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Globe says OSC fines K2 for "manipulative trading"

2018-10-22 08:07 ET - In the News

The Globe and Mail reports in its Monday edition that K2 & Associates Investment Management, a well-known Toronto hedge fund, and two of its top employees have been fined $1-million in total by the Ontario Securities Commission for "manipulative trading." The Globe's Tim Kiladze writes that under the settlement terms, K2's founder, Shawn Kimel, will pay $550,000; the fund itself will pay $430,000; and president Dan Gosselin will pay $20,000. Notably, Mr. Kimel is prohibited from trading any securities or derivatives for nine months, and after that, all of his trades must be preapproved by K2's chief compliance officer for 18 months. Mr. Gosselin faces the same restrictions, but for shorter periods. Last week, the OSC alleged that K2, its founder and its president engaged "in manipulative trading activities that deceive counterparties and benefit themselves financially to the detriment of others in the marketplace." According to the OSC, K2 used a technique known as "spoofing" when trading equity options on the Montreal Exchange. Spoofing involves placing bids or offers on an exchange, then quickly removing them. It has been known to help move the price of a security shortly before a separate trade takes place.

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