Yorkton Securities Inc. is back in the hotseat. A class action against the company alleges it favourably promoted Book4Golf.com Corp. shares despite having undisclosed connections with the company.

General and punitive damages being sought in the suit total $520 million.

The claim alleges that as a result of Yorkton’s improper promotion of the securities, share prices were artificially inflated and caused investors losses when the share price of the Thornhill-based company collapsed. Improper dealings cited include providing financial advice, positive analyst coverage, and acting as the dominant trading dealer.

The suit is the latest chapter in a story of regulatory trouble that saw the departure of several senior staff including former chairman and CEO Scott Paterson.

The firm began recommending Book4Golf late in 1999, through retail and institutional sales, and through it’s high-tech analyst, Mark Pavan, who later claimed the stock could reach $100. In March 2000, Paterson said $100 was an understatement, and predicted the stock would go as high as $300.

The Ontario Securities Commission had accused various Yorkton employees of harbouring conflicts of interest in several of the companies the firm underwrote. In December 2000, it took the unusual step of requiring Book4Golf to disclose the existence of the investigation in a prospectus. In the same prospectus, Yorkton refuted any suggestion it had contravened securities laws.

Following a December 2001 hearing of the OSC, Paterson, along with Piergiorgio Donnini, Roger Dent, Nelson Smith and Alkarim Jivraj were fined and ordered to pay compensation to the commission for expenses incurred in investigating the matter.

With the exception of his interest in Yorkton, which he agreed to take all reasonable steps to sell, Paterson is prohibited from having any ownership interest, or holding a position of authority for two years.

Yorkton representatives were not available for comment.