The company backing the controversial Pebble Mine project was allegedly involved with “a flurry of stock trades” in the days leading up to the Environmental Protection Agency’s surprising reversal of regulations restricting the project.
The claims are brought by environmental group Earthworks that on Monday sent a complaint to the Securities and Exchange Commission asking for an investigation into Northern Dynasty Minerals Ltd. The story was first reported by CNN on Monday evening.
The complaint details a significant uptick in trading ahead of the EPA’s announcement that it would lift Obama-era regulations on the project, which was announced on July 30. That reversal has already been notable because that effort was reportedly launched the day after President Trump met with Alaska Gov. Michael J. Dunleavy at a stopover in Alaska on June 26.
The decision to repeal the Obama-era regulations on the mine has already been met with a lawsuit brought by Bristol Bay-area groups.
The timeline provided in Earthworks’ complaint suggests that the change had been in mind prior to that June 26 visit, detailing meetings or calls between EPA General Counsel Matthew Leopold and Pebble Mine on May 15, the White House on May 16 and Dunleavy on May 21.
On June 19, a stock tips website reported a conversation with Northern Dynasty Ltd. CEO Ron Thiessen and stated “if you are thinking about selling, don’t.”
Then on June 21, the group says offshore investment firms snapped up more than a million shares of Northern Dynasty Minerals Ltd.
“We believe what happened is that inside information was disclosed.” Lin M. Deola, Earthworks attorney told CNN, “Insiders in the company traded on that information and then made a profit as a result of that.”
Northern Dynasty Minerals Ltd., and the EPA have both denied wrongdoing or leaking of insider information.
But former financial sector officials in Canada and the U.S. told CNN that the trades look suspicious.
“From very small amounts, 100,000 shares a day or less, to very large amounts, 700-800 thousand shares… Someone looking at that is going to say, what has caused that sudden interest in this company?” Joe Groia, the former head of Enforcement for the Ontario Securities Commission, told CNN.
Jacob Frenkel, a former SEC investigator, told CNN that the post about not selling also raised red flags.
“When you start to talk about an imminent announcement and the suggestion that information about an impending announcement is going to be positive for the company… the first thing I’m thinking about is, is there trading that takes place in advance of that announcement?” he told CNN.
CNN notes that after it started investigating the story and asking about the June 19 post that the post was removed from the website.
Frenkel said that post is a critical piece of evidence and said its removal raises yet another red flag.
“It’s absolutely relevant,” Frenkel said. “Anytime potential evidence or information disappears from the marketplace, it creates additional suspicion.”
Why it matters
The progress of Pebble Mine under the Trump administration has been fast, overriding concerns of scientists and even of Alaska’s Republican Congressional Delegation who has raised concerns with the separate Army Corps of Engineers process. They have warned against letting politics drive decisions that should be based on science.
The latest revelations suggest there may be some criminal wrongdoing involved in the project, which adds more fodder for groups opposing the project.
As for the political impact, Dunleavy’s involvement with the project is an increasingly bad look. While his official position on the project has been neutral, he’s repeatedly been found to be working behind the scenes to further the project.
There’s his meeting with Trump, his July 30 letter to a potential mine investor pledging Alaska’s support to “actively help defend them from frivolous and scurrilous attacks” and now the Earthworks complaint suggests Dunleavy’s involvement with the project goes back to at least May 21.