The Ontario Securities Commission has laid Securities Act charges against the president of
The charges, brought this past week in provincial court, allege that Harper sold about $4 million in Golden Rule shares between Jan. 3 and May 6, 1997, while knowing material facts that had not been generally disclosed. The material facts would appear to have been adverse results from the Stenpad exploration property in Ghana, where Golden Rule and
Samples taken from surface soils and from trenches on the property in November 1996 yielded high but frequently erratic gold concentrations in the range of 7 to 54 grams per tonne (T.N.M., Feb. 3/97). The results caused the market to bid up the price of both stocks, despite a warning from the companies in January 1997 that the results were preliminary.
Later check analyses on the sample pulps, done by a Canadian lab, showed slightly less gold but still returned grades between 7 and 15 grams.
That April, the two companies retained Associated Mining Consultants of Calgary to oversee their exploration program and verify the results of the earlier surface sampling before drilling started. Golden Rule and AMC independently resampled the trenches and could not duplicate the earlier results.
Evidence from assays of sieved fractions of the Stenpad samples led AMC to conclude that coarse particulate gold had made it difficult to reproduce the results of earlier gold analyses. AMC concluded that the earlier results — which had driven Golden Rule to $13.80 a share and Hixon to $13.95 — were unreliable. AMC’s report said “it would seem tampering is the most probable cause.”
The OSC alleges that during the time the Stenpad results were in doubt, Harper sold Golden Rule shares while knowing about the adverse results from the company’s own check sampling and from AMC’s technical audit. The charges cover the period Jan. 3 to March 6, 1997, during which time Harper sold 227,600 shares for $2.06 million, and March 14 to May 6, during which he sold 197,102 shares for $1.98 million.
Harper has been charged under Section 76 of the Securities Act, which makes it an offence for a company insider to “purchase or sell securities . . . with the knowledge of a material fact or material change,” until the fact has been disclosed to the public. Enforcement provisions prescribe fines of up to $1 million and a maximum jail term of two years less a day if convicted of a Securities Act offence.
A statement released by Golden Rule called the charges “surprising,” given that the company had co-operated with the OSC’s investigation. The statement said Harper would be defending the charges with the full support of the company.
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