EDITOR: | November 2nd, 2020 | 25 Comments

Shareholders suffer on Reuters Anonymous Tesla tip while Insiders Hit the Lottery

| November 02, 2020 | 25 Comments
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I don’t even know where to start with this. The long suffering shareholders? The recently suffering shareholders who got taken in the market scam? New shareholders who are getting pummeled by the recent PEA? Reuters’ shoddy reporting and follow-up? No matter where you look at Giga Metals Corporation (TSXV: GIGA | OTCQB: HNCKF), there are problems.

First off, I have no horse in this race. I’m not short, I’m not long. In fact, I’m predisposed to like Giga Metals due to the high-quality reputation of CEO Mark Jarvis (who I don’t know but he was an advisor to a company where I was a director) and the world-leading metallurgist Dr. David Dreisinger (who I do know and deeply respect). I also have run into some of the other Giga people over the years.

But.

Let’s start with the obvious. There was a securities scam related to Giga Metals perpetrated against the market in early September. The background facts, together with a chart showing the insiders’ staggering profits, are here. The only question is, who was the criminal. There are only three possible answers:

  1. One or more of the insiders who exercised cheap derivatives and conned the journalist into writing the untrue Tesla-related story
  2. One or more of the insiders who exercised cheap derivatives and the journalist was a willing participant in the scam
  3. The journalist did it for reasons of her own, with the insiders just as surprised as the rest of the market but gleeful at their sudden ability to sell roughly $8,100,000 of their stock.

The journalist alleged that Giga was in discussions with Tesla Motors to help develop Giga’s Turnagain nickel project in northern British Columbia. That made the stock price skyrocket all the way to a high of $2.55 in mid-September, with five insiders pounding on the bid. Reality is a cold shower, though. The stock has toppled since the spike, as Mr. Market comes to grips with the fact there is no Tesla deal with Giga, and more importantly, there never were any advanced negotiations with Tesla. The stock closed on Friday October 30 at $0.55. Whoever bought at the top has lost 80%.

How do we know the story was wrong? Giga told us so in its press release and Giga’s CEO said the same to the shareholders at the AGM. More on the AGM below.

Reuters, by the way, refuses to say whether it confirmed the identity of the three anonymous sources credited in the inaccurate article, either before or after publication. My inquiring email to Reuters’ ethics commissioner was answered by Heather Carpenter, Senior Director, Communications (a.k.a.’ damage control’) with a non-answer.

Giga’s AGM was held Thursday, October 22. I attended virtually. I emailed the company in advance at Giga’s info@ email address because I don’t do ambush, and advised I intended to ask questions. I did not record the meeting but did take took notes. Mr. Jarvis answered all the questions and told us the following (fairly paraphrased):

  1. Who at Giga was in negotiations with Tesla as alleged by Ms. Desai. Answer: we’re talking to everyone all the time and everyone else is talking to everyone else all the time, too, but there was nothing in particular with Tesla
  2. When did Ms. Desai contact Giga President Martin Vydra for a quote for her article, meaning Vydra knew the article was coming? Answer: Martin is very well known in critical metals circles in London so it’s not a surprise he was contacted. Also he had suggested a few months prior that someone should do an article on the zero carbon emissions side of the Giga Metals story. So this all makes sense that Ms. Desai would contact him a couple of months ago about this
  3. Why did five insiders including the Corporate Secretary all decide to exercise cheap derivatives at roughly the same time? Answer: the warrants were expiring, and we don’t pay these people very much, and the stock had started a bit of a run, so it’s okay they made money in the market
  4. Has Giga been contacted by any regulator or police force related to the insider trades or the incorrect article? Answer: not to the best of our knowledge
  5. (Here’s my favourite) Were any of the people at this shareholder meeting (including all the directors and the Corporate Secretary) one of the three anonymous sources cited by the journalist in her article? Answer: no

I need sumatriptan to work with those.

First, I don’t think Mr. Jarvis was the bad guy here. He stood up and took the bullets for the team. First class dude doing his job as CEO. He doesn’t seem to be the kind of person to cover up for other people’s sins. So, clapping hands for him.

But these answers? OMG. Let’s go back to question 1. Essentially he’s saying the reporter is full of warty toads. Anyone who’s CEO is any industry is always talking to everyone in the industry, so that makes her ‘story’ irrelevant because it’s not news. His answer guts the story.

Question 2 about Mr. Vydra’s quote. He knew the story was coming. He knew. He may not have known the exact date of publication, but he knew it was coming. And as a long-time market pro he had to have known the impact a “Tesla is helping us” story would have on the stock price. Do you think he may have told anyone the story was coming?

Answer 3 begs another question, namely, why did the stock start to run before the story was published? There was no Giga news, no catalyst for any move in the share price up or down. So why did it start to move? A logical guess would be that people expected the incorrect story to be published in the near future, bringing in buying in advance. And if that supposition is right, then at least one of the insiders knew it was coming, because why else exercise cheap derivatives in a vacuum? The only explanation that makes sense is someone at Giga knew the incorrect story was going to soon be published.

Also, note his answer to the question only addressed the warrants, exercised only by Anthony Milewski, who is Giga’s Chair and a director. Milewski took over $6,000,000 out of the market on the back of the incorrect Reuters article. (Jarvis took none.) Jarvis’ answer does not address why the insiders exercised 1,300,000 cheap options at roughly the same time, without an explicable catalyst. Again, it seems obvious that one of the insiders knew the incorrect story was going to soon be published.

I back off on question 4. Sometimes the regulators contact a target early, sometimes not. I say a little prayer every morning when I log in that a regulator is actually looking into this. And it’s not like the police or the regulators say, Hello, I’m investigating you. So fair dinkum to Mr. Jarvis’ answer.

A quick aside. None of the regulators responded to my request for confirmation an investigation is underway, save for the British Columbia Securities Commission whose written response was it doesn’t ever confirm or deny whether an investigation is underway. That’s the answer I expected.

As for Question 5 about the anonymous sources, imagine the Chair Milewski (remember, the person who took over $6,000,000 out of the market and in theory is responsible for corporate governance) looking around the boardroom and asking, Were you the anonymous source? Who’s going to put up a hand and say, Yeah, you caught me, I was the one who lied to the reporter. The company’s position is, nope, none of us was an anonymous source, nothing to see here, move along.

Additional info. Stockhouse manages a fairly robust bulletin board for public companies. Half of the time the content from users is personal theories, half of the time it’s correct, half the time it’s unintelligible ranting. (If you think the contents at Stockhouse is a little wacky, try Hot Copper out of Australia. Those users have a few kangas loose in the top paddock.) One user (Baylee) posted, “I also hear that there is an investigation going on and not only with Giga Metals but with Anthony himself. I also heard that he defrauded the company and paid the journalist secretly and Mark was involved.”

Minimal credibility to that. Too vague, no details, no source credited.

But this user Gorddino? Sources and details:

“I reported Giga at the time to the OSC and IIROC by filling out there form and I also sent a link from Mr Perry’s article. I believe that was his name….On the form I misspelled my email address but my phone number was there. I got a call about 10 days later form a woman at the BCSC office and she told me that the OSC transferred it to them as there in charge even though they trade on the venture because there based in BC. We got talking for over 30 minutes. She was very pleasant and she told me a few things and what her thoughts were with the info I had given..Don’t want to say what she exactly said but she then got my right email address and sent me a letter with a file number.”

This user? Credibility. A betting person would put money on the investigation prop.

And the stock price continues to erode. The stink associated with the scam is part of it, but the arm’s length shareholders just can’t catch a break. On October 28, the company issued a press release about its Preliminary Economic Assessment. Look it up for yourself and make your own judgment. To my eye, it’s a disaster – the cratering stock price seems to agree. An eye-catching piece from the press release: “Industry standard processing with current smelting and refining charges delivers pre-tax IRR of 6.3% at base case pricing of US$7.50/lb Ni and 9.4% at ESG-premium pricing case of US$8.50/lb Ni”. In other words, it ain’t ever going to make money, so who would ever finance this? Hence the diving stock price.

This feeds back into the timing and content of the Reuters story. A board of a mining company always knows the progress of a document as important as a PEA on its singular asset. In August the Giga insiders would have known the contents and conclusions of the PEA, the view of the independent professionals, the timing for its delivery and the negative impact the PEA would have on the share price. It would not take a lot of creativity for an amoral insider to see this, and to plan a route out. You know, like a Tesla-linked arm’s length article that would provide the insider with plausible deniability.

Two last facts. A shareholder meeting is almost always chaired by the Chair on the company. I’ve been in the public markets since 1992; the only times I’ve seen a non-Chair chair the meeting were due to health issues or it was expected the meeting would have some degree of conflict. Milewski is the Chair and was on the call for the October 22 shareholder meeting, but the meeting was chaired by external legal counsel. Why would Giga go the expense of hiring external legal counsel to do the Chair’s job when the Chair was actually on the call? The only answer that makes sense is Giga did not want him front and centre, so they hid him behind the lawyer and Jarvis’ credibility.

Last fact. Milewski and the reporter have a documented relationship dating back to at least 2017 when she did an article on another company in which he was involved.

Draw your own conclusions.

I admit some of this is dot-connecting and theorizing. We are still missing some facts. I’m still counting on the regulators to do something to protect the investing public that got Ned Beattied here.


Editor:

Mr. Clausi is an experienced investment banker, executive, director and shareholder activist. A graduate of Osgoode Hall Law School called to Ontario's bar in 1990, ... <Read more about Peter Clausi>


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Comments

  • AndyH

    Now it’s clear to me that you’re trying to slander Giga Metals. I was on the call too and I was the one who brought up this subject. In this article you’ve conveniently omitted the part where Mr Jarvis told you that on the day the executives exercised their options, they were in contact with authorities to ensure things were done in accordance with the law.

    They sold their stock because the market was up, because warrants were due to expire, and because there was no reason not to. Its pretty simple.

    Overall the Reuters article is accurate in broad ways because Tesla and other EV OEMs have been in contact with Giga Metals, as well as nearly every other Nickel mine in North America, at least according to nearly every Nickel mine on this continent…. Not just Nickel either, and not just this continent, but all materials necessary to build batteries world wide. Do your research, Tesla is very active with securing their supply chain all over the globe.

    In all of this you’re forgetting about the various YouTube channels who drew their own conclusions from the Reuters article and reported that Tesla was buying Giga Metals. That’s what made the stock pop, not just the Reuters article.

    Lastly, your conclusion that Giga Metals “ain’t ever going to make money” with their cost basis only demonstrates your ignorance of the dynamics at play in the nickel market. What do you think the price of nickel will be in 3 years when supply bottlenecks start happening? What do you think will happen with Lithium, Manganese, Graphite, etc? If the EV transition is going to happen, and it certainly seems that it will, then the whole world will need to produce significantly more volumes of these materials, and Nickel it seems will be the most problematic to source past 2025 and beyond.

    I personally learned of Giga Metals because of the hype after the Reuters article. I immediately did research and found videos of Mark Jarvis all over the internet describing a large scale multi year project before it comes online. It would seem they’ve accurately timed the market. Myself, I waited to buy until it came down in price. After your last hit piece when it came down more, I bought more.

    November 2, 2020 - 11:48 AM

    • Paul Sinclair

      Your biased comment demonstrates a total lack of credibility and honesty! You do not seem to show not a single shred of compassion to the innocent investors who invested their savings thinking it was a lifetime opportunity, due to the insidious engineered “tesla&giga metals” deal that never materialized! You think it is fair for the insiders to exercise cheap derivatives and options whereas the public investors got hammered? I am among retirees investors who invested in this unknown company. Under normal circumstances, I would not put a dime on this junior mismanage mining company. The organized “montage” was done in a timely manner so that investors won’t have time to look at the fundamentals, the financial ratios, and all the possible metrics to make sure the company was sound and worth investing in. We are waiting for the BCSC’s decision and intend to collectively conduct lawsuit against this fraudulent company. I can hardly sleep at night without pills, knowing I was scammed by criminals who made a fortune at our expense! We rely on BCSC’ s integrity to take a total ownership of the investigation and prosecute the criminals who are going to pay not only our losses but a compensation for our suffering and being taken for a ride. Justice will be served and our voice will be heard. Godspeed

      December 2, 2020 - 1:44 AM

  • David Francescutti

    I would definitely be one of those scammed investors. I follow tesla and own stoke there. I saw the Reuters story and had thought them to be a reputable company, I also saw a YOUtuber at the time report on Giga and he had a screen shot of Giga’s website that showed the Tesla Nevada Giga factory, it had since been taken down, so I did not personally see it. I looked into the company a bit and they seemed to have decent amount of talent and the fact that it was a BC Canada company I felt I should help them out as I’ve lived in BC my whole life. Feeling a bit betrayed by insiders.
    I would be very interested to see what comes of this.

    November 2, 2020 - 11:58 AM

  • AndyH

    Just to follow up my previous comment so my complete opinion is clear:

    If there was wrongdoing, as defined by the law, those responsible must be held accountable. Period. Meanwhile if the actions of those involved do not break the law, as written, then their actions do not matter. Period.

    With that said, its hard to stomach one reporter (Clausi) complain about another reporter or news organization who published an article (Reuters) before obtaining a clear understanding of the facts when Clausi himself admitted in this article that he’s connecting his own dots and does not have the facts.

    Hypocrisy in the media is nothing new.

    Mr Clausi, you essentially claim to be fighting for the shareholders, and you may be… however instead of lobbing unfounded accusations at the company, thereby further damaging shareholders, why not dig deeper, find the facts, turn them over to authorities if wrongdoing is clear, and then write an article? Wouldn’t that be the responsible thing to do?

    Making people feel as if they were scammed, when they may not have been, (and probably weren’t) helps no one, and only ends up creating more victims.

    November 2, 2020 - 1:07 PM

    • Peter Clausi

      Re Reuters: it has its own code of conduct, which covers ‘anonymous sources’. All I asked of Reuters was for it to confirm it followed its own code of conduct. Reuters would not do that.

      November 2, 2020 - 1:45 PM

      • ruSerious

        Reuter’s did not deny their reporting to you or to Parry? You and Parry both dump on Pratima Desai as some ‘obscure’ back alley dealmaker. Desai regularly covers the LME. Apparently, you and Parry don’t read LME financial press, or you would recognize the name. -www.reuters.com/journalists/pratima-desai. Your recollection and my recollection of what was said in the call don’t match. I’ll go through the call recording sometime soon and come back to fact check further, but please answer one simple question, Mr. Clausi. At anytime before or after the AGM call, did you call and talk to Jarvis? Or did you run your paraphrased questions and answers by Jarvis for comment, by phone or email? You quoted some anonymous bullboard commenter instead? Seriously? Why didn’t you report that you asked Gordinno for proof and they didn’t provide it? I sent an emaiil to CEO Jarvis last week and got a reply in less than 15 minutes. SMH….

        November 2, 2020 - 9:45 PM

        • Peter Clausi

          Four things in response. Reuters has an ethics policy concerning anonymous sources. Both Mr. Parry and I asked Reuters to confirm whether it had followed its ethics policy. Reuters would not do so. That’s a huge red flag. Second, why is someone who covers the LME doing a story on a minor company on a junior stock exchange? Third, as I said at the shareholder meeting, I had emailed the company a week before but no one returned my email. And lastly, I spoke directly with Mr. Jarvis by phone at the shareholder meeting.

          November 3, 2020 - 9:25 AM

    • Another fleeced retail investor

      It was a scam. I got scammed. Everyone paid the ~$10MM the CEO, Director, Chairman, and other insiders stole from retail investors with their obvious pump and dump. These guys exercise their options two days before the fake story ran, then sold their positions within three days of the ‘story’. https://equity.guru/2020/09/18/reuters-journalist-pratima-desai-sets-giga-metals-giga-v-run-insider-sell-off-fake-story/

      November 28, 2020 - 6:29 PM

      • Peter Clausi

        I keep saying I don’t think Jarvis the CEO was involved. Notice he wasn’t a seller.

        November 29, 2020 - 12:01 PM

  • H

    Volume had been high for a bit after Tesla’s summer request for more nickel, and then after the announcement that their annual shareholder meeting would be called “Battery Day” etc. There are so many perfectly reasonable explanations for this, and also important to note that GIGA keeps saying “Nothing material to note” and the Reuter’s article ONLY EVER STATED they were in TALKS.

    Neither party has ever denied this is the case and GIGA has clearly said they have talked– there are no lies to even cover up. Everything else is inferred speculation. Clausi is clearly passionate and dedicated but needs to move on to a cause with some meat on the bones.

    November 2, 2020 - 9:59 PM

  • Wei Qian

    I’ve lost money on this. I’m interested to learn the results of further investigations.

    November 8, 2020 - 1:43 AM

    • Peter Clausi

      You should add your voice to the others that have contacted the British Columbia Securities Commission. Go here https://www.bcsc.bc.ca/about/contact-us and use the “Report a Concern” link.

      November 8, 2020 - 9:40 AM

  • Trevor sweetman

    I’d kick in 10k to help sue ppl responsible for this Rort as I was a victim as well . We should do a class action this is so blatant.

    November 16, 2020 - 2:24 AM

    • Peter Clausi

      In the short term, complain to the BCSC.

      November 16, 2020 - 9:47 AM

    • Paul

      PAUL
      Hello,
      I would like to know how many are willing to join me for a class action lawsuit. We should not be wasting our time with BCSC. A representative called me confirming there’s nothing to be done for prosecuting the giga metals insiders, due to a lack of evidence!!! I am outraged and extremely disappointed. Here is enclosed the latest email from the lawyer Lewis who is willing to take charge of our case:

      lewis Klien
      7:10 PM (4 hours ago)
      to me

      Hi Paul I am truly sorry to hear this all. If you recall I did tell you that they would not be helpful you need to work with a third party like ourselves.

      When the proper Authority’s start receiving letters from us they do not ignore it in any means. We are very respected due to the amount of cases we deal with and our disputes letters do not get ignored in anyway.
      I am willing to help you and your group and change the fees to the opposite 5% upfront and 10% on the success. Time is everything when dealing with fraudulent activity. If you and your people have any interest my advise is to not keep delaying the correct process. Get back to me as soon as possible.

      Regards, Lewis W Klien

      Email: Lewis@payback-law.com

      Toll Free: 1-855-922-2961
      Office IL: 03-309-5410
      US: 17868711161
      UK: 44-2039666012
      AUS: 61-863654977
      EXT: 19

      January 26, 2021 - 3:05 AM

    • Paul

      PAUL
      Hello,
      I would like to know how many are willing to join me for a class action lawsuit. We should not be wasting our time with BCSC. A representative called me confirming there’s nothing to be done for prosecuting the giga metals insiders, due to a lack of evidence!!! I am outraged and extremely disappointed. Here is enclosed the latest email from the lawyer Lewis who is willing to take charge of our case:

      lewis Klien
      7:10 PM (4 hours ago)
      to me

      Hi Paul I am truly sorry to hear this all. If you recall I did tell you that they would not be helpful you need to work with a third party like ourselves.

      When the proper Authority’s start receiving letters from us they do not ignore it in any means. We are very respected due to the amount of cases we deal with and our disputes letters do not get ignored in anyway.
      I am willing to help you and your group and change the fees to the opposite 5% upfront and 10% on the success. Time is everything when dealing with fraudulent activity. If you and your people have any interest my advise is to not keep delaying the correct process. Get back to me as soon as possible.

      Regards, Lewis W Klien

      Email: Lewis@payback-law.com

      Toll Free: 1-855-922-2961
      Office IL: 03-309-5410
      US: 17868711161
      UK: 44-2039666012
      AUS: 61-863654977
      EXT: 19

      January 26, 2021 - 3:08 AM

  • Paul Sinclair

    Your biased comment demonstrates a total lack of credibility and honesty! You do not seem to show not a single shred of compassion to the innocent investors who invested their savings thinking it was a lifetime opportunity, due to the insidious engineered “tesla&giga metals” deal that never materialized! You think it is fair for the insiders to exercise cheap derivatives and options whereas the public investors got hammered? I am among retirees investors who invested in this unknown company. Under normal circumstances, I would not put a dime on this junior mismanage mining company. The organized “montage” was done in a timely manner so that investors won’t have time to look at the fundamentals, the financial ratios, and all the possible metrics to make sure the company was sound and worth investing in. We are waiting for the BCSC’s decision and intend to collectively conduct lawsuit against this fraudulent company. I can hardly sleep at night without pills, knowing I was scammed by criminals who made a fortune at our expense! We rely on BCSC’ s integrity to take a total ownership of the investigation and prosecute the criminals who are going to pay not only our losses but a compensation for our suffering and being taken for a ride. Justice will be served and our voice will be heard. Godspeed

    December 2, 2020 - 1:45 AM

  • Paul Sinclair

    Is it fair that I am blocked and cannot add any comment?

    December 2, 2020 - 1:41 PM

  • Paul

    Even my article was removed from stockhouse.com and my reputation was downgraded to absolute zero for telling he truth! How is it fair?

    December 2, 2020 - 1:44 PM

    • Peter Clausi

      I would agree with you. Perhaps they were threatened with litigation?

      December 2, 2020 - 2:07 PM

  • Trevor sweetman

    Yes Sounds like a plan I’m interested as I also feel there’s a case to answer

    January 27, 2021 - 4:40 PM

    • Ted

      Trevor,
      There’s a few of us that have already called Lewis on this and the team is growing. Paul has his contact info above. Simply call Lewis and get your name on the list.
      Cheers
      Ted

      January 29, 2021 - 10:41 AM

  • Paul

    Victimized Group of investors, due to a fraudulent Giga Metals activities, are advised to file a complaint joining massively: Contingencyfee.com, Shields Harney, John Douglas Shields, Suite 490 – 1177 West Hastings Street, Vancouver, BV V6E2K3, by Phone:604-491-1339, by Fax: 606-682-1822, and submitting all the details through Email: jshields@contingencyfee.com
    The more of us the better is our case.

    April 20, 2021 - 5:31 PM

    • Ted

      Paul, thanks for the update, I’m on board.

      April 21, 2021 - 7:08 AM

  • Trevor Sweetman

    Yes I’d be onboard also

    April 21, 2021 - 7:22 PM

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