The Securities and Exchange Commission has charged a B.C. resident with stock manipulation.

The commission has filed suit against the former president of Dicom Imaging Systems, David Gane, a resident of White Rock, B.C., along with five Florida-based stock promoters alleging that they committed securities fraud through baseless financial projections and “scalping.”

Scalping is the practice of recommending the purchase of a stock to the general public while selling the stock around the same time.

The commission’s complaint also alleges that the promoters touted Dicom’s stock but did not disclose all of the compensation they were to receive. The SEC said that as a result of scalping, the promoters received over US$1.1 million in trading profits.

Gane was Dicom’s president, CEO, and a member of the board of directors. Dicom was a provider of dental imaging software from 1999 to 2001 but has ceased operations.

The SEC alleges that Dicom hired the promoters to tout Dicom’s stock in return for compensation. Gane supplied the promoters with Dicom’s financial projections for the next three years: US$24.7 million in revenues and US$19.7 million in earnings. The promoters wrote reports recommending the stock. In January 2000, Dicom announced that it was restating its financial results for the third quarter of fiscal 1999 from a gain to a loss.

Nevertheless, the stock promoters continued to repeat the projections in their investment opinions and set even higher targets for Dicom’s stock price. Gane announced even higher three-year revenue projections.