Seafield Resources

2 versions of this are out today. See if you can spot the major difference, I'll make it easy and underline it. Classic case of who said what.

Version 1 - Stockwatch Email

Seafield's Park promotes in the open despite SEC ban

Seafield Resources Ltd (C:SFF)
Shares Issued 148,603,649
Last Close 2/9/2011 $0.405
Monday February 14 2011 - Street Wire

by Stockwatch Business Reporter

Canadian securities regulators face a dilemma. When is regulation too much and when is it not enough? Small, speculative companies are a special problem. Too much regulation can drive away business to other jurisdictions; too little attracts bad business that can ruin a carefully cultivated image of respectability.

The TSX Venture Exchange and its predecessors have had many years to get this balancing act right, resulting in regulations that keep scoundrels away from a public company's boardroom, but perhaps not too far away.

The affairs of Seafield Resources Ltd. and promoter Ian Park offer some solutions to the regulators' dilemma. Mr. Park, a 63-year-old promoter with a past, lives in Medellin, Colombia, just a few hours drive from Seafield's main gold projects in a district called Quinchia. His official position with Seafield is "Country Manager," though in company press releases he is referred to as the president of Minera Seafield SAS, a Seafield subsidiary. Mr. Park is currently banned by the United States Securities and Exchange Commission from being an officer or a director of a public company. According to TSX-V regulations, this leaves him unable to serve as either an officer or a director on that exchange as well. It appears though that creative minds have come up with a work-around.

Park's path to purgatory

The origins of Mr. Park's SEC purgatory date back to 2002 and 2003, when he was the co-founder and president of Renaissance Mining Corp., a private company that claimed to have bought three Central American gold mines and to be the "leading gold producer in Latin America." The problem, according to the SEC, was that Renaissance's only products were tall tales. It was not a producer of gold, nor had it bought any mines. It had only a vague, non-binding letter of intent to acquire them. Renaissance also claimed on its website to have "acquired an extensive portfolio of producing gold mines and economic gold deposits in Nicaragua and Panama," though that too was false, said the SEC.

Meanwhile, four other promoters, including criminally convicted former broker Wayne Wile, secretly acquired over 99 per cent of a shell company, Sedona Software Solutions Inc., which traded over the counter in the United States. The group arranged to take Renaissance public by merging it with Sedona and arranged for several newsletter touts, including Robert Chapman, a purportedly independent newsletter writer who secretly owned Renaissance shares, to recommend the stock. Mr. Chapman predicted Sedona shares would soon trade at $10 a share.

When Sedona began trading as a mining company, the group completed a few manipulative trades to set the price and then sold 159,000 shares between $8.95 and $9.40, reaping proceeds of about $1.5-million. The scheme collapsed a week later, when the SEC suspended Sedona because of "questions concerning the accuracy and completeness of public information about Sedona and Renaissance." Years later, on Dec. 19, 2007, Mr. Park settled with the SEC for his role in the market manipulation, accepting a five-year ban from being an officer or director of a public company. He agreed to pay a $30,000 fine without admitting to any wrongdoing.

Caribbean Copper and Gold

It is unclear when exactly Mr. Park joined Seafield, but the process is interesting because the sequence of events lays out the regulatory workaround. The company's first reported transaction with a firm related to the promoter was on Oct. 1, 2009. Then, Seafield announced it had invested $100,000 (U.S.) in a private company named Caribbean Copper and Gold Corp. (CCGC), and that it intended to buy a 50-per-cent interest in Caribbean for $5-million (U.S.). Importantly, it would be an arm's-length purchase.

Caribbean had tried but failed to reach a similar deal a few years earlier (in 2008) with OTC-BB-listed Nilam Resources Inc., but Nilam could not come up with the money. Documents from that deal disclose Mr. Park as the president of an affiliate company, Caribbean Copper (Belize) Ltd. According to Seafield's IR man, Dean Stuart, Mr. Park is only one of "maybe 10 or 20 guys" involved in Caribbean. TSX-V policy would not require Seafield to publicly disclose the identity of Caribbean's then arm's-length principals, ensuring they remained hidden from investors and nosy reporters.

In November, 2009, Seafield and CCGC changed the terms of the deal: instead of $5-million for a 50-per-cent interest, Caribbean would sell its Quinchia gold project to Seafield for just $75,000 (U.S.) and 1.5 million shares. In addition to Quinchia, Caribbean also helped Seafield acquire two other nearby Colombian gold properties, Miraflores and Chuscal, from two private vendors. Caribbean, still an arm's-length entity, received several hundred thousand dollars and 5.5 million shares for acting as the middleman.

The TSX-V requires all of its public companies to declare any non-arm's-length transactions to investors. If the selling party is somehow connected to the buying party, this has to be disclosed to investors, however neither Seafield's news releases nor the TSX-V's bulletins disclose a conflict of interest surrounding Mr. Park's involvement in both Caribbean and Seafield. Mr. Park and Seafield could probably argue that at that time the promoter had no role with the company, the buying party, hence no disclosure.

By mid-2010, however, with Mr. Park in control of at least seven million Seafield shares through CCGC, a relationship must have evolved, some might say a managerial relationship. The promoter hosted an investor conference in July and started popping up in company press releases, frequently talking up the potential of the new projects.

There appears to be no attempt by Seafield or Mr. Park to hide his role with the company. A few weeks ago, The Northern Miner had a picture of Mr. Park and other Seafield men on its front page, in which it identified him as a legal representative.

Mr. Park's emergence also coincided with a bump-up in investor relations. On June 22, Seafield hired Dean Stuart of Calgary to provide investor relations. Mr. Stuart received an option on one million shares at 17.5 cents.

Promotion underway

From June through November, 2010, Seafield drilled 12 holes at Miraflores totalling 3,800 metres. On Dec. 2, 2010, the exchange halted the stock, pending news. Seafield had assays for the first three holes, including the best intercept ever found on the property, 449 metres of 1.29 grams per tonne gold.

Before the markets opened on Dec. 3, Seafield received a glowing report from James West's Midas Letter. Midas had e-blasted a "special alert" to its subscribers (and even its expired free trial users) titled, "Seafield Resources: The Next Ventana?" The report vigorously touted Seafield's "stunning" drill hole and urged readers to "grab all you can with both hands" as "there is absolutely no doubt that the Miraflores deposit is going to be a home run." Mr. West also predicted Seafield's stock might soon increase by up to 10 times in value, saying, "When the market opens later this morning, any shares you can get under a dollar will likely be ten-bagger potential, as a few more drill holes like this one, and you've got Ventana 2 on your hands. (Ventana is currently the subject of a buyout offer by Brazil's EBX Group for $1.5-billion.) At the bottom of the e-mail, Mr. West disclosed he had "no beneficial interest" in Seafield.

Seafield opened at 35 cents on the TSX-V that morning but quickly jumped to an intraday high of 77 cents, closing at 57 cents on 91.3 million shares. The astronomical trading volume is all the more interesting given Seafield only had 98.6 million shares outstanding at the time (plus another 47.9 million warrants and options). A total of 176.5 million shares traded on the TSX-V from Dec. 3 to Dec. 13.

Insider responsibilities

It is difficult to determine whether Mr. Park sold any of Caribbean's seven million shares when they suddenly tripled in value up to $5.3-million on Dec. 3. As he is not an officer or a director, he does not file insider trading reports on SEDI. Nevertheless, TSX-V policy defines a company insider as someone who "performs functions similar to those normally performed by a director or officer," or, importantly, as someone who is a director or officer of a public company's subsidiary. The policies of the British Columbia Securities Commission would also define Mr. Park as an insider. The BCSC has a simple test to determine whether or not someone is considered an insider, called a two-part basket test. If an employee has routine access to material undisclosed information, and has the ability to assert significant control over the issuer, that employee is an insider who is required to disclose his shareholdings. Furthermore, if the employee is "responsible for a principal business unit, division or function of the reporting issuer," as Mr. Park is being the president of Seafield's subsidiary, he has to file insider trading reports.

Mr. Park had ample opportunity to acquire additional shares of Seafield in 2009 and 2010. In late 2009, after Seafield had announced its initial investment in CCGC, it sold a total of 6.75 million shares at 12.5 cents in two private placements (each share came with a 16-cent warrant exercisable for two years). The policies of Canadian securities regulators allow the company to hide the identity of 23 hidden placees who participated in the offerings. In June, 2010, before the Miraflores drill results were released, Seafield sold an additional 16.8 million shares at 17.5 cents. The shares came with an equivalent number of 25-cent warrants exercisable for two years. Fifty-three hidden placees participated in that offering.

In addition, on March 5, 2010, Seafield granted options to buy 1.25 million shares at 29 cents to recipients described only as "consultants," and on June 22, it granted options to buy 2.6 million shares to "consultants, officers and directors" (of which one million presumably went to IR man Mr. Stuart).

Best of both worlds

For now, the policies of Canadian regulators and the TSX-V have resulted in a best of both worlds scenario. The SEC's ban has been enforced in B.C., contributing to the image of a ship tightly run, and Mr. Park has vended his promotable properties. As a result, Seafield has raised money for exploration; shareholders and insiders have had a chance to profit on wild trading; the brokerage industry has made arrangement fees and huge trading commissions; Mr. Park has got rich; and the TSX-V has received its cut on every transaction.

They call it pragmatic regulation.

Meanwhile, investors await assays for the remaining nine holes drilled at Miraflores in November. The stock closed at 41.5 cents Friday.

You can send comments about this article to Matthew Allan: matthewa@stockwatch.com.

� 2011 Canjex Publishing Ltd.

Version 2 - SFF Street Wire

Seafield's Park promotes in the open despite SEC ban

2011-02-14 10:32 PT - Street Wire

by Stockwatch Business Reporter

Canadian securities regulators face a dilemma. When is regulation too much and when is it not enough? Small, speculative companies are a special problem. Too much regulation can drive away business to other jurisdictions; too little attracts bad business that can ruin a carefully cultivated image of respectability.

The TSX Venture Exchange and its predecessors have had many years to get this balancing act right, resulting in regulations that keep scoundrels away from a public company's boardroom, but perhaps not too far away.

The affairs of Seafield Resources Ltd. and promoter Ian Park offer some solutions to the regulators' dilemma. Mr. Park, a 63-year-old promoter with a past, lives in Medellin, Colombia, just a few hours drive from Seafield's main gold projects in a district called Quinchia. His official position with Seafield is "Country Manager," though in company press releases he is referred to as the president of Minera Seafield SAS, a Seafield subsidiary. Mr. Park is currently banned by the United States Securities and Exchange Commission from being an officer or a director of a public company. According to TSX-V regulations, this leaves him unable to serve as either an officer or a director on that exchange as well. It appears though that creative minds have come up with a work-around.

Park's path to purgatory

The origins of Mr. Park's SEC purgatory date back to 2002 and 2003, when he was the co-founder and president of Renaissance Mining Corp., a private company that claimed to have bought three Central American gold mines and to be the "leading gold producer in Latin America." The problem, according to the SEC, was that Renaissance's only products were tall tales. It was not a producer of gold, nor had it bought any mines. It had only a vague, non-binding letter of intent to acquire them. Renaissance also claimed on its website to have "acquired an extensive portfolio of producing gold mines and economic gold deposits in Nicaragua and Panama," though that too was false, said the SEC.

Meanwhile, four other promoters, including criminally convicted former broker Wayne Wile, secretly acquired over 99 per cent of a shell company, Sedona Software Solutions Inc., which traded over the counter in the United States. The group arranged to take Renaissance public by merging it with Sedona and arranged for several newsletter touts, including Robert Chapman, a purportedly independent newsletter writer who secretly owned Renaissance shares, to recommend the stock. Mr. Chapman predicted Sedona shares would soon trade at $10 a share.

When Sedona began trading as a mining company, the group completed a few manipulative trades to set the price and then sold 159,000 shares between $8.95 and $9.40, reaping proceeds of about $1.5-million. The scheme collapsed a week later, when the SEC suspended Sedona because of "questions concerning the accuracy and completeness of public information about Sedona and Renaissance." Years later, on Dec. 19, 2007, Mr. Park settled with the SEC for his role in the market manipulation, accepting a five-year ban from being an officer or director of a public company. He agreed to pay a $30,000 fine without admitting to any wrongdoing.

Caribbean Copper and Gold

It is unclear when exactly Mr. Park joined Seafield, but the process is interesting because the sequence of events lays out the regulatory work-around. The company's first reported transaction with a firm related to the promoter was on Oct. 1, 2009. Then, Seafield announced it had invested $100,000 (U.S.) in a private company named Caribbean Copper and Gold Corp. (CCGC), and that it intended to buy a 50-per-cent interest in Caribbean for $5-million (U.S.). Importantly, it would be an arm's-length purchase.

Caribbean had tried but failed to reach a similar deal a few years earlier (in 2008) with OTC-BB-listed Nilam Resources Inc., but Nilam could not come up with the money. Documents from that deal disclose Mr. Park as the president of an affiliate company, Caribbean Copper (Belize) Ltd. According to Seafield's director James Pirie, Mr. Park is only one of "maybe 10 or 20 guys" involved in Caribbean. TSX-V policy does not require Seafield to publicly disclose the identity of Caribbean's then arm's-length principals, ensuring they remained hidden from investors and nosy reporters.

In November, 2009, Seafield and CCGC changed the terms of the deal: instead of $5-million for a 50-per-cent interest, Caribbean would sell its Quinchia gold project to Seafield for just $75,000 (U.S.) and 1.5 million shares. In addition to Quinchia, Caribbean also helped Seafield acquire two other nearby Colombian gold properties, Miraflores and Chuscal, from two private vendors. Caribbean, still an arm's-length entity, received several hundred thousand dollars and 5.5 million shares for acting as the middleman.

The TSX-V requires all of its public companies to declare any non-arm's-length transactions to investors. If the selling party is somehow connected to the buying party, this has to be disclosed to investors, however neither Seafield's news releases nor the TSX-V's bulletins disclose a conflict of interest surrounding Mr. Park's involvement in both Caribbean and Seafield. Mr. Park and Seafield could probably argue that at that time the promoter had no role with the company, the buying party, hence no disclosure.

By mid-2010, however, with Mr. Park in control of at least seven million Seafield shares through CCGC, a relationship must have evolved, some might say a managerial relationship. The promoter hosted an investor conference in July and started popping up in company press releases, frequently talking up the potential of the new projects.

There appears to be no attempt by Seafield or Mr. Park to hide his role with the company. A few weeks ago, The Northern Miner had a picture of Mr. Park and other Seafield men on its front page, in which it identified him as a legal representative.

Mr. Park's emergence also coincided with a bump-up in investor relations. On June 22, Seafield hired Dean Stuart of Calgary to provide investor relations. Mr. Stuart received an option on one million shares at 17.5 cents.

Promotion underway

From June through November, 2010, Seafield drilled 12 holes at Miraflores totalling 3,800 metres. On Dec. 2, 2010, the exchange halted the stock, pending news. Seafield had assays for the first three holes, including the best intercept ever found on the property, 449 metres of 1.29 grams per tonne gold.

Before the markets opened on Dec. 3, Seafield received a glowing report from James West's Midas Letter. Midas had e-blasted a "special alert" to its subscribers (and even its expired free trial users) titled, "Seafield Resources: The Next Ventana?" The report vigorously touted Seafield's "stunning" drill hole and urged readers to "grab all you can with both hands" as "there is absolutely no doubt that the Miraflores deposit is going to be a home run." Mr. West also predicted Seafield's stock might soon increase by up to 10 times in value, saying, "When the market opens later this morning, any shares you can get under a dollar will likely be ten-bagger potential, as a few more drill holes like this one, and you've got Ventana 2 on your hands. (Ventana is currently the subject of a buyout offer by Brazil's EBX Group for $1.5-billion.) At the bottom of the e-mail, Mr. West disclosed he had "no beneficial interest" in Seafield.

Seafield opened at 35 cents on the TSX-V that morning but quickly jumped to an intraday high of 77 cents, closing at 57 cents on 91.3 million shares. The astronomical trading volume is all the more interesting given Seafield only had 98.6 million shares outstanding at the time (plus another 47.9 million warrants and options). A total of 176.5 million shares traded on the TSX-V from Dec. 3 to Dec. 13.

Insider responsibilities

It is difficult to determine whether Mr. Park sold any of Caribbean's seven million shares when they suddenly tripled in value up to $5.3-million on Dec. 3. As he is not an officer or a director, he does not file insider trading reports on SEDI. Nevertheless, TSX-V policy defines a company insider as someone who "performs functions similar to those normally performed by a director or officer," or, importantly, as someone who is a director or officer of a public company's subsidiary. The policies of the British Columbia Securities Commission would also define Mr. Park as an insider. The BCSC has a simple test to determine whether or not someone is considered an insider, called a two-part basket test. If an employee has routine access to material undisclosed information, and has the ability to assert significant control over the issuer, that employee is an insider who is required to disclose his shareholdings. Furthermore, if the employee is "responsible for a principal business unit, division or function of the reporting issuer," as Mr. Park is being the president of Seafield's subsidiary, he has to file insider trading reports.

Mr. Park had ample opportunity to acquire additional shares of Seafield in 2009 and 2010. In late 2009, after Seafield had announced its initial investment in CCGC, it sold a total of 6.75 million shares at 12.5 cents in two private placements (each share came with a 16-cent warrant exercisable for two years). The policies of Canadian securities regulators allow the company to hide the identity of 23 hidden placees who participated in the offerings. In June, 2010, before the Miraflores drill results were released, Seafield sold an additional 16.8 million shares at 17.5 cents. The shares came with an equivalent number of 25-cent warrants exercisable for two years. Fifty-three hidden placees participated in that offering.

In addition, on March 5, 2010, Seafield granted options to buy 1.25 million shares at 29 cents to recipients described only as "consultants," and on June 22, it granted options to buy 2.6 million shares to "consultants, officers and directors" (of which one million presumably went to IR man Mr. Stuart).

Best of both worlds

For now, the policies of Canadian regulators and the TSX-V have resulted in a best of both worlds scenario. The SEC's ban has been enforced in B.C., contributing to the image of a ship tightly run, and Mr. Park has vended his promotable properties. As a result, Seafield has raised money for exploration; shareholders and insiders have had a chance to profit on wild trading; the brokerage industry has made arrangement fees and huge trading commissions; Mr. Park has got rich; and the TSX-V has received its cut on every transaction.

They call it pragmatic regulation.

The stock closed at 41.5 cents on Feb. 11.

You can send comments about this article to Matthew Allan: matthewa@stockwatch.com.