Leafy Marijuana Plant with Hairy Bud at Indoor Cannabis Farm
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The former CEO of a junior mining company has been sanctioned by the Ontario Securities Commission (OSC) for his role in issuing press releases that falsely foreshadowed a possible pivot into the cannabis industry when that sector was hot.

An OSC hearing panel approved a settlement between commission staff and David Randall Miller, former CEO of Inspiration Mining Corp., that will see him banned for 10 years, ordered to disgorge $97,000, and pay a $92,000 penalty and $10,000 in costs.

The settlement followed allegations that Miller violated securities laws when, in 2018, he caused his company to “issue five false and misleading press releases regarding purported negotiations between Inspiration and Compassion Cannabis Corp.,” the panel said.

“He did that to capitalize on heightened investor interest in the cannabis industry,” the panel noted in its reasons.

According to the settlement, Compassion had no actual expertise in the cannabis business. It had no assets, employees, or revenue, and never applied for, or held, a cannabis distribution licence.

“Its negotiations with Inspiration were its sole business activity, save for occasional internet research about the cannabis industry,” the settlement said.

The settlement also noted that the company’s sole officer and director was a friend of Miller, who worked as his assistant at a different company.

The settlement indicated that, in or around 2014 or 2015, Miller received information “which could have suggested that” Compassion had a relationship with another company which had applied for a federal cannabis production license.

Nevertheless the panel noted that shortly after issuing the first press release, Miller sold stock in Inspiration, whose share price had since jumped from around $0.04 per share to $0.22 per share.

“[Miller] realized a gain that was almost $100,000 greater than he would otherwise have realized,” the panel said, adding that the sales violated securities laws as they were made while he was in possession of material non-public information, and he failed to file insider trading reports as well.

“Mr. Miller’s admitted misconduct is serious,” the panel said in its reasons. “The requirement to make truthful disclosure is a cornerstone of the securities regulatory regime. Mr. Miller deliberately violated that important principle, and then sought to profit from his misconduct, at the expense of other investors.”