The truth isThat CC and others frequently sell their own clients stock short... stock they recieved a commission on. This stock is in 4 month lock up in the clients account, but available for shorting by the firm.... a practice that ensure the client wont sell his own stock means they dont even report the stock as being shorted....JMHO
There have been numerous articals emerging of late for just such activity.. here's one;
Canaccord denies role in Natco shorting
2007-06-13 15:43 ET - Street Wire
Also Street Wire (U-NCII) Natco International Inc
by Mike Caswell
Canaccord Capital Corp. denies allegations it lent shares of Natco International Inc. to short sellers as the stock plunged from $3.30 to $2.25 on April 18, 2007. The brokerage says internal records show it has never lent shares of Natco and it has a policy of not lending stock in OTC Bulletin Board companies.
Canaccord lawyer David Mitchell says Natco has dropped an injunction application it filed last week in the case, but the main lawsuit continues.
Natco's case
The case began last Monday, when Natco and eight of its shareholders filed a 14-page complaint against the brokerage. The shareholders alleged Natco suffered a "precipitous decline" on April 18, the same day Canaccord lent out Natco shares. The stock opened at $3.30, up from a 52-week high of 10 cents, but it plunged to $2.25.
It was not clear how Natco traced the alleged shorting back to Canaccord, but the company claims a Canaccord broker, Barry Hartley, confirmed that the brokerage was lending shares.
The shareholders demanded Canaccord return their Natco shares, which they held in accounts there. The statement of claim identifies the shareholders as Canafra Financial Ltd., Donna Moroz, Gurminder Bajwa, John Rennie, Narinder Tahndi and Rajinder Thandi.
Canafra Financial made the first demand on May 16, through its beneficial owner, Gerry Podersky-Cannon. Three other shareholders in the case say they asked for their shares in certificate form on May 22, but received nothing.
"Canaccord has improperly refused to convert the shares of Natco from depository form to certificate form, ignoring the demands of shareholders and Natco," the statement of claim alleges.
Natco also alleged Canaccord engaged in naked shorting, or lending the stock "when there was no prospect of delivering the shares that had been sold because insufficient free-trading shares were available to cover the short positions."
Natco and its shareholders sought a court order for the return of their shares, plus damages for loss of opportunity caused by Canaccord's alleged naked shorting.
Off to court
Natco went to court last Monday, June 4, to request that its case be heard on an expedited basis. B.C. Supreme Court Justice H. Groberman ordered the company to deliver a copy of its complaint to Canaccord by the end of the day, and agreed to hear the case the next day.
On Tuesday Natco went back to court, this time with Canaccord's lawyers on the other side. The brokerage agreed to a consent order, which instructed it to deliver share certificates to Natco's shareholders "without delay once those certificates are in the hands of Canaccord Capital Corporation."
Canaccord denies any shorting
Last Friday, June 8, Canaccord's lawyers assembled the brokerage's version of events in three affidavits they presented to Natco's lawyer, Rupert Shore.
In one of the affidavits Bruce Maranda, Canaccord's chief compliance officer, says the brokerage has never lent any Natco shares. "On the basis of direct inquiries that I made of my staff and documentation provided to me ... I can say with confidence and I verily believe that no Natco shares have ever been loaned out by Canaccord. In particular, the Natco stock belonging to the plaintiffs was never loaned," his affidavit reads.
"Apart from the fact that Canaccord's records show that Natco stock has never been loaned, the loaning of such stock would be contrary to Canaccord's policy not to loan OTC Bulletin Board stocks," he states.
Mr. Maranda says he reviewed short sale reports from April 18 that showed no short sales on any Natco stock in any Canaccord accounts.
In another affidavit, Canaccord's Mr. Hartley says delays in getting share Natco share certificates were caused by a chill placed on the shares by Depository Trust Company. (Chills are used by DTC to limit potential problems on a stock. They are a special restriction that prevents share transfers.)
Mr. Hartley says he informed Mr. Podersky-Cannon on May 23 there was a chill on Natco and that there would be a delay in producing his Natco share certificate. Mr. Hartley claims he did not say there would be "no problem" returning the shares, as Natco alleges.
Two days later, on May 25, Mr. Hartley told Mr. Podersky-Cannon that a regular, non-rush certificate takes three weeks to produce. Mr. Hartley said a rush order could cost as much as $400, although he later discovered it was $155.
Injunction application dropped
Canaccord's lawyer, Mr. Mitchell, claims Natco's lawyer, Mr. Shore, read the affidavits and dropped his application for an injunction against Canaccord. A Natco representative, reached Tuesday, said the main case is still on, however.
"We have not dropped it yet. They have still not delivered the share certificates," he said. Mr. Shore did not return a message seeking comment.
Natco closed at $2.25 Tuesday, up five cents
IDA fines Canaccord $80,000, violated public interest
2007-07-06 12:53 ET - News Release
See News Release (C-*IDA) Investment Dealers Association of Canada
Mr. Warren Funt reports
IDA FINES CANACCORD CAPITAL CORPORATION $80,000
A hearing panel of the Investment Dealers Association of Canada, appointed pursuant to Bylaw 20, has imposed discipline penalties on Canaccord Capital Corp., at all material times a member of the Investment Dealers Association.
In its written reasons for decision dated June 29, 2007, a hearing panel considered, reviewed and accepted a settlement agreement negotiated between Canaccord and staff of the Investment Dealers Association's enforcement department. Pursuant to the settlement agreement, Canaccord admitted that from November, 2001, through November, 2002, it failed to adequately supervise a pro account and engaged in business conduct or practice that is detrimental to the public interest, contrary to Investment Dealers Association Bylaw 29.1, by failing to restrict a trading strategy, which it knew, or ought to have known, might be unfair to other market participants and contrary to the public interest, and by failing to establish procedures which would enable it to detect whether the trading in the account was fair to other market participants or contrary to the public interest.
For its misconduct, Canaccord is fined $80,000 and must pay $5,000 in costs.
For a complete summary of facts, please see Investment Dealers Association bulletin 3643 on the association's website.