(August 14 – 12:05 ET) – The Alberta Securities Commission has issued reasons for its decision in the Cartaway Resources Corp. case.
The Cartaway fiasco involved a firm, traded on the Alberta Stock Exchange, that was controlled by a group of brokers from the Calgary and Vancouver offices of First Marathon Securities Ltd. In May 1996 the firm issued news releases describing promising drilling results in the Voisey’s Bay region, near the Diamond Fields Resources huge nickel strike. The stock spiked to $26 before assay results were released, revealing no nickel at the site and the stock tanked, crashing the ASE’s systems in frenzied trading.
Cases have been brought against those involved by the TSE, B.C. and Alberta securities commissions. The ASC was looking at whether a Cartaway director failed to promptly disclose the change in Cartaway’s business from a garbage-container-rental company to a Voisey’s Bay mining exploration company. The panel found the director blameless because the brokers “participated in a secret plan to acquire cheap stock through the private placement, knowing that Cartaway would later become a Voisey’s Bay mining exploration company.”
It also looked at whether Cartaway’s distribution of drill core samples prior to assay constitutes selectively releasing a material fact. The ASC found that, “although it is generally unwise to distribute samples prior to assay, the samples in this case were too small to constitute material information”. However it did find that issuing a news release suggesting mineralization was a “misrepresentation”.
It found that Cartaway CEO John Ivany, “displayed a reckless and cavalier approach that fell far below the standard expected of persons in his position.” The hearing will reconvene in order to receive submissions for an order against Ivany.
-IE Staff