(February 28 – 16:15 ET) – A hearing panel of the Toronto Stock Exchange has approved a settlement with Stuart Gordon Smith, a registered rep with CIBC World Markets Inc.

For failing “to move the market in an orderly manner prior to executing a trade that caused a change greater than $1 in the price of a security” back in October 1999, Smith will pay a fine of $7,500 and $2,000 towards the cost of the investigation. The TSE has no grounds for any disciplinary action against CIBC World Markets.

The TSE panel found that on Oct. 5, 1999, at approximately 11:00 a.m., a CIBC client placed an order to sell 373,500 shares of a listed security. At that time the market indicated the last trade was 100 shares at $11.80. After locating purchasers for the order, between 12:25:09 p.m. and 12:25:46 p.m., Smith took out all the existing bids in a span of 37 seconds and then executed a cross of 371,200 shares at $10.

Since the stock was selling at less than $20.00 and the crossed trade caused a change in price below the prevailing bid by more than $1, the TSE required Smith to obtain exchange approval prior to moving the market down to facilitate the trade. If Smith had contacted the TSE as required, it would have allowed approximately 20 minutes for him to move the market prior to executing the trade at $10.

The TSE found, “The failure to move the market in a fair and orderly manner did not allow market participants a sufficient amount of time to react to the change in price from $11.50 to $10.”
-IE Staff