The Ontario Securities Commission is accusing a Toronto-based investor relations firm of talking up stocks in online forums using numerous aliases.

The OSC issued a notice of hearing last Thursday against Agoracom Investor Relations Corp., a related company, and Agoracom’s management, George Tsiolis and Apostolis Kondakos, accusing the firm of “fraudulent online posting activity”; that, it says, was designed “to create a misleading appearance of greater interest and trading activity in the securities” of its clients.

The allegations have not been proven, and the commission has set April 26 as the first day to begin hearing the case.

The firm has published a statement flatly denying the regulator’s allegations. In an online statement, Tsiolis, said, “It is an understatement to say that we are all shocked to receive the allegations made by the OSC.” He said that it has spoken out against boiler rooms and spam in online IR campaigns, and that it “outright disagree[s] with allegations made by the OSC and look forward to vigorously defending them at any future proceeding.”

In its statement of allegations against the firm and its management, the OSC claims that the firm’s representatives were required to post anonymously to online forums about its IR clients using aliases.

“To post messages anonymously, the representatives created fictitious usernames and posed as investors blending in with other users, investors and interested persons. Representatives had between 40-50 aliases (some had up to 200) and were required to make a requisite number of posts per hub per day or risk having their pay docked,” the OSC claims.

The commission alleges that more than 24,000 alias posts were created from within Agoracom; more than 670 aliases were created by its’ reps; and that their posts, “were promotional and promoted purchasing and/or holding stock.”

The OSC says that neither the public, nor the firm’s clients, were aware that representatives were posting using aliases.

“In fact, the respondents knowingly deceived clients about the traffic and activity generated on their hubs,” it says, adding that they “knew or ought to have known that the posting activity described above put their clients at risk of being in breach of the TSX-V Corporate Finance Policies governing investor relations firm activities and compensation.”

In its response, the firm says that, “The OSC allegation of fraud pertaining to traffic and activity on client hubs is unfounded and without merit.” The firm says that it initiated conversation on some client forums “to simply act as a catalyst to spark conversation amongst members and forum users.” And, it notes that in 2008 and 2009, its employees accounted for just 0.23% of total visits to the site. It also “outright rejects” allegations that posting activity was intended to be promotional.

The commission claims that the conduct it alleges violates Ontario securities law and is contrary to the public interest. It is seeking to suspend the registration of the firm’s management, as well as seeking cease trade orders, director & officer bans, and administrative penalties, among other sanctions.

IE