The Globe and Mail reports in its Monday edition that Reconnaissance Energy Africa paid German stock promoter Gunther Goldherz to write several highly speculative articles about the company, including one on Jan. 14 on the site goldherzreport.de, that compared its stock to a jackpot-winning lottery ticket.
The Globe's Geoffrey York and Niall McGee write that a Sept. 30 article in valuethemarkets.com said ReconAfrica is on the path to discovering "phenomenal riches" in Namibia. Today, after a barrage of similar promotional articles over the past 18 months, ReconAfrica's stock has soared to about $12 from 50 cents. The company now faces two detailed complaints, submitted to U.S. and B.C. securities regulators, alleging that it has engaged in deceptive stock promotion and inadequate disclosures.
The B.C. Securities Commission complaint, filed June 4, alleges ReconAfrica has been deficient in its disclosures by marketing its project to investors for most of the past two years as a fracking play, even though Namibia had not approved fracking. ReconAfrica dropped its previous emphasis on fracking, but did not make the change in its business model sufficiently clear to investors, according to the BCSC complaint.
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