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Barkerville penalties do nothing to stop slimy stock promotion

Danny Deadlock Danny Deadlock, TickerTrax
17 Comments| January 25, 2016

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Friday, January 22, 2016 | www.tickertrax.com | Previous Issues
Barkerville Penalties Do Nothing to Stop Slimy Stock Promotion
By Danny Deadlock, TickerTrax
 
 
 
It has been quite some time since a public company peed me off enough that I wanted to write about it, but a recent settlement associated with Barkerville Gold Mines (BGM.V) is justification. A LOT of people lost a LOT of money on this company in 2012 and the penalty against those who orchestrated it, is a farce.
 
When you see this type of nonsense, it is no wonder the junior mining industry cannot raise capital anymore - they have run out of retail investors to take advantage of !
 
And the securities regulators should be ashamed of themselves. They have gone out of their way to regulate fund raising (private placements) to death, but when something so blatantly obvious FLEECES unsuspecting investors, they do little about it – and when they finally do, the penalty is a JOKE. There is nothing in place to keep others from doing the same thing.
 
QUICK BACKGROUND
 
After collapsing in June of 2012 to 30 cents, BGM was heavily accumulated before a “grossly promotional” news releases was unleashed on the world. The news included drill results and horribly inflated gold resource estimates. The stock doubled overnight on huge trading volume and gained more than 200% over the trading price only two weeks earlier.
 
The stock exchange and/or regulators should NEVER have allowed that stock to open for trading on that news. LET ALONE the fact they allowed trading for six weeks before it was FINALLY halted near $1.28 (?!). Yes there were a LOT of very naive investors buying BGM on that news, but I have watched stocks get halted for plenty of reasons FAR less than this.
 
Click to enlarge
 
Not only was VERY little done to protect investors when that news was released, but the penalties that came out of this after several years were nothing more than a simple slap on the wrist. Proving once again to investors of junior resource stocks that this industry is nothing more than “The Wild West”.
 
And the Canadian financial industry wonders why few want to come back in and buy stocks on the TSXV or CSE even as many very good companies trade near painful lows. Other than horrible commodity prices and destroyed portfolios, investors are sick of being taken advantage of and when they are, nothing is done about it.
 
The investing public has very little confidence that they will not be taken advantage of, and if they are, that anyone will be there to do something about it.
 
Two weeks after this infamous news release by Barkerville – and after the stock was being allowed to continue trading – I wrote the following article on Stockhouse (link and excerpt shown below).
______________________________________________________
 
July 13, 2012
Barkerville pulls playbook from 1990's VSE: Stockhouse TickerTrax
https://www.stockhouse.com/news/natural-resources/2012/07/13/barkerville-pulls-playbook-from-1990-s-vse-stockho
 
“I can imagine the flaming that will occur this week in the comments section after this opinion on Barkerville – but I really do not care. While I suspect a lot of people closely associated with Barkerville made a lot of money (by accumulating stock in early and mid June), a LOT of people lost a lot of money on tactics that were employed by this company.
 
Those directly responsible would have been Frank Callaghan (President & CEO), consulting geologist Peter T. George, and Barkerville chief geologist Jim Yin.”
______________________________________________________
 
Investors lost millions because of this grossly promotional news release and yet the CEO Frank Callaghan received a $30,000 fine and the man calling himself a geologist, Peter George, was recently handed a $15,000 fine !!??
 
The TMX Group has been holding “Town Hall Meetings” across Canada in an effort to bring investors back to the TSX and TSXV. I applaud the effort BUT they need to start by better protecting investors (not over-regulating and creating more paper work for public companies), but REALLY watching for the garbage news releases and cracking down immediately - when it is glaringly obvious that something is wrong.
 
I often see stocks halted and questioned for the dumbest reasons or companies asked to issue a clarification of trading when it was obvious it wasn’t necessary (a stock bouncing off a grossly oversold low for example).
 
YET situations like Barkerville are allowed to occur and when they are finally penalized, it has taken three years and the penalty is (as I stated at the beginning), nothing short of a joke.
 
It will be difficult to encourage investors to return to the TSXV or CSE if they have little confidence in the exchange or the regulators. Retail investors typically understand the risks and are big enough to make their own investing decisions, but when it’s glaringly obvious they are being taken advantage of, they need to know proper mechanisms and penalties are in place to help protect them.
 
IN CLOSING…
 
Barkerville is the perfect example of a system that is severely broken and until something is done to repair it, retail investors will continue to be taken advantage of.  There is a line between “corporate communication” (which is critical), and “stock promotion” (which is abused).
 
WAY more needs to be done in Canada to severely crack down on those stock promoters who continually damage the reputation of the TSX, TSXV, and the CSE. If nothing else, start with HUGE fines that deter the abuse, not encourage it.
 
These guys don’t care if they are banned from being a director or officer of a public company. They have already robbed investors of their money and are sitting with a large (often offshore) bank account and a new vacation home.
 
We need a system in place that better protects the average investor and starts with large fines when people have been taken advantage of by unscrupulous stock promoters and brokers.
 
_____________________________________________________________________
 
Throughout the week you can follow Misc market information I post on Social Media
http://www.twitter.com/microcap_com  or  www.facebook.com/microcap
 
LinkedInwww.linkedin.com/in/dannydeadlock
_____________________________________________________________________
 
Disclosure (shares always purchased in the open market):
N/A
_____________________________________________________________________
 

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marpincan
Danny D deserves 10 stars for this report. Enforcement of securities regulation in Canada tends to be a joke and the results of this case proves it.
3 stars
January 25, 2016
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tcalandra
Bravo. Many Bravos, Danny. tc
5 stars
January 23, 2016
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Tradernick
Please watch the activities of Greg Gibson going forward. He is no saviour - he is a farce. Someone who is a one-and-done, and has blotched everything else in his career. Barkerville is diluting the hell out of existing bagholders. Thankfully, I believe, we will see extreme bullish behaviour start shortly. Thankfully.
2.5 stars
January 23, 2016
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stack
Excellent article, Danny. I've been fleeced by a number of Venture and TSX listed companies and it would be nice to see some of the Insiders responsible face criminal charges rather than petty slaps on the wrist. Investors today are fearful and with good reason. It would be nice if this could change one day and give us a fighting chance of making some money and not just losing it all to these sorts of people.
3.5 stars
January 28, 2016
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j_harbaugh
Have a read of this: http://seekingalpha.com/article/3808506-the-systematic-erosion-of-the-retirement-savings-of-canadians Issues like Barkerville scamming the investor public are once in a while. The banks scam the public through naked shorting on every stock, every day.
3 stars
January 29, 2016
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calico
Hey Danny, what are you smokin'? Any perceived abuse by BGM is peanuts compared to the daily abuse perpetrated on practically every company on the Venture by shorters, particularly naked shorters. Why not get your knickers in a knot over that, since it's been going on for decades? As for BGM, I believe they really do have a monster resource in BC. For the record, I have no shares in BGM, but will probably pick up some soon.
2.5 stars
January 25, 2016
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biloshi
Nicely done Danny D., I and many investors share your frustration! To make these Canadian Markets more transparent and more of a level playing field is not rocket science its just simple common sense. From what I see the Regulators are rooting for the bad guys!!! Thanks for calling them out Danny! Cheers!
2 stars
January 22, 2016
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Wirtz
Fortunately, did not buy in, had thought about it & decided No. Something didn't seem right to me - Even though Barkerville was headlines everywhere, almost daily advertising on Stockhouse. Instead, I decided to invest in Lithium junior HLM doing the right things in smaller stages & getting results for shareholders, a junior that "never" appears in any Stockhouse headline nor any analyst or media publication.
3 stars
January 25, 2016
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kcac1
Danny, Any chance of a follow up now that a class action lawsuit has been announced. Also, do you have contacts to find out who is the law firm handling the class action which is long over due. Thanks
2.5 stars
April 10, 2016
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Chefboy69
it is very sad that unscrupulous promoters continue to do this. Now they have moved from the mining industry to the pot/marijuana industry. Just take a look at all the tickers that have been promoted then dumped on retail investors. Its a dog eat dog world out there.
1 star
January 23, 2016
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