Environmental group Earthworks wants an investigation into possible insider trading by an investor and others involved in EPA's actions surrounding the proposed Pebble Mine in Alaska, according to a formal complaint filed yesterday with the Securities and Exchange Commission, New Jersey Bureau of Securities and Financial Industry Regulatory Authority.
The complaint was born out of an E&E News investigation that found investors in Northern Dynasty Minerals Ltd. received advance notice that EPA planned to strike down a proposed veto that effectively blocked the Canadian company's massive gold and copper project in southwestern Alaska (Greenwire, July 26).
According to Earthworks, Northern Dynasty stock spiked after the warning, before EPA officially withdrew its Obama-era Clean Water Act proposed determination on July 30.
"Northern Dynasty's Pebble mine proposal was on its financial last legs before it magically became an attractive investment right before EPA's favorable announcement," Earthworks Northwest Program Director Bonnie Gestring said. "We believe this is worthy of investigation."
CNN first reported on the complaint.
"Northern Dynasty Minerals Ltd. has viewed last night's report on CNN, and unequivocally rejects all of the claims and insinuations contained within it as baseless and unfounded," said Northern Dynasty spokesman Sean Magee. "We will be making no further statement on the matter."
On June 19, New Jersey-based financial consultant John Tumazos spoke with Northern Dynasty CEO Ron Thiessen before Thiessen spoke at the John Tumazos Very Independent Research LLC's annual Jersey Shore metals conference at the Greek Orthodox Church in Holmdel, N.J.
"Leopold should be acting on the [proposed determination] within the next couple of weeks," Tumazos posted on the Northern Dynasty page of investor social media site Stocktwits that same day.
The "johnc6" account has since been deleted, but Tumazos linked to an excerpt of the E&E News report on his website.
According to Earthworks, a company owned by investor James Gordon Flatt bought 1.22 million Northern Dynasty shares two days after the StockTwits post. Flatt owns two companies that combined control more than 10% of Northern Dynasty stock, making him a company insider, Earthworks argued.
The complaint also reported Northern Dynasty board member Gordon Keep purchased stock for $0.40 or less on June 24 and sold stock after EPA's reversal for $1.18.
"My clients have no information as to who disclosed this non-public information to Northern Dynasty’s CEO," wrote Lin Deola, the attorney for Earthworks. "But it is apparent that someone who disclosed this information prior to the July 30, 2019, public announcement and trades were made based upon this information."