Chairman of TSX Venture Exchange company found guilty of illegal insider trading - The Vancouver Sun

A B.C. Securities Commission hearing panel has found that former Burmese guerrilla fighter and drug informant Michael Kyaw Myint Hua Hu engaged in illegal insider trading and then lied to commission investigators about it.

In a decision released Thursday, the panel said that between Sept. 24 and Oct. 12, 2007, Hu bought nearly $1 million worth of shares of Maple Leaf Reforestation Inc., at prices ranging from 82 cents to $1.30.

Maple Leaf is a Calgary-based company that trades on the TSX Venture Exchange. At the time, Hu served as the company's chairman, and worked from Maple Leaf's office in Vancouver.

The hearing panel found that, when Hu bought his shares, he was aware that the company was negotiating a memorandum of understanding to build a biodiesel plant in China.

Evidence showed that he was actively involved in the process. At one point, he indicated his intention to move the stock price to $2 to help finance the project.

The MOU was finalized and publicly announced on Oct. 16, 2007 - several days after Hu acquired his shares. On this basis, the panel found that Hu had engaged in illegal insider trading.

The panel also found that Hu purchased the shares though a CIBC online brokerage account owned by a woman named Li Ping Tian. The actual trades originated from IP addresses at Maple Leaf's Vancouver office and Hu's residence.

Hu had met Tian a year earlier through a Vancouver dating service, but when commission investigators questioned him, he denied knowing her and he denied making the trades. The panel found these statements were false and misleading. "The evidence proves that no one but Hu could have done the trading," it stated in its decision.

Sanctions will be determined at a later date. Given the seriousness of the violations, they will likely include a lengthy suspension from the B.C. securities market, and the assessment of substantial fines and costs.

Hu is a controversial figure quite aside from his stock dealings. Several publications have linked him to drug trafficking and money laundering activities in Burma during the 1990s.

Jane's Intelligence Review reported in November 1998 that Hu claimed to be a deputy minister of finance of the United Wa State Army, an insurgent group that the U.S. State Department described as the world's largest armed narcotics trafficking organization.

AsiaWeek magazine reported that the United Wa State Army set up a firm called Kyone Yeom Group, with Hu as group chairman. The magazine said the firm was used to launder drug proceeds.

During an interview in February 2009, Hu told me these allegations were false. He denied he has been involved in any illicit drug dealings.

On the contrary, he said he worked as a consultant for the U.S. Drug Enforcement Agency, and the DEA helped him obtain political asylum in the United States in 2000. Two years later, he moved to Toronto and then to Surrey, where he has lived for the past seven years.

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Bad timing for Gordon Brent Pierce. Just when the West Vancouver stock promoter is trying to refresh his personal image, along comes the U.S. Securities and Exchange Commission with another multi-million-dollar judgment against him.

On Wednesday, U.S. administrative law Judge Cameron Elliot held Pierce personally liable for $7.25 million worth of shares of Lexington Resources Inc. that he illegally sold through two private companies, Jenirob Company Inc. and Newport Capital Corp., at accounts in Liechtenstein. The judge found that Pierce was the beneficial owner of the assets in both companies.

The judge found that the shares had not been registered for resale and no exemption from registration was available to him.

This is the third leg of the case. In June 2009, a different judge found that Pierce had illegally sold $2.04 million worth of Lexington shares in 2004 through personal accounts while orchestrating a heavy stock promotion campaign. He has since paid that judgment.

In May this year, Elliot found that Jenirob and Newport had illegally sold another $7.25 million worth of Lexington shares and ordered the two companies to disgorge that amount. The issue of Pierce's personal liability was not decided.

In this week's decision, the judge found that Pierce had conducted those trades and had "fraudulently concealed" that fact from SEC investigators. He found Pierce personally liable for the full amount.

Pierce's Vancouver lawyer, Bryan Baynham, said Thursday that Pierce has instructed his U.S. counsel to immediately appeal the decision on grounds that it "contains several fundamental errors of fact and law."

As mentioned, the timing of this decision is unfortunate for Pierce. Several months ago, the 54-year-old promoter inaugurated a personal website that, in my view, appears intended to enhance his image.

"Canadian Brent Pierce is a businessman and philanthropist with over 35 years of experience in business development and investment banking in the fields of energy exploration and development," the website states.

It continues: "His true entrepreneurial spirit has lent itself to a breadth and depth of acquired knowledge and experience that has served his career well."

The website does not mention any of his problems with the SEC, or the 15-year ban that the B.C. Securities Commission imposed on him in June 1993, after he diverted funds from the initial public offering of a grotty Vancouver Stock Exchange company called Bu-Max Gold Corp. (That ban expired in June 2008.) The website also states that Pierce serves as chairman of The Pierce Foundation, "where his own innate sense of individualism, pursuit of excellence and strong dedication to family and community combined with his depth of business experience give him the experience and knowledge to seek out worthy recipients of The Pierce Foundation's work."

The website doesn't mention that Pierce has promoted a string of money-losing OTC Bulletin Board companies that have caused investors considerable financial grief. They include Lexington, Geneva Gold, Morgan Creek Energy, GeneMax and Cellcyte Genetics.

Pierce, meanwhile, has managed to live a very affluent lifestyle. He and his wife, Dana, live in a $10-million waterfront home in West Vancouver. As they say, charity begins at home.

dbaines@vancouversun.com

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