38-year-old Strategic Capital International owner and self-professed ‘market expander’ Kris Sundell has admitted to breaching Alberta securities law after an investigation found he had engaged in the practice of ‘uptick trading’ shares in Teras Resources (TSX:V.TRA
, Stock Forum
According to the settlement
released by the ASC Friday, Sundell consulted with Teras in filling private placements, ‘market expansion, and awareness campaigns, in return for shares, options, warrants and consulting fees.
Sundell then began trading the stock, looking to make small purchases at a higher uptick than previous trades, often right before the close of trading, and at times under what he claims to have felt was the direction of Teras CEO Peter Leger.
According to the settlement document, “On occasion, Leger would call Sundell late in the trading day and tell him it would be great for the Teras stock to close high that day, or words to that effect. Sundell also made high close trades without direction, believing that was expected of him by Leger, and wanting to protect his investment in Teras.”
The details of Sundell’s trading are fairly damning:
On 17 days the Account both purchased and sold shares on the same day.
On these days, most of the sales were executed prior to the purchases, and at sale prices lower than the subsequent purchase price;
58,500 Teras shares were purchased, accounting for less than one percent of all purchases during the Period;
97 buy trades were made, 96 of which were of one or two board lots (respectively, 500 or 1000 shares - the smallest block of shares that could be purchased in a transaction);
60 of the 97 buys were upticks (that is, at a price higher than the previous trade), representing 24% of all upticks in the shares traded during the Period;
54 of the 60 upticks were purchases of a single board lot (500 shares)
19 of the 60 upticks were also high closes (ie. the last tick setting trade, made on an uptick, and executed during the last half hour of the trading day);
The 19 high closes represented 61.3% of the total high close trades during the Period;
11 of the 19 high closes were the only trades in the Account that day;
All of the high close trades were actively pursued - each buy order was entered at the best ask price at the time and resulted in immediate execution;
Numerous of the high closes were made with less than two minutes left in the trading day
When informed by Scotiabank that his trading activity was questionable and that he should modify his trading, he posted two more high closes that month.
Scotiabank duly reported his trading activity.
Sundell has agreed to pay $40,000 to settle the case, $5,000 to cover costs of the investigation, and to cease trading for five years.
Leger remains CEO and President of Teras.