T H E'
M A .
I TOeA
THE SECURITIES ACT
Order No. 6651
S E C u RITIES
COM MI S S
I ON
Section 148
February 25, 2013
CLAUDE J. MARTEL
WHEREAS:
(A)
On
February
20,
2013,
The
Manitoba
Securities
Commission
("Commission") issued a Notice of Hearing ("Notice") giving notice of its intention to
hold a hearing to consider, inter alia, whether or not it was in the public interest to
order, pursuant to section 148 of The Securities Act ("Act"), that a Settlement
Agreement
between
staff of the
Commission
("Staff")
and
Claude
J. Martel
("MARTEL") be approved ;
(8)
Staff of the Commission and MARTEL entered into a Settlement
Agreement (a copy of which is attached as Schedule "A") dated February 12, 2013
("Settlement Agreement"), which proposed settlement of an enforcement matter,
subject to the approval of the Commission ;
(C)
MARTEL has consented to the issuance of this Order and has waived
his right to a full hearing;
(D)
On February 25, 2013, the Commission held a hearing ("Settlement
Hearing") to consider whether or not to approve the Settlement Agreement;
(E)
At the Settlement Hearing, the Commission approved the Settlement
Agreement and the Commission is of the opinion that it is in the public interest to
make this order.
IT IS ORDERED:
1.
THAT the Settlement Agreement, Schedule "A", be and the same is
hereby approved .
2.
THAT, pursuant to section 148 of the Act, MARTEL undertakes to the
Commission that for a period of five (5) years from the date of this Order, MARTEL
will not place any trades on any accounts with any firm including any discount
brokerage account within fifteen (15) minutes of the close of any trading day, nor will
he cause anyone else on his behalf to do so.
8Y ORDER OF THE COMMISSION
Directo
500-400 St. Mary Avenue, Winnipeg, Mani toba R3C 4K5 • lei: (204) 945 .2548 • fa x: (204) 945.0330 · www.msc.gov.m b.ca
SCHEDULE "A"
THE MANITOBA
SECURITIES
COMMISSION
Settlement Agreement
Claude J. Martel
and
Staff of The Manitoba Securities Commission
The Manitoba Securities Commission
500 -
400 St. Mary Avenue
Winnipeg, Manitoba
R3C 4K5
SETTLEMENT AGREEMENT
A.
Introduction
A1.
By way of a Notice of Hearing to be issued ("NOH"), The Manitoba Securities
Commission ("Commission") will give notice of its intention to hold a hearing
to consider whether pursuant to The Securities Act ("Act") it is in the public
interest for the Commission to make an order approving the settlement
agreement contained herein entered into between staff of the Commission
("Staff") and the respondent Claude J. Martel ("Settlement Agreement").
A2 .
Discussions have been held between the respondent and Staff in an effort to
settle all issues in connection with an enforcement matter in respect of
conduct or alleged conduct of the respondent in relation to the facts set out
in Part B. of this Settlement Agreement ("Enforcement Matter") . A settlement
of the Enforcement Matter has been reached based on the terms and
conditions set forth in this Settlement Agreement.
A3.
Pursuant to the settlement, Staff agree to recommend to the Commission
that the Enforcement Matter against the respondent be resolved and
disposed of in accordance with the terms and conditions of this Settlement
Agreement as set forth below. The respondent consents to the settlement
and to the making of the consent order referred to in Part D. below, on the
terms and conditions set forth in this Settlement Agreement.
B.
Statement of Facts
Background
B1.
Claude J. Martel ("MARTEL") is an individual residing at all material times in
Manitoba.
B2 .
At all material times, MARTEL was a retired commercial glass salesman.
MARTEL has never been registered under The Securities Act ("Act") in any
capacity.
B3.
At all material times, Silver Wheaton Corp . ("Silver Wheaton") was a public
mining company.
B4.
At all material times, the shares of Silver Wheaton were traded on the
Toronto Stock Exchange ("TSX") and the New York Stock Exchange . Its
warrants were traded on the TSX only. Silver Wheaton 's series B Warrants
were traded under the symbol SLW.WT.B.
B5 .
At all material times, Franco-Nevada Corporation ("Franco-Nevada") was a
corporation in the business of generating revenues through royalty holdings
predominantly in gold mines.
B6.
At all material times, shares of Franco-Nevada and two series of its Warrants
traded on the TSX. The Warrants specifically exercisable on or before March
13, 2012 at $32.00 per share were traded under the symbol FNV.WT
("Franco-Nevada Warrants").
Trading Activity
B7.
In or about 1998, MARTEL opened a personal Canadian dollar discount
margin
account
("Martel's
Account")
Brokerage ("TO").
B8.
For the purposes of calculating the available margin in Martel's Account,
SLW.WT.B and FNV.WT were valued at the best bid price at the end of the
day.
B9.
In general, when the price of a stock falls below the margin value, the client
will get a margin call, requiring an injection of cash, to be used in payment
towards the amount borrowed, failing which securities in the account will be
sold to generate the cash.
B10.
For Martel's Account, the brokerage's margin requirements for SLW.WT.B
and FNV.WT were:
Warrants trading under $3.00 could not be margined;
Warrants trading at or above $3.00 could be margined to 50%.
B11.
In January 2009 ("Period of High Closing"), MARTEL placed the following
buy orders electronically:
Date
Time
Size
Stock
(Buy
(Buy
(Buy
Order)
order)
order)
1
Jan 7
15591403
500
SLW.WT.B
2
Jan. 14
15:59:34 05
100
FNV.WT
3 Jan. 15
15:59:24.86
100
SLWWT.B
4 Jan. 27*
15:55:39.67
200
SLW.WT.B
5 Jan. 27
15:58:55.10
200
SLW.WT.B
* Filled and followed by another identical buy order at 15:58, which was unfilled and
established best bid at end of day.
** Attempted to high close.
B12.
All of the above MARTEL bids were Day orders, expiring by default at the
end of the trading day.
B13.
The TSX closes daily at 16:00 (Eastern Time).
2
with
TO
Waterhouse, ~iscount
Bid
Quote
Quote
Closing
Bid Price
Price
Prior to
Prior to
Bid?
Increase ,
I
,
(Buy
Order
Order
(Buy
-
Order)
Highest
Lowest
Order)
Increase
In
Bid
Ask
Margin-
Price
able
Price
$3.00
$2.98
$3.03
dNo
.. ---:-.
$0. 02
$3.00
$2.86
$4.08
Yes
$0.14
$3.01
$2.90
$305
Yes
$0.11
$301
$2.61
$3.39
**No
$0.40
$301
$2.61
$3.39
Yes
$0.40
3
B14.
All of the above MARTEL bids were made in the last 5 minutes of the trading
day. Three such bids were made in the last minute; one bid was made in the
last two minutes and was made after an identical bid of MARTEL's placed in
the last five minutes had been filled by a matching sell order entered at
almost the same time.
B15.
The size of each of the bids was smaller than the size of bids historically
made by MARTEL.
B 16.
Each of the buy orders shown above resulted in raising the best bid price
and three of them established the closing bid price for the day.
B17.
In January of 2009, MARTEL suffered forced credit sell-outs totalling
$51,000 to cover margin deficit.
B 18.
MARTEL had previously, in October 2008, suffered forced credit sell-outs
totalling over $155,000.
C.
Acknowledgements
C1.
MARTEL acknowledges that during the Period of High Closing he engaged in
trading activity by which he intended to and in some cases did raise the price of the
securities in question as described above for the purpose of avoiding a margin
call(s), that he now understands such conduct is a form of market manipulation, and
that therefore the terms of settlement are in the public interest.
C2.
Staff acknowledge the cooperation of MARTEL during the investigation.
D.
Terms of Settlement
01.
In order to effect a resolution of the issues raised by the Enforcement Matter,
Staff and the respondent have entered into this Settlement Agreement.
Upon this basis, Staff seek an order ("Consent Order") from the Commission
pursuant to the Act that:
(a)
the Settlement Agreement be approved;
(b)
MARTEL undertakes to the Commission that for a period of five (5)
years from the date of this Order, MARTEL will not place any trades
on any accounts with any firm including any discount brokerage
account within fifteen (15) minutes of the close of any trad ing day, nor
will he cause anyone else on his behalf to do so.
E.
Procedure for Approval of Settlement
E1.
The approval of this Settlement Agreement and the making of the Consent
Order set out in this Settlement Agreement shall be sought at a public
hearing pursuant to the NOH to be issued.
4
E2.
Staff and the respondent agree that if this Settlement Agreement is approved
by the Commission, it will constitute the entirety of the evidence to be
submitted to the Commission in connection with the Enforcement Matter and
the respondent hereby waives his right to a full hearing and appeal of this
matter.
E3 .
If, for any reason whatsoever, this Settlement Agreement is not approved by
the Commission or the Consent Order referred to in Part D. above is not
made by the Commission, Staff will be entitled to proceed with whatever
steps it is entitled by law to take, including but not restricted to the
commencement of a hearing before the Commission, unaffected by this
Settlement Agreement or the settlement discussions. In the event that such
steps are taken, the respondent shall have all the usual rights of an individual
subject to such proceedings. If this Settlement Agreement is not approved or
the Consent Order set out in Part D. above is not made by the Commission,
the terms of this Settlement Agreement shall remain confidential and will not
be raised in this or any other proceeding and any admissions contained in
this
Settlement Agreement shall
be
considered
as without prejudice
communications and in furtherance of settlement discussions, which will not
be binding upon the parties and which will be inadmissible in any proceeding
whatsoever.
E4.
Staff and the respondent agree that if this Settlement Agreement is approved
by the Commission and the Consent Order made upon the terms set out in
this Settlement Agreement, this Settlement Agreement will be a public
document.
E5 .
The respondent agrees that he will not raise in
any proceeding this
Settlement Agreement or the negotiation or process of approval of this
Settlement Agreement as a basis for an attack on the Commission's
jurisdiction, alleged bias, alleged unfairness or any other challenge that may
be available .
E6.
If this Settlement Agreement is approved by the Commission and the
Consent Order is made upon the terms set out in this Settlement Agreement,
neither Staff nor the respondent will make any statement inconsistent with
this Settlement Agreement.
DATED at Winnipeg , Manitoba, this 1 day of
/:J~ ,2013.
~ /
. .
-
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CiGdd ).~ McVCG1
Wftness V
/
Claude J. Martel
DATED at Winnipeg, Manitoba, this!Jfi(jay of
/~.5btfl4'f
,2013.
Staff of the Manitoba Securities Commission
per~~
Di ect
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