Canadian Dep’t Of Finance Complicit In Insider Trading?
On the eve of the likely fall of Paul Martin’s minority Liberals, a move by Finance Minister Ralph Goodale to calm angry income trust investors looks to have enabled insider trading;
How else are we to explain the sharp jump in the price of income trusts over the past few days, a rise that climaxed on Wednesday, the day of the federal government’s announcement that there would be no new taxes on income trusts. On Wednesday, the S&P/TSX capped trust index rose by 1.49%, with the bigger business trusts posting even larger gains. For the week ending Wednesday, the index was up by 3.61%.
And how else to explain the action in the high dividend-paying stocks, such as BCE, on Wednesday. The stock, which hit a six-month low the previous day –jumped by 4.9% on Wednesday, on twice the normal volume.
To put that gain in perspective: It is BCE’s largest gain in four years and it occurred on the day that announcements are made. Readers can work out whether it was a coincidence.
Clearly those with the good information made the best returns. Meanwhile, the poor mopes who didn’t get the good information were selling.
And to support that contention, this column got a call yesterday from a well-known investment banker who is as Type A as the rest of them. And he was disgusted at what has occurred.
“I was talking to some prominent lawyers and bankers and they were up there in Ottawa earlier this week and they were basically told this was going to happen,” added the banker, who over the years has won his share of the deals that are up for grabs. “It’s all over the street. All the people are talking about who had a heads up and who didn’t.”
The events left the banker wondering whether Ottawa was interested in consultation or more interested in passing on inside information.
In this banker’s mind, “It pays to consult. The government has leaked this out to their friends and cronies in the business community and [in so doing] panicked the little investors who sold.
“It’s brutal. It’s third world. It’s unbelievable,” he said.
Canadian blogger Ginna Dowler noticed, too.