SpeakEasy Cannabis Club (EASY.C) is trying to put their involvement in the Bridgemark scandal past behind them by getting back to business.
The news is that SpeakEasy finished moving its massive-in-scale genetics into its facility today, and anticipates getting a cultivation license in the near future. For that, they’ve been granted a 33% boost to their stock price, which actually adds to the rumour bumps from previous days, all of which means roughly a 50% ($0.30) increase.
Not bad for a company that spent the last half of 2018 in hot water with the British Columbia Securities Commission (BCSC) for their part in the Bridgemark scandal.
What is the Bridgemark Scandal?
Twenty-six firms, which the BCSC collectively named the Bridgemark Group, are alleged to have entered into illegal consulting agreements with 11 Canadian Securities Exchange-listed cannabis companies.
Essentially, these 11 companies, including SpeakEasy, collectively sold tens of millions of dollars in securities illegally, shooting a loophole called a “consultant exemption,” but with no actual consultation being provided. These payments were effectively cash swaps, in full or in part. Afterwards, these consultants unloaded their free-trading shares on the exchanges, shredding the stock and leaving shareholders holding depreciated and diluted stock.
Equity.Guru’s Chris Parry wrote about it last year:
Bridgemark finds a company that is, essentially, torches and pitchforks, where the shareholders have given up and the execs are in desperation phase. Then they offer to finance a $4m+ investment round in that company.
There would be no over-allotment, because the $4m deal involved handing $3m or so back to Bridgemark for ‘marketing the stock’, along with $4m worth of free trading consultant stock.,
Soon after, the selling of that stock would commence and the company share price would crater.
It’s since been revealed that some of the CSE-listed companies were in cahoots with the consultants while others were victims. It’s not good optics wherever SpeakEasy fit in. Especially since their former CFO was also the principal of BridgeMark Financial Corp, one of the 26 firms.
Fast forward to 2019:
SpeakEasy has shuffled its board, akin to cutting off gangrenous limbs so the rest of the organism can survive, and is working hard to earn back investor trust. They started by hiring a former RCMP officer as their new chief security officer.
With his appointment, the company aims to set a new standard in compliance within the industry. Mr. (Grant) Bernier will have the authority to perform independent audits within the company and will have complete autonomy. The company believes once this system is in place it will set the standard for compliance in the industry.
And it’s no doubt they’ll do everything to the letter while this lawsuit is in force. Maybe even after it’s over.
Earlier this month, the company and a few former directors were named as defendants in an action by the Supreme Court of British Columbia for misrepresentation and damages.
“We believe that these claims have resulted from the same claims made against Bridgemark Financial Corp. et al. in previously filed BCSC investigation filings, and we will continue to work with the BCSC to resolve this matter,” Dr Bin Huang, CEO, said.
The company and directors haven’t been served official court documents yet, and they intend to vigorously defend themselves when the day comes.
The entire cannabis industry right now is reeling from a series of terrible scandals, but trust can be regained. It’s going to be a long, hard climb for Speakeasy, but getting back to business is a step in the right direction.