Regulatory bodies issue guidance on abusive trading practices ahead of public offerings or private placements
The Ontario Securities Commission (OSC) and the Investment Industry Regulatory Organization of Canada (IIROC) are calling on the public to send in tips on potential abusive trading in securities of Ontario reporting issuers.
“The OSC and IIROC have reason to believe that certain market participants may be engaged in abusive short selling practices and are particularly interested in tips relating to short selling into or ahead of public offerings or private placements of Ontario securities,” the two regulatory authorities said in guidance issued to the public.
According to the statement, some market participants may be short selling an issuer’s securities to negatively impact the price ahead of a public offering or private placement of those securities. Such abusive short sellers, the statement said, stand to profit from the price manipulation as they exploit the resulting discrepancy between the short sale price and the offering price.
“In particular, anyone with first-hand knowledge or other specific and credible evidence about short selling into or ahead of public offerings or private placements of Ontario securities is strongly encouraged to submit a tip,” the OSC said in a statement.
The OSC and IIROC’s guidance also called for leads on insider trading, particularly in cases where a person or company trades securities of an issuer while in a special relationship with the issuer and being privy to material, non-public information.
“Those who provide information to the OSC Whistleblower Program may be eligible for awards of up to $5 million for tips that lead to an OSC enforcement action,” the OSC statement said.
Last year, the OSC paid out nearly $7.5 million to three tipsters whom it said “provided high quality, timely, specific and credible information, which helped advance enforcement actions resulting in monetary payments to the OSC.”
Earlier this year, it announced it had given a $525,000 award to a company outsider who had lent his industry expertise to the commission in identifying irregularities. That brought the total payouts made under the OSC whistleblower program past the $8-million mark.
