are going on, and putting sunlight into an area that’s been a bit of a dark corner,” he said.
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