Manitoba securities commission warns investors about letter exploiting COVID-19 stock market anxiety

By | April 9, 2020

Financial regulators are warning Manitobans about a letter delivered to mailboxes in what’s being called an attempt to exploit fears of a recession related to the COVID-19 pandemic.

The Manitoba Securities Commission issued an investor alert Thursday “warning the public to exercise extreme caution about aggressive promotion of Crestview Exploration Inc., a British Columbia gold mining company,” an MSC release said.

The promotion came in the form of a letter sealed in a white envelope without a return address, marked in bold red letters, “CORONAVIRUS AFFECTING MARKETS: READ NOW.”

Copies were delivered to homes in Manitoba, Saskatchewan, Alberta and B.C. this week, the MSC said.

The letter from someone describing himself as a “stock analyst and geologist” makes “exaggerated claims about Crestview, predicting that its stock price ‘will soar as the recession hits'”, the MSC said.

The regulator received complaints about the letter this week, said Jason Roy, a senior investigator with the MSC.

“We’ve unfortunately seen a steep increase in marketing that exploits people’s anxiety about the pandemic and their investments,” Roy said. “Investors need to be extremely vigilant when making decisions in this environment.”

This letter was delivered to homes in Manitoba, Saskatchewan, Alberta and B.C.. In it, someone describing himself as a “stock analyst and geologist” makes “exaggerated claims about a BC company, Crestview Exploration Inc., predicting that its stock price ‘will soar as the recession hits’”. (Vera-Lynn Kubinec/CBC)

Crestview Exploration, listed on the Canadian Securities Exchange and the Frankfurt Stock Exchange, issued a statement Wednesday saying it was not responsible for the statement.

“…To the best of the company’s knowledge, no officers and or directors were involved in disseminating this letter,” the statement said.


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“Crestview has not paid any compensation nor has it requested for this analyst to endorse the company nor its stock.”

The company urged investors to visit its website for up-to-date information about the company and its mining assets.

“Crestview advises all investors and potential investors to properly verify the information provided by any individual and or third parties regarding buy recommendations,” the statement said.

Roy told CBC News the MSC investigation is underway and it has not yet determined who distributed the letters. He said it hasn’t determined yet whether the individual named in the letter uses a pseudonym.

The investigation will look into whether it’s similar to a case of “pump and dump”, Roy said.

In that scenario, the MSC says anonymous people talk up a stock they own, quoting supposed “inside information”. When people buy into the hype and start buying the stock, its value shoots up.

“The original promoters sell their stock at the inflated price and the stock price soon drops. The rest of the group is left holding stock that is worth far less than they paid for it,” the MSC explains on its investment fraud website.

Roy said the MSC wanted to get a warning out to Manitobans while the investigation continues.

Other provincial securities regulators including those in Alberta and B.C. have also issued warnings about the letters.

The securities commission underlined the importance of doing research before buying or selling an investment, adding that aggressive promotions “may make false claims of large profits and baseless stock price projections,” the MSC said. 

“Most aggressive stock promotions in recent years have been done through unsolicited email or social media, but promotions delivered through the mail carry the same risks,” the regulator said. 


The Manitoba Securities Commission investor alert:

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