The B.C. Securities Commission (BCSC) has accused two local businessmen of manipulating markets by promising investors a shell company they controlled would solve “the global food crisis” and “double in size every year.”
Business associates David Tuan Seng Lim and Michael Mugford allegedly began providing website content for Urban Barns Foods Inc. in late 2009.
Shares of the company were to be delivered to a Swiss firm and held for the Lim and Mugford. The Swiss wealth management firm, EuroHelvetia, would sell the shares while proceeds would be used to pay for promoting the stock.
Promotional tout sheets included statements such as “Urban Barns amazing technology will transform food production around the globe!” and "The company’s advance is so spectacular it could soon be the fastest growing company in North America.”
But Urban Barn Foods was never in operation at any point and had no revenue, according to filings with the U.S. Securities and Exchange Commission.
Despite that, the BCSC alleged the pair would buy and sell shares of Urban Barns through firms they controlled to make it appear as if the shell company was active.
Shares traded at a high of US$1.27 on the Over The Counter Bulletin Board markets in the U.S. before the stock crashed at $US0.22 when the last tout sheets were published in May 2010.
“The tout sheets were grossly promotional,” the BCSC said in a November 20 notice of hearing.
“(Lim and Mugford) engaged or participated in conduct relating to Urban Barns’ shares that they knew, or reasonably should have known, resulted in or contributed to a misleading appearance of trading activity.”
None of the allegations have been proven.
The BCSC will set dates for a hearing into the allegations on January 12, 2016.
