BCSC Executive Director's Bulletin: Securities regulator alleges mining company made misrepresentations in its news releases

VANCOUVER, Feb. 7 /CNW/ - The executive director of the British Columbia Securities Commission is alleging in a notice of hearing that an OTC Bulletin Board (OTCBB) company and two of its directors contravened various securities laws when it issued misleading news releases over a more than two-year period. The executive director also alleges that the two directors breached a cease trade order.

The notice of hearing says that, from February 2005 to June 2007, Brookmount Explorations Inc., a company that quoted its shares on the OTCBB, issued nine news releases that included mineral estimates and economic forecasts about a property the company owned. These estimates and forecasts came from written reports that had inconsistent information about the mineral deposits on the property and its economic viability.

Additionally, the notice says that investors traded approximately 25 million shares with a market value of more than US $9.9 million when Brookmount Explorations was issuing the news releases.

At the time, Peter John Flueck, an Alberta resident, was the president and a director of Brookmount Explorations, and Zafer Erick Sungur, a B.C. resident, was also a director and officer of the company. Furthermore, the company operated from a Vancouver, B.C. office until July 15, 2007 when it relocated to Bellingham, Wash.

The notice alleges that:

  • Brookmount Explorations made misrepresentations when it disclosed selected mineral and economic information from the written reports, but omitted certain material facts in the news releases.
  • Brookmount Explorations breached National Instrument 43-101 Standards of Disclosure for Mineral Projects when it issued the news releases.
  • Flueck and Sungur contravened securities laws because they authorized, permitted, or acquiesced in the company's misconduct.
  • Flueck and Sungur breached a BCSC cease trade order when they sold Brookmount Explorations securities in July and August 2007.

These allegations have not been proven. Counsel for the executive director will apply to set dates for a hearing into the allegations before a panel of commissioners on March 28, 2011.

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. If you have questions, contact Ken Gracey, media relations, 604-899-6577.

SOURCE British Columbia Securities Commission

For further information:

Ken Gracey
604-899-6577 or
(Canada) 1-800-373-6393


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