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News Release

For Immediate Release

99/28


CONTACT:

November 9, 1999

PAM WHITWORTH
communications@vse.ca
(604) 488-3126
Vancouver Stock Exchange: Borchert, Approved Person Disciplined

By way of an Offer of Settlement, Gerald Ernest Borchert ("Borchert"), an Approved Person employed by Canaccord Capital Corporation ("Canaccord"), has agreed to the imposition of the following penalties by the Exchange for violation of Exchange By-Law 5.01(2):

 

  1. a fine in the amount of $5,000;
  2. disgorgement of inappropriate profits in the amount of $19,157;
  3. a requirement to re-write and pass the examination based on the Conduct and Practices Handbook for Securities Industry Professionals;
  4. a requirement to be placed on strict supervision for a period of 6 months, and
  5. an assessment of investigative costs in the amount of $2,000.

 

Exchange By-Law 5.01(2) states in part, that an "Infraction" means any conduct, proceeding or method of business which is unbecoming or inconsistent with just and equitable principles of trade or detrimental to the interests of the Exchange or the public.

 

On December 20, 1996, Exchange listed Maymac Petroleum Corp. ("Maymac") issued a news release disclosing in part that Maymac was attempting to negotiate an equity financing with Canaccord. Borchert was Maymac’s contact at Canaccord for preliminary discussions.

 

On January 7, 1997, Maymac issued a further news release disclosing in part that negotiations (the "Negotiations") for an equity financing with Canaccord were continuing. Borchert did not consider the preliminary discussions with Maymac to be "Negotiations".

 

Borchert terminated the discussions with Maymac on January 8, 1997. The termination of the discussions was not disclosed to the public. During the period January 9, 1997, to January 22, 1997, Borchert sold short a total of 205,000 Maymac shares for his own account. Maymac was the most actively traded security on the Exchange during that period.

 

On Friday January 24, 1997, the Exchange’s Surveillance department halted trading in the shares of Maymac pending clarification of the market activity due to heavy trading volumes.

 

On Monday January 27, 1997, Surveillance contacted Borchert who advised Surveillance that the Negotiations were off.

 

On January 30, 1997, Maymac issued a further news release stating in part that the Negotiations had ceased effective January 27, 1997. Trading in Maymac was reinstated on February 6, 1997.

 

Borchert covered his short position on February 6, 1997 and February 10, 1997, realizing a net profit of approximately $19,157.

 

Borchert ought to have known that his short sales occurred in circumstances where it appeared that material information had not yet been disclosed to the public. Borchert acted on this information by selling short Maymac shares. Borchert thereby violated Exchange By-Law 5.01(2).

 

No fault was attributed to the Member Firm.

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