The British Columbia Securities Commission (BCSC) has issued a notice of hearing alleging that mining company Cinnabar Explorations Inc. and three B.C. residents engaged in illegal distributions, and that one of them made prohibited statements.
The notice says Cinnabar, which purported to own a gold and copper property in Idaho, raised $45,000 from 13 investors between April and July of 2011. Cinnabar has never filed a prospectus in B.C.
Christopher James G. Bass, Daniel Grant McGee and Dale Zucchet, all of whom are B.C. residents, are also named in the notice.
Bass was CEO and a director of Cinnabar until his resignation on October 4, 2011. He was registered as an investment adviser from 1986 to 1987, and was previously sanctioned by the BCSC in 1988.
McGee is a director of Cinnabar, and Zucchet solicited investors on behalf of the company.
The notice says that Cinnabar filed exempt distribution reports with the BCSC concerning the distribution.
The BCSC contends that seven of the 13 investors did not qualify for the family, friend and business associates and accredited investor exemptions relied upon by Cinnabar.
On July 21, 2011, the corporate finance division of the BCSC cease-traded the securities of Cinnabar.
In addition to the illegal distribution, the BCSC alleges that Zucchet made materially false or misleading statements to a commission investigator concerning Cinnabar’s plan to go public and the legality of purchasing shares under an exemption for which the investigator said he did not qualify.
These allegations have not been proven. A hearing date is scheduled to be set September 18.
