The Investment Industry Regulatory Organization of Canada (IIROC) says that it is investigating trading in the shares of Orbite Aluminae Inc. (TSX:ORT) earlier this month that caused the stock’s price to plunge and the regulators to order the trades revised.
In a notice published Thursday, IIROC reports that on February 14, it made a ruling affecting 56 trades in Orbite Aluminae’s class A shares in order “to protect market integrity and to provide for a fair and orderly market” for trading in those shares.
It reports that, on that day, the company’s stock price fell 55% in less than a second. There was no material news to account for the price movement, and, at IIROC’s request, the company issues a press release to that effect.
IIROC says it reviewed the trading and concluded that the stock had traded at an unreasonable price, “due in large part to the automatic triggering of a number of stop loss orders by persons with long positions in the stock.”
As a result, it ordered all trades executed more than 20% below the last trade prior to the anomalous event, to be varied or cancelled. As a result, it says purchasers in 53 of the trades opted to have the trade price varied and the remaining three trades have been cancelled.
“IIROC is continuing its inquiry into the circumstances that led to the anomalous trades,” it says, adding it cannot comment on the status of an ongoing inquiry. “If there has been any violation of IIROC rules or applicable securities legislation, IIROC will take appropriate action,” it adds.