Two B.C. men accused of manipulating share prices in a shell company are receiving hefty fines and long-term securities trading bans.
Malkeet Singh Bains and Narvinder Singh Patric Virk have admitted to market manipulation involving Sungro Minerals Inc., according to the BC Securities Commission.
Sungro, a Nevada corporation that was originally headquartered in Surrey, is quoted on the loosely regulated U.S. over-the-counter bulletin board.
Bains has been ordered to pay the commission $125,000 and is banned from trading in securities for 25 years. He is also prohibited from promoting stock or acting as an officer or a director of any issuer or acting in any management or consulting role in the securities or engaging in investor relations.
Virk has been ordered to pay a $100,000 fine and is banned from trading in securities for 25 years.
In his settlement agreement, Bains admitted that in 2007 he set up Sungro as a shell company, on the recommendation of a financial planner.
In 2009, Bains and the financial planner agreed to sell some of the shares and split the proceeds, after it became clear the company could not be sold as a shell company.
Bains also admitted to recruiting several friends to invest as seed shareholders. They then sold their shares at specified prices on specific dates in June and July of 2009.
One of Bain's friends was Virk, who admitted to becoming a Sungro seed shareholder. He also admitted to recruiting his own friends and family as seed investors. Virk admitted to selling his shares at prices and dates directed by Bains.
In July 2009, the BCSC ordered Sungro to cease trading, and issued a notice of hearing, alleging market manipulation.
Bains has admitted his actions would have given the appearance of artificially inflating the price of Sungro shares. Bains was the sole official director of Sungro at the time.
