The B.C. Securities Commission has punished a former executive of a Vancouver mining exploration firm for illegal insider trading and committing fraud.
In a settlement with the commission, John Gregory Paterson, the former president and CEO of Southwestern Resources Corp., admitted that he committed fraud when he entered into the company's database false assay results relating to the company's Boka project in China. He admitted to causing the false data about the gold mining operation to be reported in 24 news releases between March 7, 2003, and February 21, 2007.
Paterson also admitted to illegal insider trading. On July 16, 2007, he sold 50,000 Southwestern shares at $5.96 per share, which netted him $298,239.78 When he sold the shares, he traded with the knowledge that Southwestern would have to issue a news release to correct Boka's gold assay values. On July 19, 2007, the day the company announced the errors, the stock price fell to $2.90 and continued to fall as more information about the false results was made public.
As part of the settlement agreement, Paterson, a geologist, agreed that he would not act as a Qualified Person, an individual who prepares mining-related disclosure for issuers. He is also permanently banned from trading securities, acting as a director of a company, engaging in investor relations or acting in a management or consultative capacity in connection with activities in the B.C. securities market.