Saturday, December 10, 2005

Who Can You Trust?

(Very Important Update At Bottom...Scroll Down)

I'm a little hesitant to post this since I can't, for the life of me, imagine why something like this would be leaked to Medisys. If there was a leak (and it looks like there was), I always assumed it was because of negligence, or because some low level staffer was trying to make a few bucks. To assume that this was part of some massive Liberal conspiracy or that Martin was involved seems a little bit rich.

Regardless, here's the lead to MK Braaten's post:


The volume of shares traded for Paul Martin linked Medisys Income Trust shares the day before the Income Trust announcement is way to high to be a "co-incidence". The volume increased 3400% from the prior day, and the following day, dropped back down about the same amount.

Paul Martins personal doctor started a medical company called Medisys Income Trust, a chain of private health care clinics located across Canada.

The day before the Goodale income trust announcement, the volume of Medisys shares traded for the day went from 5,714 on November 21, to 203,953 oNovemberer 22. On November 23, the shares traded dropped back down to 6,220.

I'm hoping someone can provide a logical explanation for this because, scanning the comments of the various blogs which have linked to this, I haven't seen one yet.

I won't comment on this story since I know absolutely nothing about Income Trusts but it does raise very important points:

1. This story won't die. A lot of people made money on the Income Trust leak and some of them will, inevitably, have ties to the Liberals. Because a lot of people on Bay Street have ties to the Liberals. As people dig through the money trail, rumours are going to continue to swirl.

2. This is the type of thing where blogs could play a major role in the election. I imagine there are enough pissed off Blogging Tories out there who will sift through every single transaction on Bay Street to try and find connections.

Anyways, I'm hoping someone who understands stock trading better than I do can post about how suspicious people should be about the information presented in Braaten's story. Is this as out of the ordinary as it looks?

[cross-posted to CTV Weblog]


UPDATE: There's a good debate going on in the comments section of this post, so be sure to check it out. You might learn something about stock trading; I know I have.

Also, I was sent this chart for the year long trading volume of Medisys and, in this context, the leap doesn't look as dramatic. There was also a day of trading of over 500,000 Medisys shares a little over two years ago. Take a look at the long term graph:



So, while it's still an odd coincidence, the Medisys story is certainly not the smoking gun many are making it out to be.

That said, there's still a lot of fishy stuff going on out there. Goodale's meeting with several Bay Street investors for starters. And MK Braaten has some more stuff up about insider trading.

59 Comments:

  • "Seems a bit rich"

    If adscam never happened you mean.

    Funnelling taxpayer money in envelopes under the table (literally) and having it funnelled back to the Liberal party seemed rich too. In fact more rich than a little "hey buddy guess what I just heard, you wanna make some easy money in the Market?"

    Insider trading happens.
    So does cash-in-envelope money laundering.

    What's remarkable is that its the Liberal party of Canada utilizing it's government position to do both.

    By Anonymous Anonymous, at 2:43 PM  

  • It's remarkable how quickly Canadians have forgotten how low the Liberals sunk with adscam.

    Looks like we're being reminded of how low they can go.

    By Anonymous Anonymous, at 2:46 PM  

  • BECAUSE of Adscam, I find it hard to believe that any prominent Liberals would be stupid enough to engage in insider trading on the eve of an election.

    That's not to say some low level staffer wouldn't do it, but once you've been caught with your hand in the cookie jar, you're a lot less likely to do it again.

    By Blogger calgarygrit, at 3:21 PM  

  • The heavy trading is, indeed, unusual, the day prior to the announcement. It is much, much higher than the daily average previously. And there are rumblings that Bay Street investment banks knew as early as the day before, on Nov. 22, that a decision was coming down.
    Nevertheless, what is not explained is the rise in the unit price for Medisys since Nov. 23.
    Plus, there's news emerging of Goodale indeed meeting with investment banks the morning of Nov. 23. And then there's the whole CARP flap.
    This is not going away anytime soon....

    By Blogger The innkeeper, at 3:30 PM  

  • Why would a Liberal operative strong arm a head of a seniors organization, and belittle him by calling him "old and confused" if this was just nothing.

    That has panick written all over it.

    That CTV market expert: What, no counter expert to say this was normal or otherwise doesn't look like an inside trading situation. Course, if it does look like an inside leak, then no market expert is going to risk their reputation/livelihood defending the indefensable.

    My call - some more canaries start chirping (if they're not already doing so to the OSC or the RCMP).

    By Anonymous Anonymous, at 3:39 PM  

  • It's all about Ethics, as this article explains:

    http://www.thiscanada.com/2005/12/10/call-for-tender-liberal-ethics/

    By Anonymous Erik Sorenson, at 3:59 PM  

  • It seems to me that if Paul Martin doesn't get out ahead of this wave fast, he's in real trouble. Political death by innuendo and half-truths. Mr. Martin should be firing people -- fast.

    As for Mr. Goodale, I doubt he is in anyway involved in the leak and the subsequent profiteering.

    Mr. Harper's campaign was slowly sinking until this fell into his lap. Will this take on enough momentum to propel him into office? Somehow I doubt it.

    By Blogger RON, at 4:02 PM  

  • The federal Libs are who they are. A leopard can't change its spots either.

    By Anonymous AlbertaAvenue, at 4:25 PM  

  • 3400% increase in daily trading volumes can only be justified on the basis of prior information released to the public if Goodale is to be believed.

    Until someone can legitimately explain this increase on the basis of commonly known information this story continues.

    In the stock market you are assumed to be guilty unless you have your due diligence and KYC documented.

    You must be able to explain your trades when asked. Paperwork must be complete and all i's must be dotted and t's must be crossed.

    The compliance department doesnt give free passes.

    By Anonymous Colin, at 4:29 PM  

  • Is anyone in the MSM pursuing this or are they scared shitless of losing their jobs? You'd think a political journo nearing retirement might give this one a shot.

    By Anonymous Sailor Man, at 6:10 PM  

  • If the mainstream media doesn't cover this, watch the blogs skyrocket (as it happened in the U.S.).

    The free market of news and ideas is here. The media can compete or get passed by.

    Bourque alone seems to be getting as much traffic as some papers.

    By Anonymous Biff, at 6:26 PM  

  • Hi My name is Jeff Cosford I'm introducing myself now cause I can never get the name part to work and always come up anoymous.

    This will be fairly long but if you want to understand my explaination may give you insite.

    In the first place it is the Toronto Stock Exchange that monitors this stuff. They are known as a SRO or Self Regulatory Organization.

    As an example of what they do, about 10 years ago I was trading a very small junior on Vancouver. If I remember correctly it was trading aroung $0.70. I hit the bid which was about $0.10 under the market.

    Markets have buyers known as bidders
    or the bid and sellers known as askers or the ask price. If you want to execute right away you go to the ask or bid depending on weather you are a buyer or seller. If you are willing to wait then you post a bid or ask if you are a seller.

    This is more than a 10% reduction of the value of the stock so the stock was halted until it could be determined why someone moved the market more than 10%. In other words it was an unusual move.

    All things in the market have their basis in something known as the prudent man rule. What would a prudent man do?

    In the case of the Trust and the dividend paying stocks you had unusual volume patterns in many of those securities directly affected by the news annoucement. Those volume patterns showed up on multiple securities begining at about 2pm the day of the announcement.

    The announcement was to come out at around 5pm - 6pm eastern time.

    Lets say you manage other peoples money. You have been shorting the market. Selling a security that you don't own but have borrowed at a higher price in the hope you can buy it back at a lower price for a profit. Almost 80% of the population is a direct or indirect owner of securities. Either in your own stock account or a pension fund mutual fund etc.

    If you are not one who got the information early as may have and you are short the market you didn't just lose an opportunity to make money but you probably lost a ton because you wouldn't have had time to figure out what was going on and exit your short position.

    The profit that was obtained at this time came out of someones pocket maybe even yours.

    This is just one example and I can give you a great deal more information. Is it serious you bet.

    I haven't traded in Canada for a number of years. I simply do not trust the markets here.

    By Anonymous Anonymous, at 7:07 PM  

  • If you look at charts of mhg.un, things look bad.

    Very bad.

    They announced an agreement with sunlife to send sunlife policyholders to medisys clinics. On December 7! This led to 2 days of trading of roughly 75k shares.

    The only other news coming out of Medisys was an earnings release that saw increased distributions but declining cash flow. This news prompted a negative review from Jennings Capital with a sell rating on Nov 21.

    So the trading the day of the announcement was around 5k, then 200k the day of interest, then 6k the day after. There are lots of possible reasons as to why this happened. Someone was rebalancing their portfolio and was using a trading window (open likely since their results had been announced the day before). Lots of explanations. Given the announcement the day after, the obvious value to the stock if tax advantages were unexpectedly kept, and the close relationship between the firm and the country's political and corporate elite, you are goign to need extraordinary proof to demonstrate innocence.

    This goes on the list of the very many stocks that give a prima facie case of insider trading. That so many trusts and high dividend stocks would see such well timed increases in prices and volumes speaks to widely distributed information.

    None of this makes sense. It is violently stupid and out of a bad movie. This is not the way to take advantage of inside information. You do it using several different brokers in offshore financial centres over a number of days. Then again, you don't pass envelopes full of cash across a table at an Italian restaurant.

    How many of the people involved have that much sophistication to know what you can and can't get away with? How many were just focused on taking advantage? How many links did this info get passed to, so that some of them didn't know that they were taking advantage of illegal information and thus weren't careful. This needs to be cleared up with a serious investigation. I know the questions to ask but I don't have the resources to answer them.

    Who traded what and when? Who kew what and when did they know it? What are the connections between the two lists, how and when did people from the 2 lists communicate and did their communications lead to trades?

    The problem is that we have 2 impossibles: you don't see these trading patterns for no reason, but you don't use insider information on a government announcement relevant to the PM's doctor's company. This needs to be resolved to explain the two impossibilities, or people need to start going to jail.

    By Anonymous annextraitor, at 7:23 PM  

  • It gets worse (check out the Western Standard's step by step guide to checking income trust volumes).

    I took a random look at other income trusts and no such similiar spike occurred.

    The hallmark of insider info is that only a few capitalize on limited info.

    This pretty much kills the arguement that "everybody knew early" or it was based on "common suspicion". If it was common you'd see widepread general movement, not spikes in specific stocks (you know like ones run by close confidants - His physician-) of the Prime Minister.)

    By Anonymous Biff, at 7:31 PM  

  • Hi again it's Jeff. I feel my last post was less than coherent. This is a big subject especially if you don't know the lingo.

    Traders focus on several types of indicators and one of the most important is volume.

    Volume picks up it peeks everyones interest. Some may enter the market on increased volume but something has to stimulate that volume in the first place.

    The best way to illustrate how a market should work before a major news announcement would be to watch the S&P futures on interest rate day.
    The Federal Reserve comes out tells everyone what they are going to charge for money. This is a very big deal. Hundred of Billions of dollars rest on this decision.

    The day of the announcement volumes across all markets tends to be very light. The announcement comes out at 2pm eastern. The closer you get to that time the quieter the markets get. At about 20 minutes before the announcement the markets almost completely halt. Most of the posted buyers and sellers dissapear.

    Then the news is released and at that very moment the markets exploded. Literally explode volumes shoot way way way up and last about 45 minutes then dies down to normal.

    This ritual happens about 6 times a year.

    There is no leak here because the volumes explode after the announcement not before. The stakes with the FOMC or Federal Reserve interest rate announcement are a lot bigger than here but the reaction should be quite similar.

    By Anonymous Jeff Cosford, at 8:04 PM  

  • So Jeff,

    Are you saying that, because the heavy trading occured before, instead of after the announcement, that its indicative that a few knew some priviledged info? Or the opposite?

    By Anonymous rager, at 8:50 PM  

  • Look, since the very first day this happened, way before this became an issue in the media, I think anyone that follows the market was 101% convinced that there was something very suspicious going on (LOOK AT BCE FOR CHRISTSAKES!), however I don't think I'd pin it on Martin because of this.

    The reason I say this? Becuase I would like to think a PM is more intelligent than this. If someone is going to use insider information to buy a stock, they want to do is DISCREETLY, buy lots of stock slowly, hopefully a stock with a high volume (BCE!) where they won't get noticed, and not make a huge splash with a massive blocktrade. THIS my friends, is a BIGGGG splash. Therefore, it was clearly executed by an idiot with too much knowledge and no idea how to handle it. This PARTICULAR stock wasn't the work of a "Bay St." insider, this seems like the work of a few morons, and that would lead me to believe it was a random staffer tipping off random friends hoping to make everyone rich. Bad move. Now for the moves in the rest of the market, that looks more like Bay St., but if it got out to random Joe, I'm sure Bay St. and everyone else knew as well. This was just one big mess, and the average ordinary Canadian paid for it.

    I've said it once and I'll say it again, if Canada stopped being the *ONLY* major industrialized country in the world without a national securities regulator, I'm sure we would have arrests already. Unfortunatly we need to rely on the terrible Ontario Securities Comm. to handle this, I'm not expecting any results.

    By Anonymous Anonymous, at 9:10 PM  

  • Rager:

    There should have been no change in trading patterns at all. It should have looked like a normal day.

    Instead if you look at trading that day there where unusual spikes in volume and price all over the place.
    begining about 4 hours before the news release. Most of those unusual patterns where in the securities affected by the news.

    The really curious part for me is not that the trusts where moving but stocks like BCE that are not a trust and unless you had prior knowledge that would be a pretty big leap of faith, at least for me. Especially if you think about the fact these guys are betting millions of dollars.

    Because of the heavier trading volumes prior to the news release it is an indication that something unusual was taking place.

    The most significant thing you might have seen before the news release was a slowdown in volumes not a increase.
    A slowdown would indicate something was up but people wouldn't know what.

    By Anonymous Jeff Cosford, at 9:46 PM  

  • Calgary,

    You can't just look at the fact that there has been significant stock purchases in the past to say "see its not a big deal".

    Looking back there were reasons for them.

    As for this particular trade, all indications were that there should have been little activity.

    With each "blip" in volume there's an explanation. So far the only one on the 22nd, was the trust leak info.

    By Anonymous Biff, at 12:41 AM  

  • CG - interesting graph and probably a good indication of the appropriate spin in this case for the Liberals - after all, bullshit baffles brains. The graph is only relevant in terms of what the spikes in volume were linked to - earning reports, downsizing, restructuring, finding a cure for cancer etc. In other words - and Jeff appears to be the real expert - spikes in volume are rarely random, they are usually related to information (have I got that right Jeff?). Needless to say, what is more compelling are remarks concerning the OSC and their effectiveness. RCMP? Doubt it. I'm going to say this without trying to make it a Lib bashing thing - a government that has been in power for a long time becomes a law unto itself (I believe this also applies to the PC's in Alberta). Fundamental to the health of any democracy is the necessity to purge government solely for the sake of change. In light of the Gomery report and Adscam even the merest hint of impropriety over the income trusts should be a warning to all of us.

    By Anonymous Gunter, at 12:41 AM  

  • Holy shit, can you believe that the head of the OSC is a major, and I mean major (thousands of dollars worth) to the Liberal party of Canada!!!!!

    Just great. It reminds me of Elliot Ness's difficulties nailing Al Capone - everybody was on his payroll.

    Here we have the head on the regulatory body being a Liberal Bag Man.

    Our country's turned into an f'ing joke under the Liberals.

    Voting these guys in - you might as well kiss democratic integrety goodby. Liberals = Banana Repubic/corruption.

    By Anonymous Chester, at 12:55 AM  

  • I think Chester is referring to this:

    Name of contributor Year Class Name of political party Donation $
    W. David Wilson 2000 Individual Liberal Party $1,100.00
    W. David Wilson 1996 Individual Liberal Party $1,000.00
    W David Wilson 1997 Individual Liberal Party $1,000.00
    W. David Wilson 1998 Individual Liberal Party $1,000.00
    W. David Wilson 2001 Individual Liberal Party $1,000.00
    W. David Wilson 2003 Individual Liberal Party $1,000.00
    David Wilson 2004 Individual Liberal Party $500.00
    W. David Wilson 1998 Individual Liberal Party $209.20
    David Wilson 1995 Individual Liberal Party $173.89
    David Wilson 2000 Individual Liberal Party $136.23

    http://www.boundbygravity.com/SEC/ECSearch.aspx


    And just to verify who this character actually is, check this link out. It is the organizational power tree of the OSC. Note the name of the head honcho at the very top: W. David Wilson.

    By Anonymous Biff, at 1:00 AM  

  • CG:

    The large spike in Aug 2003 is due to an issuance of shares to the market thereby causing the sharp increase in trading activity for that day.

    According to the press release, Medisys issued over a million shares to an investment bank at about $2 per share, this explains the sharp increase in trading that day, as the graph indicates.

    The other large spike in Mar 2004 was due to Medisys landing the Air Canada contract, which subsequently increased their revenues, and by extension, their stock price causing increased trading of the stock.

    The spike in Oct 04 was due to Medisys landing a large contract with a global financial services firm; the December 04 spike was due to the announcement of the income trust...I could go on. The key argument here is that those spikes occurred after announcements were issued, unlike the income trust fiasco.

    Case in point: On December 7 Medisys and Sun Life announced an alliance that has Medisys offer services to Sun Life's clients. If you look at the trading on Dec 6, 7th, 8th, 9th, you will notice barely any activity on the 6th, but on the 7, the day of the trade, and the 8th and 9th, the volume of trades increased sharply, this is because investors bought up shares.

    Nonetheless, your assertion that this is 'definitely not a smoking gun' is quite incorrect. The movements on that graph you have up happened immediately after the aforementioned announcements. This stock is still suspect as the trading increased dramatically before the Goodale announcement.

    I wouldn't believe for a minute that this is not a smoking gun. It definitely is; it’s far to suspect.

    By Anonymous baystreet_investor, at 1:07 AM  

  • Hey, how about that insider trading tip that was reported by two media outlets.

    The Globe and Mail
    Bloomberg.com

    Both of these were reported before Goodale's announcement.

    There is no insider trading scandal here. End of story. Case closed. The right is wrong again. Booyaa!

    By Blogger Robert McClelland, at 1:18 AM  

  • Is Robert an idiot? The above post is referring to trades taking place on the 22nd, not the 23rd.

    Also, even if the papers sourced an 'insider' that would suggest there was a frigging leak, regardless of insider trading.

    By Anonymous Anonymous, at 1:24 AM  

  • Woah!!!

    The head of the OSC is a Liberal Bag Man??!!

    Well that's just f'ing great!

    It's like the Chicago Mob - everybody's on the payroll.

    Apparantly, including Robert "nothing to see here just move on" Mclelland

    By Anonymous Tiger, at 1:28 AM  

  • Oh, it's still suspicious - I'll agree. And there doesn't appear to be a solid explanation. There's definitely a story in all this somewhere.

    But...to talk about a 3400% increase is a little disengenuous, considering we see big blips like this quite frequently.

    By Blogger calgarygrit, at 1:30 AM  

  • Calgary:

    There's a major increase in volume the day before the announcement

    other objective factors indicate, that if anything, there should be little activity

    it's Paul Martin's physician's co.

    They make a huge profit off the early stock buying which comes just prior to the "official announcement"


    How generous of you to admit that "its suspicious".

    Absent evidence to the contrary, its downright conclusive!!!!!

    Oh, and where is that evidence to the contrary??????????

    By Anonymous Margaret, at 1:38 AM  

  • Well, true CG. But, to his/her credit, that braaten blog did mention that correlation is not causation in that regard. But the timeing certainly suggests some correlation.

    The thing is, after ADscam, anything the Lib's do will be looked at as if they are guilty and have to prove them selves innocent. Their track record doesn't really give us a reason to think otherwise.

    By Anonymous b_i, at 1:39 AM  

  • I think your 'update' should include a qualifier now that the last several comments proved your 'not a smoking gun theory' is essentially useless CG.

    By Anonymous Anonymous, at 1:43 AM  

  • The sad thing is our pathetic Liberal friendly media won't touch this.

    There's a major story with interwoven threads of corruption.

    But we have a democracy that is ill. A big part of that illness is a complicit media. You can't have a corrupt government stay in power for 12 years without a complicit media. Apologizing, minimizing the corruption, while ruthlessly scrutinizing the opposition, who's job it is to hold the government accountable.

    The media must be cleansed along with the Libs. And the Blogs will be that cleanser. The monopoly on the "news" is pretty much over.

    That must scare the hell out of the Liberals

    By Anonymous Maggie, at 1:47 AM  

  • CG - Full disclosure - now that you have a "relationship" with CTV (BCE) have you been told to squash these rumours? Or, are you just a wee bit naive? Wait, CTV broke the story OR did they? Why does Scott Reid wear girls panties (not that there's anything wrong with that)? Seriously dude, I hope you're just playing devils advocate...

    By Anonymous Sailor Man, at 1:48 AM  

  • Maggie I refuse to hear you disparrage a media that may be a bit tired, infirm, cowardly, drunk, arrogant and stupid. What have they done to you? If you had spent the last 12 years sucking up to the Libs then you'd be a little reluctant to see them go as well. There are senatorships, OC's and consular generalships on the line here - so go easy...

    By Anonymous Sailor Man, at 1:54 AM  

  • The above post is referring to trades taking place on the 22nd, not the 23rd.

    The Globe and Mail article clearly states that Goodale signalled his intentions on the 22nd. See how they say he did it yesterday in the article. And see how the article was published on the 23rd.

    There is no insider trading scandal here. The info was widely known to more than just a few of Ralph's buddies.

    By Blogger Robert McClelland, at 1:55 AM  

  • Apparantly, including Robert "nothing to see here just move on" Mclelland

    Oh, there's something to see here. But it's only conservative lies and progressive naivete for believing those conservative lies.

    By Blogger Robert McClelland, at 1:57 AM  

  • You know what I see here on this, and other blogs,

    we've reached the far side of the rubicon.

    We are no longer told what the "news" is. We investigate, share, reinvestigate ourselves.

    The filter is gone.

    And with that filter removed, what do we have:

    Within a day or two we've found major evidence of a leak,

    that it went to those close to Paul Martin himself

    That those responsible for investigating (OSC) are in the back pocket of the Liberals

    That it appears that the OSC is not pursuing any bona fide investigation

    Now. Is it that this just happens to be a day where such info is uncoverered, or.....

    Is this what happens on the far side of the rubicon where the media filter (one which has layers of Liberal control) is removed.

    Don't let the melodrama belittle the significance of what's being uncovered here.

    By Anonymous Maggie, at 1:57 AM  

  • Robert you really are grasping at straws and missing the point entirely. Furthermore, Goodale only said in the Globe that he 'may provide investors...'

    Regardless, even if this was widely known why didn't the whole sector jump on it?? I don't understand your reasoning. Are you a broker or do you just not understand the semantics of this?

    Irregardless of timing of the article, thats not important. Whats important is the fact that Goodale was going around making hints about Gov't policy shows how incompetent he is. You don't go around making suggestions about what the Gov't might do for the equity markets. Irregardless, he should have been tight lipped about it until the minute his press conference started. That is the only way to keep the markets fair.

    You are also forgetting, Rob, and this is the major point that your missing, is it also isn't fair that Goodale 'consulted' with several investment bankers on how to decide. These investment bankers therefore had a clear sign to what was going to happen, because they advised him on it. That there is unfair to the average investors; these executives whom he met with definitely had knowledge what was going to occur. And the trades before the announcement were likely linked to these bankers.

    I dont know about you, but no investor in his right mind is going to bet a million dollars because the G&M or Bloomberg said so. If you actually think that investors rely on a news paper article, then you 1) have no idea how stock traders work, or 2) give the papers far too much credibility. Many times have the papers caused investors grief, many times.

    Unlike in Canada, in the USA, for example, right before a Gov't announcement (which is confidential right up till the announcement), the markets are effectively frozen. Once the announcement occurs then the markets go take off; this is because, unless you hear it from the horses mouth, there's too much at stake to risk billions of trades on 'speculation'.

    Your assertion that because two articles in the newspaper exposed what the announcement was going to be, misses the point entirely. The simple fact that Goodale consulted with investment/fund executives leading up to his decision is what should be investigated. These bankers, likely had their firms start bidding on call options and other securities long before the announcement because they knew first hand what it would be.

    Furthermore, because the markets are supposed to be fair to all investors (not just ones that read G&M and Bloomberg, I might ad), the fact that this information was released to the online papers only hours before the announcement indicates not everyone in the investment community read it.

    I'm not sure why you’re so dead set in defending the Liberals on this Robert, but you must open your eyes, your missing the point. It’s not the newspapers or the timing of the articles; it’s the fact that stakeholders in the market had privy information in the days leading up to the announcement. And I'm willing to bet that these executives instructed their firms to buy huge volumes of call options (which are a bet that prices will rise and you can buy at a lower price previously agreed to) in preparation for the announcement, long before the Bloomberg/G&M articles.

    By Anonymous baystreet_investor, at 2:22 AM  

  • Here are the most suspicious income trust trades:

    http://www.stephentaylor.ca/archives/000485.html

    By Blogger Stephen Taylor, at 3:33 AM  

  • "I'm hoping someone can provide a logical explanation for this because, scanning the comments of the various blogs which have linked to this, I haven't seen one yet."

    Yes you have, CG. You just don't like the answer.

    The logical explanation is that the Liberal party is corrupt to the very core, a party full of thieves. And if you support the Liberal party, then you approve of thievery (or are one of the thieves yourself).

    By Blogger Ed, at 7:36 AM  

  • CG, if Kinsella's idea is true that you will see an increase in donations to the Liberal party in late november/early december from the profiteers of these trades...then I think you have your explanation. I doubt you'll like it, but there it is.

    Can the Liberals be forced to reveal their most recent campaign donations?

    And to those who have said "they wouldn't be that stupid..."; remember the Liberals own the media, the RCMP, and apparently the OSC. Their behaviour gets more and more brazen. It honestly looks like they simply believe they won't get caught.

    By Anonymous john g, at 9:00 AM  

  • The stuff regarding David Wilson is indeed true. He is known on Bay Street as a major Liberal and, rumour has it, was prepared to run for the Liberals federally after he lost out on the top job at Bank of Nova Scotia.
    It is clear that MSM has to go after the OSC.
    Also, I am not buying this argument that because Ralph told the Globe and Mail that he was "considering" his options on Nov. 22 led to all this trading. In fact, I think Measured Markets did a graph for the Post about the unusual trading in BCE, Yellow Pages Income Fund, and such.

    By Blogger The innkeeper, at 9:36 AM  

  • This is a post I just created on my blog — hackoncrack.blogspot.com — that I hope sheds some light for Calgary Grit readers.

    I have posted excerpts of a column by Barry Critchley that ran in the Financial Post on Nov. 29, six days after Ralph Goodale made his income trust announcement. It is, in my opinion, the best evidence to date of something fishy. This may help out the readers at Calgary Grit, which have quite the discussion going about the alleged income trust leak.
    Here is most of the column. I have changed dates for the sake of clarity... But remember, the day of the trust announcement was Nov. 23.

    ....
    "It's clear that different people knew different things during the day," said one securities lawyer, who noted that even leaking the news [during the day] that there would be an announcement after the markets closed "is bad." Goodale made his announcement about 6 p.m.
    So, what do we know?
    ... There was lots of market activity in a number of stocks.
    There is a company based in Toronto called measuredmarkets.com, whose business is providing an "early warning service for stocks." It is run by Christopher Thomas, a former broker, analyst and money manager.
    Thomas's business is to look for what he calls "deviant behaviour." He uses a proprietary algorithm that focuses on three aspects of deviant behaviour: price, volume and number of trades. In Thomas's world, those aspects are known as flags. The maximum score is nine per category, meaning a total of 27.
    As a service to the readers of this column, Thomas compiled the three flags -- price, volume and trades -- for three stocks: BCE Inc., Royal Bank of Canada and Russel Metals Inc. -- and two income funds, Superior Plus Income Fund and Yellow Pages Income Fund. He compiled those flags for every day since Oct. 31.
    What did he find?

    * BCE
    * On Nov. 23, there were 13 flags (two for price, three for volume and eight for trades) -- the highest number in a few weeks. On that day, more than 5.4 million shares traded on the Toronto Stock Exchange and New York Stock Exchange -- almost three times the previous day's totals. (The highest was Nov. 2, when there were 25. On that day, BCE released its third-quarter financials.) On Nov. 24 there were 18 flags.
    * ROYAL BANK
    * On Nov. 23, there were 10 flags (eight for price, two for volume but none for trades) -- the most in two weeks. On this day, volume was double the previous day's. Thomas refers to this as "highly unusual trading."
    * RUSSEL METALS
    * On Nov. 23, there were 13 flags (seven for price, three for volume and three for trades) -- the most since Nov 3. Thomas also calls this "highly unusual trading."
    * SUPERIOR PLUS
    * On Nov. 23, there were 19 flags (two for price, nine for volume and eight for trades) -- equal to the most for the period since Oct. 31 (On Nov. 7, there were also 19 flags.)
    * YELLOW PAGES
    * On Nov. 23, there were eight flags (four for price, one for volume and three for trades) -- the most for the month. Indeed, on the five previous days, there were no flags. On Nov. 23, volume was 1.5 million units -- almost four times the previous day's volume.

    "Despite Mr. Goodale's denial, it certainly looks like some were in the know regarding the announcement on dividend taxation," said one investor, who owns shares in Russel Metals, one of the TSX's high dividend-paying stocks. He was trying to add to his holdings. "It was a real surprise to see Russel gap up at the open on Wednesday [Nov. 23], and close at $20.50. up 3.8% for the day. There was no news relating to Russel. But when Goodale's announcement was made, after the markets closed on Wednesday, it all became clear." His conclusion: "Very hard to prove, of course. But somebody knew."

    By Blogger The innkeeper, at 10:01 AM  

  • There has to be someone working on the 'inside' who has some info. This is an appeal - if you value integrity more than power then help put the bloggers down the right track. One of you has to value Canada enough to see that this issue isn't about party politics anymore. If we don't slay this beast then we are opening a Pandora's Box in terms of the precedents we are setting for government. This type of behaviour cannot be condoned - it is a matter of right and wrong. It speaks volumes of those who speak of values and then condone crime.

    By Anonymous Anonymous, at 10:09 AM  

  • Well, it's clear that the news got out. The real question is how it got it and who benefited.

    This may be a stupid question, but is it possible to get a list of all the stock traders who profited significantly by buying on the 23rd? Once you had a list like that, it might be easier to draw the connection and to start looking for other connections of those individuals to the Liberal Party, people working in the Ministry of Finance, etc. You could also find out the percentage who profited who had previously donated to the LPC, or who donated afterwards.

    I still think that it's a little far fetched to assume Goodale or Martin would be directly involved on the eve of an election. But it's highly possible Goodale was negligent and it's possible someone in his office or in the LPC war room leaked something they shouldn't have.

    By Blogger calgarygrit, at 12:33 PM  

  • I don't think this was so much an attempt by Goodale or Martin to enrich a few Liberal insiders as it was an attempt by either the PMO or Goodale's office to "prepare the ground" for a positive reception to the policy announcement by giving certain key stakeholders advance notice. This way, when the media came calling for reaction, the interested groups would be ready with fulsome praise for Goodale and the Liberals, rather than being caught flat-footed.

    The Liberals were either indifferent to the fact that this would make some people quite a bit of money - and cause others to lose quite a bit of money (all those people who sold without the benefit of information the buying party had lost a substantial sum of money) - or were simply too stupid to realize it. Either explanation is sufficient for Martin to demand Goodale's resignation, and the resignation of any person in his office who had anything to do with it.

    It's also yet another reason to vote these people out of office on January 23rd.

    By Anonymous Sean, at 12:53 PM  

  • Robert,

    Yes, Goodale made his announcement on the 22nd - at 6:00PM. The spike happened during the trading day on the 22nd - which ended before 6:00PM. Heavy trades before announcement. Announcement after heavy trades. Need it made any more clear?

    Now, there are reports that CargoJet's (long-time Liberal supporters and provider of the LPC's campaign 727) income trust had the same mysterious spike as did the Medisys income trust. Funny how pro-Liberal companies' trusts seemed to have a funny spike in the hours before the announcement.

    By Blogger Greg P, at 2:04 PM  

  • wowie

    thanx a million for the insight y'all
    ... totally out of my 'realm'...

    By Blogger Ricia, at 5:21 PM  

  • I don't see how anyone here still can't see this for what it is.

    LOOK, BCE is a high dividend paying stock. Therefore, this announcement would help it a lot. Secondly, there have been rumors for a long time that BCE was considering a partial or full trust spinoff. This inflated the price of the stock a bit, but as soon as Goodale crushed the income trust sector then this knocked BCE down too. Naturally then, by reinstaing the income trust conversions, one would expect BCE to disproportionally benefit.

    Now, in the HOURS BEFORE THE ANNOUNCEMENT, when NO ONE was supposed to know what was going on, which is a prerequisite for fair and efficient capital markets, BCE rose 6%, it's biggest ONE INTRA-DAY GAIN IN FIVE YEARS, ON "NO NEWS WHATSOEVER", unless of course someone was tipped off. If any of you think that is a "coincidence", I have some beautiful ocean front property in Saskatchewan I would like to sell you.

    I realize some people here want to adopt the "hear no evil, see no evil" approach to their beloved Liberals (ahem robert) but LOOK at the evidence.

    Remember the Bank of Canada govenor, David Dodge, called Canada's capital markets "the wild west" last year, referring to how we are AWFUL AWFUL AWFUL at regulating the markets compared to other countries (US, UK, Aus, Germany, France, Japan, etc) and was roundly critisized by the politicos? Sometimes the truth hurts! He wasn't lieing you know. We ARE awful at regulating our markets, and the fact that this hasn't caused a crazy outcry just shows that. Now why the hell would international investors want to invest in Canada if they think the decks are stacked against them, because they aren't "bay street" or "Liberal" insiders? Why would individual investors? Why do you think in every country in the world people go to jail for 5+ years for this kind of thing? BECAUSE THIS STUFF IS IMPORTANT, it's not something you just throw under the rug. Someone should really pay for this to send a message that we are not as awful as we seem, but no one will, and that truly is depressing.

    I mean when people are caught by the American SEC for doing this type of thing on a really small scale, they get busted, prosecuted, banned from exchanges, fined, etc... And it's usually on such a small scale that no one can really even notice. Here, we see MASSIVE MASSIVE movements in the countries' biggest corporations on insider trading, and it's being swept under the rug? Dispicable. I for one am putting my money in the NYSE, clearly the TSX is just not a "fair market" for normal investors.

    By Anonymous Jimmy K, at 6:27 PM  

  • CG,

    Yes it is possible to get a list and see who profited greatly. One would expect the non-partisan guardian of capital markets OSC to be all over that. Don't hold your breath.

    Oh and to all the Albertan's out there who hate the Liberal's, don't forget when Chretien was in power, he wanted to create a national securities regulator, but Klein and Cherest refused, citing "intrusion on provincial jurisdiction", and millions of people in those provinces who didn't know what this securities regulation thing was all about wrongly sided with the premiers without thinking about it, because they don't trust Ottawa. Well this is what happens when you don't have a well funded national securities regulator.

    By Anonymous Jimmy K, at 6:31 PM  

  • For those who keep holding on to the hope that there's nothing to see here because "if there had been insider trading, it would have been spread out over several days", I say balderdash. This announcement couldn't have been spread out over several days, because it was under a desperately short timeline because of the fall of the government. Decisions that were scheduled to take more than two months longer were compressed to hours, not days. If a person wanted to take advantage of this information - and it's pretty clear many did - they had to do it the day of the announcement, or lose out. Greed triumphed over prudence.

    By Blogger Patrick, at 8:45 PM  

  • Do Canadians really care anymore whether Liberal insiders profited from something clearly illegal? I don't think so. What is sad is that a lot of people (40%+-) have bought into the lies and spin. People are past the point where they can reflect on these matters rationally. The last couple of elections have been emotionally inflamed - not about policies but about people. West hates East. French v. English. He's a right-wing wacko. He's a commie. And now? It's too hard for people to put those emotional investments back in their pocket. That is why the polls aren't changing. That is why this issue won't break this election, but this election could break Canada.

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