British Columbia Securities Commission

British Columbia Securities Commission

June 25, 2009 13:30 ET

British Columbia Securities Commission: Former President and CEO of Mining Issuer Receives a Lifetime Ban

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 25, 2009) - The British Columbia Securities Commission has settled with John Gregory Paterson, the former president and CEO of Southwestern Resources Corp., who admitted to fraud and illegal insider trading.

In the BCSC settlement agreement, Paterson admitted that he committed fraud when he entered false assay results related to Southwestern's Boka project in China into the company's database. He also admitted to causing the false data about the gold mining operation to be reported in 24 news releases between March 7, 2003 and Feb. 21, 2007.

Paterson also admitted to illegal insider trading in the settlement agreement. On July 16, 2007, Paterson sold 50,000 Southwestern shares for net proceeds of $298,239.78, at a price of $5.96 per share. When he sold the shares, he traded with the knowledge that Southwestern would have to issue a news release correcting the gold assay values for the Boka project.

On July 19, 2007, the day that Southwestern announced the errors in the previously reported assay results for the Boka project, the trading price of Southwestern shares closed at $2.90 on the Toronto Stock Exchange. Paterson therefore avoided a loss, on that day alone, of approximately $153,000. The trading price of the shares continued to decline after July 19 as more information about the false assay results became public.

As part of the settlement agreement, Paterson, a geologist, undertakes not to act as a Qualified Person - an individual who prepares mining-related disclosure for issuers - in his lifetime. In addition, he is permanently banned, with limited exceptions, from trading securities or acting as a director or officer. Finally, he is permanently prohibited from engaging in investor relations activities or acting in a management or consultative capacity in connection with activities in the securities market.

Paterson voluntarily contributed all of his assets in settlement of lawsuits, and is unable to pay the approximately $3.5 million to the BCSC that would have been required in this matter.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the settlement on our website www.bcsc.bc.ca by typing in the search box, John Gregory Paterson or 2009 BCSECCOM 344. If you have questions, contact Ken Gracey, media relations, 604-899-6577.

Learn how to avoid investment fraud at the BCSC's investor education website: www.investright.org.

Contact Information

  • British Columbia Securities Commission
    Ken Gracey
    Media Relations
    604-899-6577 or (Canada) 1-800-373-6393
    www.bcsc.bc.ca