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by Mike Caswell
The U.S. Securities and Exchange Commission has reached a settlement with Caledonian Bank Ltd., the Cayman Islands firm formerly headed by an Ontario lawyer that is accused of facilitating multiple pump-and-dumps. Caledonian has agreed to disgorge $25-million in gains, without admitting any wrongdoing. (All figures are in U.S. dollars.) It has also accepted a permanent penny stock ban.
The SEC claimed that Caledonian was one of a group of offshore brokerages that sold $75-million worth of shares in four Canadian-linked companies during questionable promotions in 2013. The selling occurred as aggressive campaigns were under way to tout the companies as active oil and gas or mining issuers. Of the companies, three had links to Surrey, B.C., and the other had a Montreal man as its president.
Caledonian's settlement is contained in a memorandum the SEC filed on Tuesday, Feb. 9, in New York. While the firm has agreed that it is liable for $25-million in disgorgement, the sanction means little in real terms. According to the memorandum, Caledonian has no way to pay the penalty. The firm is in the hands of a court-appointed receiver in the Cayman Islands. The receiver expects that there will be no assets remaining after paying out priority creditors.
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