Mr. Joseph Ovsenek reports
INDEPENDENT COUNSEL CONCLUDES PRETIUM-INITIATED INVESTIGATION
Pretium Resources Inc.'s independent legal counsel and a consultant retained to investigate recent trading in its shares have reached two clear, main conclusions.
First, the investigation found no evidence of an information leak by the company.
Second, there is evidence of instances of market manipulation in trading of Pretium shares by an outside party or parties. The findings of the investigation, summarized below, have been turned over to the U.S. and Canadian securities regulators for possible further action relating to the evidence of market manipulation.
Pretium initiated the external investigation into unusual trading of its shares
Pretium engaged independent legal counsel to examine unusual trading activity in its shares leading up to its news release dated Jan. 9, 2019. The investigation comprised an examination of:
a) Pretium's internal and external communications;
b) Trading in Pretium common shares and derivatives.
Independent legal counsel was provided with complete and unrestricted access to all Pretium internal and external communications for the review.
There was no evidence of information leaks from the company.
The independent investigation of Pretium's communications found no evidence of a leak of confidential information to market participants. In addition, Pretium's disclosure policies and procedures were reviewed and found to be compliant with all applicable laws and in conformance with best practices. As a result of the investigation, the independent legal counsel recommended minor revisions to the company's policies and procedures. These recommendations have been adopted by the company.
There was evidence of market manipulation through abnormal, high-volume sell-side common share order cancellation during trading, and there was a sharp rise in open interest of short-dated put options leading up to Sept. 6, 2018.
As part of the investigation, the independent counsel retained a consultant to examine the trading in Pretium's shares and derivatives leading up to Pretium's Jan. 9, 2019, news release, and additionally for trading leading up to and including Sept. 6, 2018, when Pretium's share price decreased sharply. In the opinion of the independent consultant, there is evidence of market manipulation in trading of Pretium shares based on a review of executed, created, cancelled and outstanding sell orders in Pretium's shares during both periods of review. In analyzing trading in Pretium's shares, the consultant identified an unusually high volume of odd-lot orders, and patterns of massive blocks of sell orders created and cancelled in rapid succession (within the same second) below and above the best offer. In one key finding in respect of the abnormal volume of order cancellations, on Sept. 6, 2018, sell orders for over 700,000 PVG shares were created and cancelled within the two, one-minute intervals between 11:45 a.m. and 11:47 a.m. EST. (By way of comparison, sell orders for an average of 4,297 PVG shares were created and cancelled for each minute of trading between July 1 and July 31, 2018.)
In reviewing PVG option trading from Aug. 1, 2018, through to Sept. 5, 2018, the consultant identified an unusually sharp rise in both the put-to-call ratio and short-dated put to long-dated put ratio leading up to the share price drop on Sept. 6, 2018.
Reports forwarded to U.S. and Canadian securities regulators for possible further action
The independent legal counsel retained by Pretium has completed its investigation into the trading of Pretium shares, and has forwarded all reports to U.S. and Canadian securities regulators. Pretium will co-operate with the securities regulators to its fullest extent in their review of trading in shares of Pretium.
Pretium is a low-cost intermediate gold producer with the high-grade underground Brucejack mine in Northern British Columbia.
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