Two B.C. public companies have recently reached settlements with the B.C. Securities Commission after admitting to improper social media influence campaigns.
Bearing Lithium Corp., a Vancouver-based junior mining company traded on the TSXV, was fined $25,000, and its CEO Jeremy Arthur William Poirier, agreed to a $10,000 fine after admitting they failed to disclose a paid arrangement with a now-defunct social media promoter called Stock Social.
Between January 2017 and February 2017, Bearing — then known as Bearing Resources Ltd., paid Stock Social to conduct marketing.
Stock Social wrote advertorials that did not disclose Bearing paid for them. In essence, the commission said the materials were designed to pass as objective journalistic content. However, none of the advertorials on various social media platforms, including Twitter, LinkedIn, investFeed, iHub, and Facebook, disclosed that they were issued on behalf of Bearing.
Bearing and Poirier admitted to contraventions of the B.C. Securities Act in an agreement published on Aug. 4.
Advertisements, or stock promotions, intend to draw investors to buy shares. Paid promotions must be disclosed, per the act.
The Stock Social campaign corresponded with a jump in Bearing’s share price, from about 50 cents per share in December 2016 to a peak of $1.43 in mid-February 2017. The stock slid precipitously after record trading volume at that time. The company trades for 32 cents per share and has no revenue.
This year, Bearing, which purports to operate a lithium project in Chile via a subsidiary, has raised about $4 million in private placements, selling $0.25 shares.
On July 7, the commission settled with a B.C.-registered software application developer.
Hello Pal also retained Stock Social for so-called “investor relations activities” from August to November 2016.
“The advertorials were written in the style of news articles designed to look and read like objective journalistic content. However, none of the advertorials disclosed they were issued on behalf of Hello Pal. Further, although two of the advertorials indicated a distribution fee had been paid, neither the payor nor the payee was identified,” stated the commission in its published settlement agreement.
Hello Pal, listed on the Canadian Securities Exchange, agreed to pay $25,000, while its then corporate communications officer Ryan James Johnson, who authorized the materials, agreed to pay $10,000 as a fine.
The commission noted that none of the entities who were fined had prior records of misconduct.