Several Canadian securities regulators are warning about an old-fashioned stock promotion seeking to exploit the fears of investors amid the prevailing market turmoil.
The B.C. Securities Commission (BCSC) and the Alberta Securities Commission (ASC) jointly issued a warning about an “aggressive stock promotion” involving Crestview Exploration Inc., a B.C.-based gold mining company that’s listed on both the Canadian Securities Exchange and the Frankfurt Stock Exchange.
The initial warning was echoed by both the Manitoba Securities Commission (MSC) and Saskatchewan’s Financial and Consumer Affairs Authority (FCAA), which later issued their own alerts.
According to the regulators’ warnings, the stock promotion seeks to capitalize on fears surrounding the impact of the Covid-19 outbreak on markets to gain investors’ attention.
“We’ve unfortunately seen a steep increase in marketing that exploits people’s anxiety about the pandemic and their investments,” said Jason Roy, senior investigator with the MSC, in a statement.
“Investors need to be extremely vigilant when making decisions in this environment.”
The warnings report that the mailing to investors in Alberta, B.C., Saskatchewan and Manitoba — which is purportedly from a stock analyst and geologist — “makes exaggerated claims about Crestview, predicting that its stock price ‘will soar as the recession hits.’”
On April 8, the company issued a statement stating that it was not responsible for the promotion, and advising investors to verify the basis of stock recommendations.
While the Covid-19 pandemic represents a novel challenge to the markets, this promotion is unusual in that it’s being carried out through printed mailings.
“Most aggressive stock promotions in recent years have been done through unsolicited email or social media, but promotions delivered through the mail carry the same risks,” the regulators said.