Liht Cannabis Corp’s independent director Richard Huhn and chief operating officer Linda Sampson speak to the crowd gathered during a public information session at the Cedar Heights Community Association in Sorrento, Nov. 17, one of two public meetings held. (Jodi Brak/Salmon Arm Observer)

B.C. securities regulator probes ‘most expansive’ alleged trading scheme in its history

Liht Cannabis Corp states it’s doing internal investigation, welcomes BC Securities Commission probe

A company with a Shuswap connection is named in an ongoing investigation by the B.C. Securities Commission.

The BCSC is currently investigating what it calls one of the most expansive alleged trading schemes in the organization’s history, involving 11 separate companies and a large group of people and firms identified as consultants.

One of the 11 companies is Liht Cannabis Corp., which is constructing a cannabis growing facility in Celista.

Black Press Media contacted BCSC media relations manager Brian Kladko on Dec. 7 and was told that executive director Peter Brady says this investigation involves a relatively large number of players compared to past cases and is the first time a Canadian securities regulator has investigated the type of transactions involved.

Liht, meanwhile, stated in a Nov. 28 news release it is carrying out its own internal investigation and welcomes the BCSC’s examination.

Twenty-five consultants and their affiliated 26 firms named have been temporarily banned from buying or selling the securities and shares of the 11 companies named by the BCSC, alleging they took part in a scheme that was abusive to the marketplace.

Most of these consultants are in B.C.’s Lower Mainland, but a few group members have addresses in the Cayman Islands, Marshall Islands, Australia, Hong Kong, the Czech Republic and Switzerland.

The ban order arises from an ongoing BCSC investigation into transactions between the purported consultants – which Brady refers to as “the BridgeMark Group” – and B.C. companies operating in the cannabis, cryptocurrency, mining and alternative energy sectors.

Related: Medical cannabis operation in the Shuswap may face regulatory hurdles

Brady alleges that four companies, after selling a total of $17.9 million worth of shares to members of the BridgeMark Group earlier this year, returned $15.3 million to members of the group. The BridgeMark Group then sold those securities in the market, often at prices far below what its members had paid, netting about $6.2 million. The four companies at the centre of the investigation include Green 2 Blue Energy Corp., Cryptobloc Technologies Corp., BLOK Technologies Inc. and New Point Exploration Corp.

According to a Nov. 26 news release from the BCSC, “the four companies subsequently issued news releases saying they had raised a certain amount of money by selling their shares, even though they had paid most of the purchase amount back to BridgeMark.”

This allegedly could make it appear as though the companies had received significant investments or interest in their projects, when the money was simply changing hands between the companies and the BridgeMark Group.

None of these allegations have been proven in court.

The BCSC is concerned that the BridgeMark Group engaged in similar transactions with seven other companies, which include Liht Cannabis Corp., the company behind the large medical cannabis operation in Celista. Liht is not one of the four primary companies being investigated in the case, but is named as a respondent along with six other companies.

Black Press contacted Liht’s chief operating officer Linda Sampson on Dec. 7 for comment regarding the case. She said the company is unable to speak to media as the matter is still under investigation by the BCSC.

However, in a news release regarding the investigation, Liht states: “The Company had engaged consulting services which were to be provided by certain members of “The BridgeMark Group” listed in the BCSC news release. Prior to the announcement, the Company had undertaken its own internal investigation and fact-finding, to reconcile the contracts and services rendered to the Company. The Company’s internal investigation has not yet been completed. The Company welcomes the BCSC’s examination of these matters, we will attend the hearing on December 7th, 2018 and cooperate with their investigation.”

Related: Column: Cannabis – from underground to mainstream

Altogether, the BridgeMark Group purchased a total of more than 252 million securities from the 11 companies between February and August, paying $50.9 million, states the BCSC news release. The temporary ban order prohibits all of the 11 Canadian Stock Exchange-listed companies from using what’s called “the consultant exemption” to sell their shares.

The BCSC alleges that the securities sales to BridgeMark were illegal because they improperly used the consultant exemption to avoid filing a prospectus, a formal document that provides details of an investment. Brady is concerned that the BridgeMark Group’s members are not consultants, that they provided little or no consulting services to the issuing companies, and engaged in the scheme for their own profit – conduct that Brady describes as “abusive to the capital markets.”

A hearing was held in Vancouver on Friday, Dec. 7 to determine the next steps in the case, and whether the temporary ban order would be extended or escalated. Due to the large scale of the case, on Dec. 7 the BCSC panel did not make a decision but “extended the temporary orders until it renders its decision on the application.”

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province.


 

@Jodi_Brak117
jodi.brak@saobserver.net

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

NIC biologist on forefront of marine research

NIC biologist on forefront of marine research NIC biology instructor and marine… Continue reading

Campbell River RCMP issue statement in support of a peaceful rally and against racism

The Campbell River RCMP issued a statement in support of a peaceful… Continue reading

Road maintenance work scheduled for Black Creek and Quadra Island

Spring roadside work will be in progress along Highway 19 A and Granite Bay Road on multiple days

Vancouver Island’s current COVID-19 case count officially hits zero

Of the 130 recorded Island Health cases, five people have died, 125 recovered

Trudeau offers $14B to provinces for anti-COVID-19 efforts through rest of year

Making a difference in municipalities is a pricey proposition

Facing changes together: Your community, your journalists

The COVID-19 pandemic has changed the world in ways that would have… Continue reading

Mirror business directory and map

If you’d like to be added to the list, shoot us an email

Friends, family mourn Salt Spring Island woman killed in suspected murder-suicide

A GoFundMe comapaign has been launched for Jennifer Quesnel’s three sons

‘I’m pissed, I’m outraged’: Federal minister calls out police violence against Indigenous people

Indigenous Minister Marc Miller spoke on recent incidents, including fatal shooting of a B.C. woman

Indigenous families say their loved ones’ deaths in custody are part of pattern

Nora Martin joins other Indigenous families in calling for a significant shift in policing

‘Alarmed’: Health critic calls for more data on COVID-19 in trucking industry

Saskatchewan, Ontario and Quebec said that level of detail is not being collected

UPDATED: Pair accused of ‘horrific’ assault at Vancouver’s Oppenheimer Park arrested

Police say Jason Tapp, 30, and Nicole Edwards, 33, did not show up to meet their bail supervisor this week

Kelowna Mountie who punched suspect identified, condemned by sister

‘How did he get away with this? How is this justifiable?’

Most Read