A hearing panel of the Investment Dealers Association of Canada has found two Toronto reps guilty of facilitating manipulative trading in the shares of American Motorcycle Corp.

Jeffrey Bradford Kasman and Clinton Anderson were both approved persons at the Toronto branch office of Desjardins Securities Inc.

The panel found that between Jan. 30, 2003 and April 30, 2003, Kasman and Anderson facilitated manipulative and/or deceptive trading in the shares of American Motorcycle Corporation (AMCY), a Pink Sheets issuer.

Specifically, the panel found that:

    of AMCY were manipulated by three clients of Kasman and Anderson. Kasman and Anderson were joint registered representatives for three offshore accounts that were controlled by these clients and were used to carry out manipulative and deceptive trading in AMCY shares. The price of AMCY fluctuated upward from US$1 on Jan. 30, 2003, to a high of U $2.50 in the middle of April 2003 before decreasing to US$1.30 by the end of April 2003. The volume of trading during this time period went from little volume on January 30, to more than 150,000 shares towards the end of April when the volume then rapidly decreased;

  • During this time period, Kasman and Anderson’s three clients accounted for 76% of the total reported trading volume of shares of AMCY on the Pink Sheets;
  • These accounts were responsible for the high trade of the day 57% of the time, including high trading on the buy side during the last hour of trading on at least eight occasions;
  • The three accounts upticked the price of AMCY 41 times and matched trades took place between the three accounts 16 times, within minutes or even seconds of each other;
  • Kasman and Anderson facilitated this manipulative and deceptive trading because they put the orders into the market for the three accounts;
  • Although Kasman and Anderson were unthinking and unaware of the significance of the trading in question, their failure to make appropriate inquiries in the circumstances was “conduct falling far below that required and expected of a registered representative”; and
  • Kasman and Anderson failed to know their clients and properly monitor and assess their trading and understand its purpose and intention.

    The penalties to be imposed upon Kasman and Anderson will be assessed at a penalty hearing on Feb. 6, 2008.

    Kasman and Anderson are currently registered representatives at the Toronto office of Research Capital Corp.

    The IDA would like to thank the Ontario Securities Commission, the Securities and Exchange Commission and the National Association of Securities Dealers (now the Financial Industry Regulatory Authority) for their assistance in this case.