B.C.’s investment regulator finds Vancouver company carried out pump-and-dump stock fraud
In pump-and-dump schemes, stocks are artificially hyped to raise the price and then are sold to unsuspecting investors. The schemes usually involve so-called penny stocks, which are priced at under $5.
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B.C.’s investment markets regulator has found that a Vancouver-based company and four B.C. businessman committed a pump-and-dump stock fraud.
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A B.C. Securities Commission panel determined that the company, Core Capital Partners Inc., and Kamaldeep Thindal of Langley, his brother Amandeep Thindal of Surrey, Yazan Al Homsi of Vancouver, and Aarun Kumar of Vancouver violated the B.C. Securities Act by directly or indirectly taking part in actions they knew, or should reasonably have known, would create a false impression of trading activity or artificially affect the share price.
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The panel further determined that the Thindal brothers and Al Homsi approved or allowed Core Capital’s misconduct and therefore also violated the Securities Act.
In pump-and-dump schemes, stocks are artificially hyped to raise the price and then are sold to unsuspecting investors. The schemes usually involve so-called penny stocks, which are those priced at under $5.
In its 134-page written findings, a three-member securities commission panel noted that pump-and-dump schemes are particularly insidious to the investment markets in B.C.
“While efficient markets are premised on transparency and accurate timely disclosure by (stock) issuers, a pump-and-dump scheme is exactly the opposite: inaccurate or artificial impressions are created by unknown parties to inflate share prices,” wrote the panel. “These adverse effects impact the market in real time, and unwitting investors gain knowledge of the ruse only after the fact.”
The securities commission said Core Capital Partners Inc. described itself as providing merchant banking services to emerging companies and claims to have raised, invested and co-invested $540 million since 2005.
The panel found that shares were sold for a profit of $46 million in the alleged scheme, but the illicit gains have not been calculated in detail yet, with allegations dismissed involving one stock and against some participants.
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The calculation of illicit profits will come during the next step when a separate securities commission panel will determine sanctions, including monetary penalties, after hearing from the parties.
The panel found that between 2017 and 2019, the pump-and-dump scheme led to a spike in the share price of two companies: Block One Capital Inc., formerly Essex Angel Capital Inc. and now known as AI Artificial Intelligence Ventures Inc.; and Integrated Cannabis Company Inc., formerly known as CNRP Mining Inc. and now known as Leef Brands Inc.
The panel found that Kamaldeep Thindal, the managing partner and sole director of Core Capital, his brother Amandeep, Core Capital’s CFO, and Al Homsi, formerly Core Capital’s vice-president of investments, knowingly engaged in conduct that resulted in an artificial price of Block One and Integrated/CNRP.
The panel found Kumar, also known as Aaron Rai Kumar, Core Capital’s vice-president of corporate development, engaged in conduct that he knew or should have known resulted in an artificial price of Block One
The participants used a variety of tactics to conduct the scheme, including concealing their control of the issuers involved, distributing misleading news releases and arranging for the publication of misleading promotional campaigns, said the securities commission.
