Angry in the Great White North

As is now widely reported, many income trusts were subjected to a massive surge in trades prior to the announcement, suggesting that someone leaked the information. That leak, if it happened, was used by those fortunate to have that information to purchase fund units ahead of the sudden rise in value that happened on November 24.

In the case of CML Healthcare, the unit price languished below $13.00 throughout October and November during the period of uncertainty while the Finance Ministry very publicly mused on the possibility to start taxing trusts.

Trade volumes went up and down, but mostly down. In the days prior to the announcement, the trade volumes were around 50,00 per day, and the price was stagnant at about $12.60.

Then on November 22, with the stock at $12.49, 327,640 units were traded.

Then on November 23, the day of the announcement, with the stock price moving up only slightly to $12.76, an additional 232,267 units changed hands.

On the evening of November 23, Ralph Goodale made his "surprise" announcement, and the very next day, stock in CML jumped to $15.25, or nearly 20%. The 559,907 shares that moved over the two days earlier were worth a total of $1.4 million in profit.

CML re-organized itself as an income trust fund in February 2004:

In an effort to safeguard the independence of both organizations, CML initiated a plan to identify new trustees and directors for CML Healthcare Income Fund and Cipher Pharmaceuticals, respectively. In addition to the three current directors, Ronald D. Besse, formerly President and CEO of Gage Learning Corporation, and Gordon F. Cheesbrough, a partner of Blair Franklin Capital Partners Inc. have agreed to stand for election as directors of CML and will serve as trustees of the Fund.

Gordon Cheesbrough was a trustee of the fund?

The same Gordon Cheesbrough who personally donated $15,000 to Paul Martin's Liberal Party leadership campaign in May 2003?

The same Gordon Cheesbrough who is president of the exclusive investment management firm of Blair Franklin, a firm that lists income trusts as one of its core asset classes in which to invest the money of its wealthy clients, a firm that makes no investment before passing the muster of the Capital Allocation Committee, a committee chaired by Gordon Cheesbrough?

Makes you wonder who purchased all those shares in CML on November 22 and November 23.