A Vancouver-based company and its CEO have been sanctioned by the U.S. Securities and Exchange Commission (SEC) for orchestrating a micro-cap fraud scheme.

The SEC secured final judgments in a U.S. district court against Brad Moynes and his company Digatrade Financial Corp., ordering them to pay over US$3.4 million in disgorgement, penalties and interest.

Moynes and the company consented to the entry of the judgments without admitting or denying the SEC’s allegations.

In June 2022 the SEC alleged that Moynes and the company generated over US$1.5 million in illegal proceeds from unsuspecting retail investors in a scheme where Moynes used foreign nominee companies to conceal his ownership in a couple of micro-cap companies that he controlled — Digatrade and Formcap Corp. — then paid promoters to tout the stocks, selling his shares into the demand generated by the promotions.

In its complaint, the SEC alleged that Moynes violated U.S. securities laws by failing to register the securities sales and not disclosing accurate information about those sales.

“As a result of Moynes’s deceptive conduct, investors buying the stock he sold were deprived of important information — that the stock they purchased was being dumped by the president and majority shareholder of the company,” the regulator alleged.

The final judgments imposed penny stock bans against Moynes and Digatrade, and an officer and director ban against Moynes.

As part of the financial sanctions ordered in the case, another company owned by Moyes, Vancap Ventures Inc., was ordered to pay almost US$1 million in disgorgement and $235,577 in prejudgment interest. The SEC alleged that Vancap received about US$1 million in illicit proceeds generated by the scheme.