Lead Securities Regulator
Alberta Securities Commission (ASC)
Inter-Jurisdiction Collaboration
The ASC is grateful for the assistance of the Ontario Securities Commission.
Type of Misconduct Committed
Market manipulation – pump and dump scheme
Perpetrating a fraud
Violating a cease trade order
Case Description
From March to August 2014, Ashmit Patel and Zulfikar Rashid engaged in a market manipulation, or pump and dump scheme, involving strategically-timed news releases that were coordinated with a promotional or “Tout” Campaign about their company, Kilimanjaro Capital Ltd.
Patel, as Kilimanjaro’s guiding mind and the architect of the scheme, covertly exerted control over virtually all aspects of the pump and dump scheme while using Rashid as his nominee. Various stock promoters disseminated 97 promotional touts for Kilimanjaro from the end of March through to the end of August 2014, in conjunction with a number of news releases issued by Kilimanjaro. At the beginning of April 2014, the ASC issued a cease trade order directing that trading or purchasing of Kilimanjaro shares cease.
An ASC panel determined that Patel, Rashid and Kilimanjaro knowingly engaged in a course of conduct that contributed to an artificial price for Kilimanjaro shares. It also found that Patel contributed to a misleading appearance of trading in Kilimanjaro shares, that Patel and Kilimanjaro violated a cease trade order in relation to Kilimanjaro shares, and that Rashid provided misleading or untrue statements to the ASC.
Penalties Issued
- Permanent market access bans against Patel.
- Various market access bans ranging from eight to 10 years against Rashid.
- All trading in or purchasing of securities or derivatives of Kilimanjaro must cease permanently and Kilimanjaro must permanently cease trading in or purchasing securities.
- Patel and Rashid were ordered to pay $450,000 and $75,000 respectively in administrative penalties.
- Patel was ordered to pay $117,400 in disgorgement.
- Patel and Rashid were ordered to pay $120,000 and $30,000 respectively of the costs of the ASC’s investigation and hearing.
Key Takeaways for Investors
Be wary of potential pump and dump schemes
A pump and dump scheme is when a stock promotion creates false hype by touting an “exciting” opportunity to bring in lots of investors and drive up the price of a stock. Once the desired movement in stock price and volume occurs, the fraudsters sell their shares, the promotion stops, and then the stock price plummets – leaving investors who believed the hype with a worthless investment. Before buying into the excitement, carefully research the fundamentals of the company and the investment opportunity you are considering.
Do your research and watch for signs of potential fraud
Your best investment decisions are informed ones. You should always err on the side of caution, do your own research, ensure there is no disciplinary action (such as a cease trade order) against the company and check the registration of anyone selling investments before giving away your money.
Don’t be pressured into making an investment
If you are being urged to “act now” on an investment opportunity, take time to think about it and do your research. Don’t rush into a decision when it comes to your money.
Additional Information
For more information about the deliberate pump and dump scheme operated by Ashmit Patel, Zulfikar Rashid and Kilimanjaro Capital Ltd., visit the ASC website.