GUMBY KEEPS MAKING THE HEADLINES.
Exchange bans ex-Yorkton broker for life
The Vancouver Sun
David Baines, Sun Business Reporter Vancouver Sun
The VSE has permanently banned stockbroker Stan Ross for trading violations.
The VSE also assessed $175,000 in fines and penalties against Ross, who was employed at Yorkton Securities when he committed the offenses.
In an unrelated action, the VSE assessed $120,000 in fines and penalties against Wolverton Securities and fined its senior vice-president, Mark Wolverton, $10,000 for trading infractions.
Wolverton is son of the late Newton Wolverton, who founded the firm, and brother of current president Brent Wolverton.
The VSE said Ross committed numerous trading violations:
- On Dec. 4, 1996, he received an order from a director of VSE-listed Computrex Centres Ltd. to sell 50,000 shares of the company. By that time, a previously-negotiated change of control had collapsed, but had not been disclosed to the public.
The VSE said Ross "suspected something was wrong, yet made no effort to determine the nature of the problem." Instead, he sold 75,000 shares from his own account and 25,000 shares from his wife's account, and recommended that his assistant sell her 20,000 shares.
- Between May 1995 and May 1997, Ross executed 985 unauthorized trades in a client account. Of those, 916 were trades in the shares of VSE-listed Turbodyne Technology, a company Yorkton had been sponsoring.
- In November 1993 and April 1997, Ross' friend, Larry Cocomile, opened two nominee accounts in fictitious names, a deception that the exchange said Ross became aware of.
From November 1993 to July 1997, there were 938 trades in these accounts, of which 304 were in shares of Turbodyne. The VSE said Ross occasionally entered orders on behalf of the nominee accounts and received about $135,000 from them.
- From May 1995 to February 1996, Ross participated in several "off-the-floor" trades -- trades conducted outside the VSE's automated trading system -- in one of the nominee accounts, contrary to VSE rules.
The VSE fined him $130,000, assessed costs of $10,000 and ordered him to disgorge $135,000 in "inappropriate profits."
It also banned him from the exchange for life.
Wolverton was fined $95,000 and assessed $25,000 in costs for several infractions, including failing to properly supervise broker Robert Jacob Van Santen.
The VSE said Van Santen's grandmother established a Bahamas trust for the benefit of her grandchildren, and his mother and grandmother opened several brokerage accounts at Wolverton.
From June 1992 to September 1994, Van Santen traded shares of VSE-listed Keystone Entertainment Ltd. in the accounts in conflict with the interests of other clients, the VSE said.
Some trades didn't make sense, it said. Shares were bought and then sold at lower prices on the same day.
Van Santen also knowingly executed trades that created a false or misleading appearance of trading activity for Keystone. He was previously disciplined by the VSE.
The exchange said the firm "failed to question the high concentration" of Keystone shares in the accounts and did not determine whether Keystone was a suitable investment for an 82-year-old client.
As for Mark Wolverton, the VSE said that from November 1994 to April 1995 two of his clients' accounts became under-margined due to the accumulation of shares in VSE-listed Wedgewood Resources Ltd.
Under VSE rules, trading activity should have been restricted to transactions that would not increase the margin deficiency, but he nevertheless permitted 58 purchases of Wedgewood shares.
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