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Gold bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich March 3, 2014.

MICHAEL DALDER/REUTERS

British Columbia regulators have ordered a newsletter author to pay penalties totalling $4.3-million after ruling he took millions of dollars to tout stocks in reports so exaggerated they read like grocery store tabloids.

Colin McCabe of Abbotsford, B.C., was accused of taking more than $5-million (U.S.) to write glowing reports about three stocks, including mining company Guinness Exploration Inc., in 2010. The British Columbia Securities Commission panel said he did not disclose the payments to his readers and wrote inaccurate statements with no apparent research or verification of the facts.

A hearing panel ordered him to repay $2.8-million (Canadian) he received for touting shares of Guinness, and imposed an additional administrative penalty of $1.5-million. Mr. McCabe is also permanently banned from engaging in investor relations activities, which includes writing stock newsletters.

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Mr. McCabe told the hearing panel he was willing to voluntarily stop writing newsletters. He argued that he thought his actions were lawful and he did not intend to be deceptive or make misrepresentations.

The BCSC hearing panel rejected his statements, however, noting he wrote three newsletters, including two published under aliases, and took instructions from others about what to write without questioning who was behind the payments or what their purposes were.

"He was in the business of creating and publishing grossly promotional and misleading reports about public companies, no questions asked," the hearing panel wrote. "All he needed was payment in advance and a name for the disclaimer. … There was nothing about this conduct that was consistent with any benign market activity."

The hearing panel also sanctioned Erwin Speckert, who was the promoter who hired Mr. McCabe to write reports about Guinness, Tuffnell Exploration Ltd. and Gunpowder Gold Corp.

Mr. Speckert, a resident of both Zurich, Switzerland, and Minden, Ont., did not reveal who he was acting for when commissioning the articles.

"Speckert's actions in arranging for, and facilitating the funding of, egregious touting has no place in our capital markets and poses a risk to investors," the hearing panel said.

He received a five-year ban from acting as a registrant or stock promoter in the securities industry, from engaging in investor relations activities, and from managing or consulting "in connection with activities in the securities market."

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The hearing panel said it based its sanctions ruling on Mr. McCabe's promotion of Guinness Exploration alone because it was so egregious that it dominated its consideration of appropriate penalties in the case.

Mr. McCabe inaccurately wrote that Guinness had found one million ounces of recoverable gold in a Yukon property and said its shares could increase tenfold within a year.

The BCSC ruling said Mr. McCabe "simply made up a non-existent, but sensational, resource estimate" for the Yukon property, which he called a discovery "so massive it makes Fort Knox look trivial."

The panel said the reports read like "tabloids one might expect to see at a grocery check-out."

Mr. McCabe told the hearing panel he regretted any errors he made, but the panel decision said he did not testify at his sanctions hearing "so we cannot gauge the depth of his contrition."

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