Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Robert Caines had a sick sense of déjà vu when he spotted an article on the internet hyping shares in mining exploration company Graycliff Exploration Ltd.

According to The Financial News website, Toronto-based Graycliff, which trades on the Canadian Securities Exchange (CSE), was sitting on $500-million worth of gold reserves, and its stock was set to skyrocket by 800 per cent. The post on Graycliff was almost identically worded to one Mr. Caines saw in February that had motivated him and his father-in-law to buy shares in Crestview Exploration Inc. , another CSE-listed stock. After they had held Crestview for a few weeks, the stock crashed for no apparent reason.

“All of a sudden, around 10:30 that day, it just dropped from $2.45 to $1.30 in a matter of 10 minutes. ‘Oh my God, how can this go down so much,’” Mr. Caines said.

Story continues below advertisement

He now believes he bought shares in a company that was the target of a “pump and dump.” In such schemes, scammers acquire shares in a thinly traded stock, then spread false information that pumps up the price and trading volume. Taking advantage of the artificially high price and volume, the con artists then dump huge amounts of stock, leaving legions of honest investors with stocks that are worth far less than they paid. The Caines family cashed out of Crestview with a $16,000 loss.

This week, Graycliff and another CSE-listed company, Valorem Resources Inc. , were targeted on the same website that promoted Crestview in February in a near identically worded post. On Monday morning, after The Financial News said Graycliff was poised to explode by 800 per cent, and was sitting on $500-million in reserves, its shares ran up by 50 per cent. Around midday, The Financial News suddenly dropped its promotional push on Graycliff, and shifted its efforts to Valorem. Almost right away, Graycliff shares started tanking, and Valorem went parabolic. Valorem ended the session up 48 per cent, and Graycliff closed down by 29 per cent.

“They’re really scamming people, taking everyone’s money,” Mr. Caines said of whoever is behind the promotions. “The RCMP should know about this.”

The publicly available information about the-financialnews.com appears to be bogus. The site is registered to an individual called Carl Smith, who has a street address in London, but a Ukrainian postal code. The Globe and Mail tried to call the listed phone number for Mr. Smith, but it wasn’t in service.

James McIntosh, the chief executive officer of Graycliff, said no material news item could account for the giant swings in the company’s shares on Monday, and added that he had nothing to do with the promotion on The Financial News.

Valorem’s CEO, Tony Louie, did not respond to a request for comment, but the company said in a news release it was “not aware of any material, undisclosed information” that explained the recent jump in volume and prices of its shares.

Mr. Caines said he saw yet another post on The Financial News earlier in the year targeting metals explorer Chilean Metals Inc. , that claimed the company was sitting on $500-million in reserves.

Story continues below advertisement

Terry Lynch, the CEO of Chilean Metals, which is listed on the TSX Venture Exchange, said he was contacted around that time by The Investment Industry Regulatory Organization of Canada (IIROC). The market watchdog wanted to know why shares in the company were skyrocketing for no reason. Mr. Lynch told The Globe this week he had nothing to do with the “insane” post on The Financial News, and wasn’t even aware it existed. “The challenge with the internet is there’s a lot of lying buggers out there that are opportunistic and willing to take advantage of anyone,” he said.

The rinse-repeat nature of the promotions shows how powerless Canadian mining companies can be to protect themselves, and how ineffective regulators and market surveillance teams are at spotting them before they do damage, and stopping them once they are under way.

Mr. Caines, a general contractor who lives in Toronto, watched with a mix of horror and curiosity as the post that motivated him to buy shares in Crestview in February later morphed into promotions for Chilean Metal, Graycliff and Valorem: still alive on the internet, with Canadian regulators seeming to be unable to have it removed.

Richard Carleton, the CEO of CSE, which has been targeted by dubious stock campaigns more than any other exchange in Canada, said that trying to get a handle on problematic promotions has become a major focus.

“Going back at least a year, we have been working with, on a fairly regular basis, both IIROC and the responsible securities commission,” Mr. Carleton said, “on trying to peel the layers back on the promotional activities which are showing up mostly on social media and online, but as we saw occasionally, in old-fashioned print.”

But it is frustratingly difficult to get a handle on the problem, he said, especially when the materials originate overseas and the perpetrators can use encryption to conceal their identities. Mr. Carleton said CSE has jurisdiction to question only the officers of the company targeted. If a third party is responsible, it is up to the regulator to make enquiries.

Story continues below advertisement

The British Columbia Securities Commission (BCSC), the principal regulator for Graycliff, Valorem and Chilean Metals, declined to answer questions about the recent misleading stock promotion campaigns. “To protect the integrity of the investigative process, the B.C. Securities Commission does not confirm or deny the existence of an investigation, and does not provide details,” spokesperson Brian Kladko wrote in an e-mail to The Globe.

BCSC is already involved in an investigation centered on Crestview Exploration. About a year ago, the RCMP, in conjunction with B.C.’s security regulator and the Alberta Securities Commission (ASC) started a probe into possible securities market violations after letters were distributed across the country claiming Crestview was sitting on “billions of dollars of precious metals.”

Calgary-based Crestview, like Graycliff, Valorem and Chilean Metals, is an exploration company with no precious metals reserves, and therefore sitting on $0 in metals. Crestview CEO Glen Watson told The Globe last year that nobody at the company had anything to do with the letters.

IIROC on several occasions halted trading this week in both Graycliff and Valorem amid the frenzy. In an e-mail to The Globe, spokesperson Sean Hamilton said IIROC doesn’t comment on any investigations that may be under way.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies