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by Mike Caswell
Chip Rice, a Montana man facing civil charges from the U.S. Securities and Exchange Commission over the improper sale of millions of shares in a Saskatchewan OTC Pink listing and other companies, has lost a motion to have the case thrown out. A judge has found that there is sufficient evidence of the allegations, with the SEC claiming that Mr. Rice realized $13.9-million selling shares he acquired through convertible debt transactions. (All figures are in U.S. dollars.) Mr. Rice had complained that the SEC was unfairly trying to hold him to the same standard as a brokerage.
The decision comes as part of a case that the SEC has been pursuing against Mr. Rice for about nine months. The SEC cited Mr. Rice, a former broker, for shares that he sold in several OTC Pink companies. Among those stocks was Grow Solutions Holdings Inc., a Saskatchewan company that claimed to be developing high-tech vertical farms.
The case mostly centres around the SEC's claim that Mr. Rice was buying and selling shares for a business, and was therefore required to be registered. According to the SEC, Mr. Rice repeatedly sold deeply discounted stock that he had acquired through convertible notes. He bought notes from listings that were in need of cash, held the notes for the appropriate holding period and then immediately sold the stock on the market, the SEC said. His activities amounted to a commercial enterprise, and as such he needed to go through the registration process.
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