000
OFF TOPIC but of interest to all on VSE
STARPOINT GOLDFIELDS INC.
2323C Dollarton Highway
North Vancouver, B.C. V7H 1B2 Canada
Tel: 604-929-7182 Fax: 604-929-9152
January 29, 1999
* * * COMPANY UPDATE * * *
STS:VSE
Further to the news release of January 22, 1999 and to fully inform the investing public, the Company is providing the Summary of the Forensic Audit relating to its Counterclaim against Global Securities. This claim resulted from a failed $5 Million financing in 1996 by Global Securities in order for Starpoint to develop its Yetwene Diamond Concession. This Concession is now being mined by DiamondWorks of Vancouver.
The British Columbia Securities Commission passed the audited information on to the Vancouver Stock Exchange. The VSE has a copy of this report pin pointing all of the trades outlined, yet they maintain it will take six months to a year to investigate this matter, even though they can refer to specific trades outlined in the Forensic Audit Report.
This Summary was excerpted from the Forensic Audit Report performed by Shikaze Ralston, Chartered Accountants, dated January 7, 1999. The complete Audit Report was filed with the Supreme Court January 11, 1999 at a Rule 18A Hearing and is a matter of public record, Supreme Court Case C975273.
"V. Summary
In sum, our analysis suggests that Global, acting for itself, its associates, or its clients:
bet against Starpoint by never holding less than half of the market's short positions while placing $300,000 of Starpoint's promissory notes and proposing to raise up to $5 million for Starpoint's use in the Yetwene project.
earned some $215,000 from its pattern of short selling while also collecting commissions in the form of cash, shares and warrants
sold half a million more shares than it bought and sold nearly twice as many shares as it, its associates, or its clients bought
sold heavily at the opening trade on nearly one day in four over the period
employed jitneys for half its buys
employed jitneys for two-thirds of its proscribed short sales on a downtick
engaged in simultaneous sales with jitneys
engaged jitneys in simultaneous opening short sales on downticks
engaged in a low-opening, proscribed downtick-short transaction simultaneously through its own facility and through jitneys
engaged in a pattern of trading that included persistent sales pressure, use of short sales nearly to double the sales of shares that it, associates, or clients owned, simultaneous own + jitney sales, low-opening, and proscribed short sales on a downtick as well as extensive use jitney trades, many of which involved short sales on downticks.
STARPOINT GOLDFIELDS INC. - Page 2
Global's pattern of trading, even if each one of the practices itself was innocuous, had the effect of artificially lowering the offer price of the shares of Starpoint. Effecting short sales on downticks and employing jitneys to do so, violating VSE Rules C.1.37 and C.1.38 are not innocuous.
Since, for a little-known firm like Starpoint, the apparent trend of its share price conveys information to prospective investors, the pattern of trading impeded the company's ability to raise capital. This occurred at a critical stage of securing its participation in the Yetwene project."
The Vancouver Stock Exchange has neither approved nor disapproved of the contents herein.
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