The share price of Sunpeaks Ventures Inc., a U.S. junior company with B.C. connections, tanked in massive trading on Wednesday.
The stock, which trades on the loosely regulated OTC Bulletin Board in the United States, touched a high of $2.40 in early trading, then plunged to a low of 65 cents in the early afternoon.
By the close of business, it had man-aged to recover some of that lost ground, closing at 92.5 cents.
Trading was feverish with 80 million shares worth $112 million changing hands during the day. The company's market capitalization, which peaked at just over $1 billion, ended the day at $390 million.
While many posters on Internet chat forums are viewing the sell-off as a buying opportunity, the current valuation - even at this reduced level - appears excessive.
As noted in four previous columns, Sunpeaks has many of the ingredients of a pump-and-dump scheme:
. The company has no track record and negligible assets. It has been pinning its future on the fortunes of an over-the-counter multivitamin called Clotamin for people on blood thinners. There appear to be many similar products already on the market.
. The company was set up with huge blocks of dirt-cheap shares parked in offshore tax and secrecy havens, most notably Panama.
. The stock has been mercilessly hyped by several hundred Internet tout services, giving those offshore investors ample opportunity to sell their shares at huge profit margins.
. No reputable analysts have been following the stock. On March 16, the company disclosed that the Financial Industry Regulatory Association, the regulatory body for U.S. broker-age firms, had commenced an inquiry into the trading.
. There is strong evidence that Robert Shull of Osoyoos, a convicted stock manipulator, and/or members of his family were involved in setting up the company and placing a large number of shares offshore.
. The purported inventor of Clotamin, Justin Barch (who also serves as a vice-president of Sun-peaks), is a U.S. broker whose registration was suspended by U.S. regulators in December.
Under these circumstances, it is remarkable that the stock rose to such a lofty level, and quite predict-able that there would be a dramatic sell-off.
Without evidence of strong sales, the share price will almost certainly decline further in ensuing weeks and months.
dbaines@vancouversun.com
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