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by Mike Caswell

Verdmont Capital SA, a Panamanian brokerage facing civil charges in the United States for selling millions of improperly issued shares in two Canadian-linked listings, says it did nothing wrong. The brokerage claims that it was simply acting on behalf of its clients. Despite its best efforts, it did not know the clients could be violating U.S. laws.

The firm is responding to civil charges the U.S. Securities and Exchange Commission recently filed against it and several other offshore brokerages. The SEC claimed that the firms sold $75-million worth of shares in four companies during questionable promotions. (All figures are in U.S. dollars.) The companies, which had links to B.C. and Quebec, were the subject of "aggressive and extensive" on-line touting campaigns, with spam predicting one could go as high as $7, the SEC said. They each fell to pennies after the campaigns ended.

For its part, Verdmont contends that it is essentially an innocent bystander. In a memorandum filed on Tuesday, Feb. 24, the firm says it is a brokerage that allows non-U.S. customers to trade U.S. stocks. With the transactions in question, it was simply acting as a broker, taking instructions from its non-U.S. clients.

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