By any person acting for himself or through a dealer or broker, directly or indirectly

Wash sales and Matched order Market rigging Dissemination of information on market activity False and misleading statements PeggingOthers: Short Sale Stop-loss order

HOWEVER Commission may, by rules and regulations, allow acts or transactions that may otherwise be prohibited under this Section, having due regard to the public interest and the protection of investors,

create a false or misleading appearance of active trading in a listed security traded in an Exchange or any other trading market

Catch-all: similar act where there is no change in beneficial ownership

e.g. private placement with a lock-up period (BW Resources case)

Wash sale –pretend sale (ie. Selling by & to yourself) - transaction with no change in the beneficial ownership - buyer = seller; same person

Matched order – order/s for purchase or sale knowing that a simultaneous order/s of substantially the same size, time and price, for the sale or purchase of such security, has or will be entered by/for the same or different parties

- buy & sell orders at the same time, price & quantity by colluding buyer and seller

series of transactions that:a) Raises/depresses their price to induce the purchase/sale,

respectively, of a security, whether of the same or a different class of the same issuer or of a controlling, controlled, or commonly controlled company by others

b) Creates active trading to induce such a purchase or sale through manipulative devices such as:

• marking the close – buying & selling at the close of market to alter the closing price

• painting the tape – reported publicly to give impression of activity or price movement

• squeezing the float – taking advantage of shortage of securities by controlling demand to create artificial prices

• hype and dump - buying at increasingly higher prices and then selling at the higher price

• boiler room operations – high-pressure tactics typically misrepresenting securities (eg. direct mail offers, phone follow-ups)

• other similar devices like churning, or corporation repurchases its own shares

information that the price will (or is likely to) rise or fall because of manipulative market operations conducted for the purpose of raising or depressing the price of the security for the purpose of inducing the purchase or sale of such security

Through media, including the internet, or any other means (SRC Rule 24,1(b)-1)

with respect to any material fact, which he knew or had reasonable ground to believe was so false or misleading, for the purpose of inducing the purchase or sale

series of transactions for the purchase and/or sale for the purpose of pegging, fixing or stabilizing the price of such security, UNLESS otherwise allowed by this Code or by rules of the Commission

2. A practice of an investor buying large amounts of an underlying commodity or security close to the expiry date of a derivative held by the investor. This is done to encourage a favorable move in market price.

2. An investor writing a put option would practice pegging so that he or she will not be required, due to lowering prices, to purchase the underlying security or commodity from the option holder. The goal is to have the option expire worthless so that the premium initially received by the writer is protected.

Neither shall any short sale be effected nor any stop-loss order be executed in connection with the purchase or sale of any security except in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

Short Sale- seller does not own the security, or sale consummated by delivery of a security borrowed by, or for the account of seller

1. seller borrows it 2. sells it to the market 3. buys it back when the market value has declined 4. returns it to the lender

Stop-loss order – buyer tells his broker to sell at a certain price

- protects the buyer against loss beyond a certain point in a fluctuating market

Cornering the shorts – ownership of outstanding shares become so concentrated that short sellers are unable to secure stock except from the controlling owner group

No member of an Exchange shall, directly or indirectly endorse or guarantee the performance of any put, call, straddle, option or privilege in relation to any security registered on a securities exchange.

The terms “put”, “call”, “straddle”, “option”, or “privilege” shall not include any registered warrant, right or convertible security.

Options – contracts that give buyer the right to buy or sell at a predetermined price (exercise or strike price) on/before a predetermined date (expiry date)

1. Put – option to sell; holder expects a decline in stock2. Call – option to buy; holder expects an advance in stock3. Straddle or spread – option to buy or sell or both

person, directly or indirectly, in connection with the purchase or sale of any securities

Employ any device, scheme, or artifice to defraud Obtain money or property by means of any untrue statement of a

material fact of any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading

act, transaction, practice or course of business which operates or would operate as a fraud or deceit upon any person

Use of information obtained in fiduciary capacity Prohibited representations1. That he is a registered securities intermediary2. Broker dealer to represent that his registration indicated that the

Commission has passed upon or approved the financial standing, business or conduct of the broker, or the merits of the security

3. That a security is a type inconsistent with state definition4. That a security has been legally authorized by the recorded owner

Issuer

Director or officer (or person performing similar functions) of, or a person controlling, the issuer

Person whose relationship or former relationship to the issuer gives or gave him access to material information about the issuer or security that is not generally available to the public

Government employee, or director, or officer of an exchange, clearing agency and/or self-regulatory organization who has access to material information about an issuer or a security that is not generally available to the public

Person who learns such information by a communication from any of the foregoing insiders

insider to sell or buy a security of the issuer, while in possession of material information with respect to the issuer or the security that is not generally available to the public

UNLESS 1. information was not gained from such relationship2. If the other party selling/buying (or his agent) is identified, (i)

insider proves disclosed the information to the other party, or (ii) he had reason to believe that the other party otherwise is also in possession of the information

Presumption of possession of material non-public information :

1. purchase or sale of a security of the issuer 2. by an insider, or such insider’s spouse or relatives by affinity or

consanguinity within the second degree, legitimate or common-law

3. transacted after such information came into existence but prior to dissemination to the public; and

4. lapse of a reasonable time for the market to absorb such information: 

Rebut: purchaser or seller was not aware of the material non-public information at the time of the purchase or sale.

a) It has not been generally disclosed to the public and would likely affect the market price of the security after being disseminated to the public and the lapse of a reasonable time for the market to absorb the information; or

b) would be considered by a reasonable person important under the circumstances in determining his course of action whether to buy, sell or hold a security.

“material” – potentially affect the investment decision of an investor

e.g. Important event such as: Acquisition of mining claims, patent/formula, real estate, or similar capital assets; discovery of mineral ores, declaration of dividends, merger or consolidationl; rights offering

See SRC Rule 14 par 1 for non-exclusive enumeration

1. insider to communicate 2. material non-public information about the issuer or

the security 3. to any person who, by virtue of the

communication, becomes an insider as defined in Subsection 3.8,

4. insider knows or has reason to believe that such person will likely buy or sell a security of the issuer while in possession of such information

tipper and tippee jointly liable if tippee indeed trades based on that information

May be sued by investor who contemporaneously purchased or sold the same class of securities, UNLESS investor knew, or would have purchased or sold at te same price regardless of the disclosure (SRC, 61.1)

where a tender offer has commenced or is about to commence  “securities of the issuer sought or to be sought by such tender offer” include

securities convertible or exchangeable into such securities or any options or rights in securities.

Buying or selling1. person (other than the tender offeror) who is in possession of material

non-public information relating to such tender offer, 2. to buy or sell the securities that are or to be sought by such tender offer 3. such person knows or has reason to believe that the information is non-

public and has been acquired directly or indirectly from the tender offeror, those acting on its behalf, the issuer of the securities, or any insider of such issuer;

Communicating1. Any tender offeror, those acting on its behalf, the issuer of the securities

sought or to be sought by such tender offer, and any insider of such issuer 2. to communicate material non-public information relating to the tender

offer to any other person 3. communication is likely to result in a violation of Subsection 27.4 (a)(i).