FYI ONLY: Jitney Trading fines on VSE from OCT, 1997.
I have been very critical of the VSE on some other threads but I am coming across more and more info where they have laid charges. This little NR shows an actual case of jitney trading by an insider using a broker to conduct them.
Sungold Gaming International Ltd SUMShares issued 158068201899-12-30 close $0Friday Oct 24 1997See Vancouver Stock Exchange (VSE) News Release Mr John Forbes of the VSE reports By way of an offer of settlement, member firm, McDermid St Lawrence Securities has agreed to a fine of $10,000 and an assessment of investigative costs of $2,500 for violation of by-law 5.07.1(a) and Thomas Leonard Taylor, a director, registered representative and VCT trader with McDermid, has agreed to a fine of $15,000 and an assessment of investigative costs of $2,500 for violation of by-law 5.02.4(a) and 5.01(2). By-law 5.01(2) states in part that an "Infraction" means any conduct, proceeding or method of business which is unbecoming or inconsistent with just and equitable principles of trade or detrimental to the interests of the public. By-Law 5.02.4(a) states in part that a specific infraction includes the purchasing and selling of securities where the person knows or ought to have know that the effect would be to unduly disturb the normal position of the market or create an abnormal market condition in which market prices do not fairly reflect current market values. During the Period of February 1 1995 to March 31 1995, the closing share price of Sungold Gaming increased from $1.89 to $4.20. Prior to and throughout the relevant period, a Taylor client had an investor relations contract with Sungold. During the relevant period, the client through Taylor, purchased 372,050 shares or 18.7% of the market total shares traded. Of the client purchases, approximately 56% were executed as jitney trades. The client jitney trades were executed at the client's direction. Taylor accepted buy orders from the client that created 230 upticks representing 49.9% of the Sungold market total upticks. The client upticks resulted in 25 new high trades representing 48.1% of the market total new highs. The client account established a pattern of selling shares into the market, and shortly thereafter purchasing shares at prices higher than the previous sell trades. In the client trading pattern either the buy or the sell side were executed as jitney trades. These jitney trades gave a false impression of member firms trading activity by misleading the public to believe other member firms were actively trading Sungold shares. During the relevant period, Taylor executed buy orders for the client account in the shares of Sungold at prices higher than the previous trade or order at which a board lot traded and there were no subsequent trades or orders that affected the market price of Sungold. Taylor accepted orders from the client that resulted in 18 high close trades or 66.6% of the market total high close trades in the shares of Sungold. The client high close trades were executed on 42.8% of the days which Sungold traded. During the relevant period, the client trading activity through Taylor unduly disturbed the normal position of the Sungold market. The client upticks and the client high close trades unduly influenced the trading activity by creating an artificial price for the shares of SungoId. Taylor thereby violated exchange by-law 5.01(2) and 5.02.4(a) gatekeeper Gatekeeper Taylor, as a director of McDermid during the relevant period, registered representative and VCT trader, ought to have known his obligations to act as an industry gatekeeper as set out in Notice to Members No. 50/94. By failing to appreciate the trading pattern of the client account, Taylor failed to meet the standard expected as a gatekeeper. McDermid By-Law 5.07.1(a) states in part that a member may be found liable for the conduct, business or affairs of an approved person of the member and therefore subject to any penalties as if it had engaged in that conduct, business or affairs. A member is liable for the conduct, business or affairs of an approved person of the member. Taylor, was a director of McDermid and as such McDermid is liable for the failure of Taylor to ensure that the normal position of the market was not unduly disturbed. McDermid relied on Taylor's experience and seniority to ensure compliance standards were maintained by its director and accordingly failed to appreciate the trading pattern of the client account. McDermid thereby failed to meet the requirements of exchange by-law 5.07(l) |
