(June 21 – 15:30 ET) – According to a story in this morning’s National Post, the Ontario Securities Commission and the Toronto Stock Exchange are investigating RT Capital Management Inc., Royal Bank’s investment arm, and numerous Bay Street traders for evidence of stock manipulation.
The paper says the OSC and TSE have been investigating the case for six months, talking with many stock traders and brokerage executives along the way. Regulators are reportedly looking at whether stock prices were manipulated to boost fund performance by “high closing” stocks, and if they has been any illegal “window dressing” of fund performance. Traders are being looked at for participating in the activity, and executives are reportedly under scrutiny for failing to supervise their employees.
The regulators are refusing comment, or even confirm the existence of the probe.
Although Royal Bank has issued a statement that does admit the investigation, noting, “RT Capital Management Inc. has been cooperating fully and completely with regulatory authorities. Royal Bank Financial Group takes the issue of regulatory compliance extremely seriously. The group will continue with its own investigation and will take whatever actions are necessary to ensure that RT Capital Management Inc.’s procedures and practices are in full compliance with all regulatory requirements. Ontario securities regulations prohibit Royal Bank Financial Group from making any further comment at this time.”
The OSC brought Altamira Management Ltd. up on charges of manipulative trading including high closing in a particular stock couple of years ago. In that case Altamira settled with the OSC for a reprimand and it agreed to implement changes to its trading practices. The OSC found that its trading had the effect of misleading the market, although it was not the firm’s intent to mislead the market or manipulate the stock.
-IE Staff