Re: 8/3/00 - [DLSC] TD Evergreen investigated for chat room stock talk; Canada Probes BBS-Using Broker
TD Evergreen investigated for chat room stock talk
WebPosted Thu Aug 3 15:35:04 2000
TORONTO - Investors are still recovering from a trading scandal involving RT Capital last month. Now there could be another case. Investment dealer TD Evergreen is being investigated for possible stock market manipulation using an Internet bulletin board.
The Quebec Securities Commission confirmed Wednesday it is looking into a complaint launched last week involving a popular French-language financial forum called Webfin.com.
Internet chat groups and bulletin boards are popular with small investors and day traders, who can swap information on-line in hopes of turning it into a profit.
Regulators' market surveillance teams tend to keep a close eye on Web sites such as the well-known SiliconInvestor.com but say Webfin, a smaller board, may have been less patrolled.
Toronto-Dominion Bank started its own investigation last week after the alleged manipulation was brought to the bank's attention. TD Evergreen is the bank's full-service brokerage arm.
One participant on the bulletin board used the pseudonym Patrick Gravel. His e-mail was traced to a staffer at a TD Evergreen office in St-Foy, a suburb of Quebec City.
The staffer was promoting a tiny company traded over the counter on the OTCBB, an electronic bulletin-board exchange in the U.S. Last Wednesday, the person identified as Gravel claimed the company would be making a big announcement last Friday and encouraged people to buy the stock.
"We take these matters very seriously and as soon as it was brought to our attention we launched an investigation," said TD spokesperson Jessica Mossman.
While this latest inquiry is unprecedented, individual investors have used bulletin boards before to try to move stock. Most notably, bulletin boards were used to promote shares of Bre-X Minerals, the Calgary-based mining company that falsely claimed it had discovered the world's largest gold mine.
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Canada Probes BBS-Using Broker
by Charles Mandel
10:45 a.m. Aug. 7, 2000 PDT
A Canadian brokerage firm is under investigation in what is believed to be the first-ever look into stock-market manipulation through an Internet bulletin board by a broker.
The Quebec Securities Commission confirmed Friday that it is investigating an unnamed broker at TD Evergreen, the brokerage arm of the Toronto-Dominion Bank.
The commission launched its investigation after it received a complaint from another member of the Montreal-based, French-language chat room and finance forum Webfin.com.
A user, Stephane Carey, initially contacted the commission with concerns over postings made by a pseudonymous board participant calling himself Patrick Gravel. In late July, Gravel began promoting a stock for DelSecur Corp., a company with offices in Washington and Montreal.
Gravel told the bulletin board that the U.S. National Security Agency (NSA) would hold a press conference to make an important announcement about DelSecur's unique anti-hacking technology, which uses a proprietary authentication process based on biological data collected from people's "finger abstract images."
When other bulletin board members scoffed at the postings, Gravel insisted in further messages that the announcement would amount to "something of significance," and asserted his information came from a well-informed and "very credible source."
Gravel also wrote that he had picked up another 1,000 shares of DelSecur, which trades under the symbol DLSC on the Nasdaq OTC Bulletin Board in the U.S.
Last April, the NSA signed a confidentiality agreement with DelSecur in which the company agreed to disclose its delID technology to the NSA for testing and evaluation as a means of protection against hacking.
This week, DelSecur moved quickly to distance itself from TD Evergreen and Webfin.com. It issued a news release, stating that "The Corporation has no business relationship with TD Evergreen. DelSecur Corp., its directors and officers bear no responsibility and do not answer for any information made in a chat room on Webfin.com or any other site."
Denis Dube, a spokesperson with the Quebec Securities Commission, said one of its investigators traced Gravel's email to a TD Evergreen office in Ste. Foy, Quebec. He said he wasn't certain if or when charges would be filed.
Among the questions to be answered, Dube said, are whether the broker possessed insider information, whether he was just creating rumors, or whether he was trying to pump the stock for his own clients. "We have to investigate in detail and then if there's any violation of securities law, we'll take the appropriate steps," Dube said.
Dube pointed out that while they had traced the email back to the broker's computer, they also had no proof as to whether the broker himself sent them. "Maybe somebody else was using this [Internet] address," Dube said.
TD Bank spokeswoman Lisa McCarney said the bank is working with the commission on the investigation, as well as conducting its own internal investigation. "We take these matters very seriously," she said.
"All of our TD Evergreen employees are governed by rigorous compliance regulations, including specific guidelines about information they impart in their capacity as an employee," McCarney said.
A new disclaimer has gone up at the Webfin.com site, warning that information posted on the boards should not replace personal research into companies and stocks. "Be particularly vigilant if the sources aren't verifiable," the disclaimer adds.
Webfin.com is owned by Montreal Internet company, Netgraphe. Executives at Netgraphe couldn't be reached for comment.
Dube said the commission tells investors to exercise caution when they take part in bulletin boards and chat rooms. The commission publishes a brochure entitled Your Investment and the Internet, which essentially tells investors not to believe everything they find online.
A spokeswoman at the U.S. Securities Exchange Commission Division of Enforcement offices in Washington, said she wasn't aware of any instances in the U.S. where a broker had been investigated for using bulletin boards to pump stocks.
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