The Provincial Court of Alberta has sentenced Caroline Meyers (a.k.a. Caroline Winsor, Caroline Danforth, Caroline Winsor-Meyers), the principal of Calgary-based International Securities Group Inc., to two years in prison for her role in the 2010 market manipulation of the securities of Coastal Pacific Mining Corp.
In December 2015, Meyers pled guilty to acting as a dealer of securities without registration, not filing a prospectus, and engaging in a course of conduct that resulted in a false appearance of trading activity and an artificial price for Coastal Pacific securities. Her co-accused, Joseph Bucci, also pled guilty to the same charges in September 2015. Bucci received an 18-month conditional sentence and permanent market bans, the first court sentence handed down in a ‘pump-and-dump” case in Alberta. Meyers is the second such sentence - the first with time served in jail.
Meyers recently returned to Canada from the U.S., where she spent time in jail for similar misconduct involving securities of different companies.
Provincial Court Judge Skene also ordered that Meyers be permanently prohibited from:
- trading in and purchasing securities or derivatives of publically traded or quoted issuers;
- using any exemptions in Alberta securities laws; and
- acting in a management or consultative capacity in connection with activities in the securities market.
“Penny stock fraud (‘pump-and-dump’ schemes) is a serious and growing problem in North America, undermining the integrity of our capital markets and inflicting tens of millions of dollars in damage to unsuspecting victims,” says Alberta Securities Commission (ASC) Director, Enforcement Cynthia Campbell. “These activities create artificial demand by distorting the price of shares through falsehoods and exaggerations of company success. Perpetrators cash in on the falsely inflated prices, halt the misinformation and watch as the share price comes crashing to the ground. Innocent purchasers are left holding essentially worthless shares.”
A copy of a transcript of the court proceedings including the oral decision can be obtained through the Provincial Court of Alberta in Calgary.
The ASC works closely with other securities regulators and police agencies, nationally and internationally, to identify, thwart, investigate and prosecute pump-and-dump schemes and to educate the public on how to avoid becoming involved in such a scheme. The ASC gratefully acknowledges the significant assistance of the Royal Canadian Mounted Police, Federal Bureau of Investigation, United States Department of Justice, United States Securities and Exchange Commission, and Financial Industry Regulatory Authority.
Recognizing a pump-and-dump scheme:
Pump-and-dump schemes usually involve penny stocks that are quoted on the over-the-counter (OTC) markets. They typically start with promoters drawing attention to a stock through press releases, investment blogs and newsletters. They will promote their stock as “the next big thing”, along with other misleading statements to get investors to buy in. The promotion pumps up the stock volume and price, and the stock price typically rises as more investors buy into the hype. What investors don’t know is that the promoters own a large number of shares and once the stock price peaks, the promoters sell their shares, depressing the price, leaving investors with shares that are nearly worthless. More information on how to recognize and avoid pump-and-dump schemes can be found here.
The ASC is the regulatory agency responsible for administering the province's securities laws. It is entrusted with fostering a fair and efficient capital market in Alberta and with protecting investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada's capital markets.
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