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Soaring share prices trouble Canadian securities regulators Trading activity of takeover companies under scrutiny as rumor mill churns out fresh speculation, dominated by talk of a BP bid for oil sands leader Suncor Energy Gary Park PNA Canadian Correspondent
Canadian securities regulators are threatening to button loose lips and curb wagging tongues that they suspect are behind a rash of surging share prices that have occurred just prior to takeover offers in the past year.
The Ontario and Alberta securities commissions have launched probes into possible illegal insider trading, with a special focus on last October’s C$3.3 billion takeover of Canadian Hunter Exploration Ltd. by Burlington Resources Inc.
The investigations are taking place amid a new spate of rumors that have driven the shares of Suncor Energy Inc. and Hurricane Hydrocarbons Ltd. sharply higher in recent days.
Wayne Alford, director of enforcement at the Alberta commission, would not say which companies or how many were under scrutiny, but said the regulator was “obviously” concerned about a number of dramatic gains in share values. Leak somewhere “That indicates there was a leak somewhere,” he told the Toronto Globe and Mail. “(Some trades) may be just straight good luck, but when you see the kind of concentrations and the money that changed hands ....”
Alford said any illegal inside trading is damaging to the capital markets in general and the oil patch in particular.
Breaches of securities laws in Alberta are subject to fines of up to C$100,000 for individuals and C$500,000 for corporations.
The Ontario commission, meanwhile, confirmed it is two months into a review of trading activities in at least 10 retail brokerage accounts at the Canadian Imperial Bank of Commerce, Canada’s second largest bank, before the Canadian Hunter-Burlington deal.
Sources have indicated that the accounts netted profits of about C$2.5 million from trading in Canadian Hunter.
Also being investigated is trading in shares of Chieftain International Inc. in the run-up to last June’s C$915 million takeover by privately-held Hunt Oil Co. of Dallas. Frenzied trading The securities net is spreading amid another flurry of rumors and frenzied stock trading that have propelled shares of Suncor and Hurricane to record levels.
Topping the list is talk that BP PLC, which sold the last of its Alberta oil assets in 1999, is interested in returning to the province by acquiring Suncor, an integrated company with a market value of about C$13 billion and a dominant player in the oil sands where output is expected to reach 225,000 barrels per day this year.
Suncor shares surged 6.2 percent on March 18 as speculation of a BP offer caught fire.
A spokeswoman for Suncor insisted the company is “not in talks, we haven’t been in talks and we don’t plan to be in talks (with BP or anyone else).” Perfect fit for BP But Wilf Gobert, an analyst with Peters & Co., said Suncor would be a perfect fit for BP because of its long-life reserves. He said Suncor was “trading awfully actively for it to be just a bad rumor.”
Hurricane, which has had a turbulent history in the former Soviet republic of Kazakhstan and was close to bankruptcy three years ago, also flatly denied speculation of an imminent offer.
Chief executive officer Bernard Isautier said Hurricane “has not received any offer at all, whether it is soft or formal or whatever.”
The company’s stock has led all others in the oil sector this year, surging almost 50 percent on the Toronto Stock Exchange amid persistent talk that current production of 130,000 barrels per day in Kazakhstan and the strong growth prospects are attracting interest from multinationals such as ChevronTexaco Corp. and TotalFinaElf SA.
“They’ve had a lot of people knock at their door,” but now seem to be facing recirculated rumors, said Brian Proop of Peters & Co.
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