The RCMP Integrated Market Enforcement Team charged three people with stock market fraud, among other things, following an 18 month investigation.

Two of the three have been arrested and charged and a warrant has been issued for a third man on allegations conspiracy to commit fraud over $5000, fraud over $5000, laundering the proceeds of crime, possession of the proceeds of crime, and extortion, among other things. None of the allegations have been proven. The two men that have been arrested were to appear today at Old City Hall in Toronto.

The Toronto IMET says that the investigation began in December 2004 following a referral from the Ontario Securities Commission dealing with trading irregularities by a group of individuals in a security known as Pender International Inc. Authorities are alleging that this case mirrors a version of a “Pump and Dump” scheme.

“All of the measures put in place to ensure the integrity of our capital markets have proven to be very effective,” stated superintendent Don Panchuk, officer in charge of Toronto IMET. “The OSC issued the Cease Trade Order almost immediately upon hearing of this group. Today, after a thorough investigation IMET has laid charges against these three individuals. By recognizing the threat immediately, and acting together, we were able to avert a potential fraud that would have been capable of netting over $360 million.”

“This project demonstrates the cooperation amongst Canada’s securities regulators and police agencies,” said David Wilson, OSC chair. “Our referral in this matter sends a message that manipulating Canada’s capital markets for personal gain will not be tolerated.”