A new special investigation unit set up in March within Quebec’s financial-industry watchdog, Autorité des marchés financiers, seems to be making some progress in enforcing laws against market manipulation and illegal insider trading.
AMF announced charges last week under the Quebec Securities Act against Richard Quesnel, president and chief executive of Consolidated Thompson Iron Mines Ltd., a Toronto Stock Exchange-listed exploration company. According to the Gazette, Quesnel is charged with two counts of trading in Consolidated Thompson stock while in the possession of privileged information in the form of a “feasibility study.” AMF is reportedly also charging two others, Martial Côté and Patrice Live, with trading in Consolidated shares while in possession of privileged information after having worked on the feasibility study.
In addition, AMF has requested an administrative penalty in a separate case against Claude Cajolet, a former director of Engenuity Technologies Inc., for trading in the company’s stock while in possession of privileged information.
An AMF spokesperson stated that “We have a stronger presence in this area and it’s producing better results.”
The AMF’s new activity in this area is a change in its approach — Canadian regulators have long been criticized by shareholder rights advocates for weak enforcement of insider trading violations. Indeed, the Gazette reports that a study issued last year found unusual trading patterns before 33 of 52 Canadian mergers in 2006 valued at more than $200 million.