U.S. regulators levelled securities fraud charges against a Canadian oil sands company and a couple of its former executives.
The U.S. Securities and Exchange Commission (SEC) charged Petroteq Energy Inc. — an oil sands mining technology company that’s incorporated in Canada and trades on the TSX Venture Exchange, but has its head office in California — for making false and misleading disclosures in regulatory filings.
The alleged disclosure failings involved misstating the company’s assets, failing to disclose related-party transactions, and misleading investors in an unregistered securities offering about the company’s use of the funds being raised.
The SEC also charged the firm’s former executive chairman, Aleksandr Blyumkin, and former chief financial officer, Mark Korb, for their roles in the alleged disclosure failings.
Petroteq and Blyumkin agreed to settle the charges against them, without admitting or denying the SEC’s findings. They consented to an order, which finds that Petroteq violated securities laws and orders it to correct its disclosure and to pay a US$1-million penalty.
Blyumkin was ordered to pay a US$450,000 penalty and is banned from serving as an officer or director of a public company. Further proceedings will determine what disgorgement should be ordered against him.
The SEC’s complaint against Korb seeks permanent injunctive relief and a monetary penalty. The allegations against him have not been proven.
The regulator’s order against Petroteq and Blyumkin finds that the company raised US$7.4 million through an unregistered stock offering, and that its filings failed to disclose that the company paid US$2.9 million to two individuals retained to conduct the offering.
It also found that Petroteq’s regulatory filings failed to disclose multiple related-party transactions, including the company’s payment of US$23.8 million in cash and stock for oil sands mining rights in Utah.
“We are pleased to put this investigation behind us, and fully intend to comply with its terms as expeditiously as possible,” said Vladimir Podlipskiy, Petroteq’s interim CEO, in a statement. “We are confident that we will continue to have sufficient financial resources to pay Petroteq’s civil penalty instalments on a timely basis. Petroteq remains committed to doing the right thing on behalf of our employees, investors and customers and we are pleased to have reached a resolution to this matter.”