The BC Securities Commission is alleging North Vancouver stock promoter Mark Morabito engaged in insider trading by transferring shares of his troubled start-up low-cost airline carrier to his spouse prior to publicly disclosing the company had lost a lease on two airplanes and operations were to be delayed.
Morabito was executive chairman and a director of Canada Jetlines Ltd. from March 2017 until December 2019. In September 2017, the B.C-registered TSXV-listed company announced it had a lease agreement for two Boeing 737 aircraft and planned to launch in spring 2018. However, by December 2017 the agreement was terminated, causing delays to the launch of operations.
The commission contends, in a public hearing notice issued Friday, the terminated lease and delays were material information that should have been immediately disclosed. However, it took until March 2018 for the company to do so. As such, the commission alleges Morabito and Canada Jetlines contravened the B.C. Securities Act for failing to file a Material Change Report.
On Feb. 23, 2018, prior to the issuance of the March news release, Morabito transferred 352,945 Canada Jetlines shares to his spouse, with the knowledge his spouse would sell the shares. The commission alleges this was insider trading.
The commission notes, following the March news release, Canada Jetlines’ share price decreased 38% from $1.42 on March 13, 2018 to $0.87 on March 15, 2018.
The commission’s executive director Peter Brady will bring forth the unproven allegations to a judicial panel of commissioners. A hearing date is expected to be set next month. Charges brought forth by the commission are administrative and not criminal.
Canada Jetlines never launched and remained a shell that was eventually bought by GlobalX airlines and it will be listed on the NEO Exchange as of Wednesday. A press release indicates the company is still trying to launch a fleet by early 2022 and is subject to Transport Canada approval. The company has not issued a statement on the allegations against its former executive chairman.
Morabito has been involved in dozens of penny stocks, either as a disclosed shareholder or director, for over 20 years.
His most active current businesses are King & Bay West Management Corp., a merchant bank he is chairman and CEO of and Excelsior Mining Corp., a Vancouver-based junior mining company, which reports no revenue, to date.
Morabito’s LinkedIn profile indicates he has a degree in criminology from Simon Fraser University and a law degree from Western. He is a former member of the Law Society of BC.