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by Mike Caswell

Bermuda fund manager Christopher Kuchanny denies that he did anything wrong when he allegedly made $1.3-million short-selling Central Fund of Canada Ltd. ahead of an offering in 2009. (All figures are in U.S. dollars.) He says that the rules barring such selling do not apply to his situation. He claims that he had not firmly committed to buy any shares in the offering when he entered the short sales.

Mr. Kuchanny, 38, is responding to a civil suit the U.S. Securities and Exchange Commission filed against him on Jan. 31, 2014. The SEC claimed that he entered short sales for Central Fund of Canada on the New York and Toronto stock exchanges just days before before buying shares in an offering at a lower price. His short sales came in the five days before the offering, during which subscribers to the offering may not sell the stock short, the SEC said. (The restriction is part of Rule 105. Among other things, the rule is intended to prevent those buying shares in an offering from manipulating a stock downward to obtain a more favourable price.)

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