British Columbia Securities Commission

British Columbia Securities Commission

April 24, 2012 19:15 ET

BCSC Executive Director's Bulletin: Securities Regulator Alleges That CEO and Directors of Company Failed to Make Immediate Disclosure

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 24, 2012) - The executive director of the British Columbia Securities Commission has issued a notice of hearing alleging that in December 2010, the President and Chief Executive Officer and three other directors of a Vancouver mining company listed on the TSX-Venture Exchange (TSX-V) voted to approve the exercise price of stock options before publicly disclosing assay results pertaining to its gold project in Tanzania.

The notice alleges that Andrew Lee Smith, Randy Smallwood, David Parsons and Brian Lock delayed and staggered the disclosure of assay results for Canaco Resources Inc.'s gold project located in the Handeni region of the United Republic of Tanzania (known as the "Magambazi claim"). During the relevant period, Smith was Canaco's President, Chief Executive Officer and a member of the company's board of directors. Smallwood, Parsons and Lock were directors of Canaco.

The executive director maintains that between November 22 and November 29, 2010, Canaco became aware of assay results from eight new drill holes at its Magambazi claim. In the opinion of Smith, Smallwood, Parsons, and Lock, the drill results were "spectacular", "just beautiful", "fantastic news" and "big results".

Canaco delayed and staggered the disclosure of the results by issuing three separate news releases on December 6, 9 and 22, and the company's share price rose in reaction to each release. Canaco did not file a material change report with respect to the assay results.

The notice also alleges that Smith, Smallwood, Parsons and Lock voted to approve a grant of 7,225,000 stock options to certain directors, officers and consultants with an exercise price of $4.56 per share, the closing price on December 2, 2010. They failed to act in the best interests of Canaco by voting in favour of grants of stock options to themselves with the knowledge that the market price upon which they were based did not take into account some or all of the assay results.

These allegations have not been proven. Counsel for the executive director will apply to set dates for the hearing on May 29, 2012 at 9:00 am.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the notice of hearing on our website www.bcsc.bc.ca by typing Canaco Resources Inc, Andrew Lee Smith, Randy Smallwood, David Parsons, Brian Lock or 2012 BCSECCOM 132 in the search box. Information regarding disciplinary proceedings can be found in the Enforcement section of the BCSC website.

Please visit the Canadian Securities Administrators' Disciplined Persons List for information relating to persons disciplined by provincial securities regulators, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).

If you have questions, contact Richard Gilhooley, media relations, 604-899-6713. For public inquiries, call 604 899 6854 or 1 800 373 6393 (toll free).

Learn how to protect yourself and become a more informed investor at www.investright.org.

Contact Information

  • British Columbia Securities Commission
    Richard Gilhooley
    Media Relations
    604-899-6713 or (Canada) 1-800-373-6393
    www.bcsc.bc.ca