OSC seeks to suspend all of Valentine's trading

The Globe and Mail
By Jacquie McNish
January 8, 2003

The Ontario Securities Commission is seeking to suspend the personal trading rights of Mark Valentine after the former brokerage executive allegedly violated a regulatory order by trading in futures contracts.

According to allegations issued by the OSC yesterday, Mr. Valentine opened an account with Toronto-based Refco Futures (Canada) Ltd. last July and traded a number of futures contracts on the Chicago Mercantile Exchange. Futures contracts enable investors to gamble on the future price of anything from pork bellies to interest rates.

The OSC alleges that Mr. Valentine's foray into futures was a violation of a cease-trade order issued last summer, which restricted him to trading only for his personal account on the Toronto Stock Exchange and New York Stock Exchange. As a result of the alleged violation, the regulator said, it will be seeking to suspend all of Mr. Valentine's trading rights at a hearing set for Jan. 30.

Mr. Valentine is currently under a Florida court order to reside in Miami, where he faces stock fraud charges from the FBI. He has pleaded not guilty to the charges. Mr. Valentine also faces allegations from the OSC that he engaged in improper trading while he served as chairman of the now bankrupt Toronto firm Thomson Kernaghan & Co. Ltd. He has disputed the allegations.

Janice Wright, a Toronto lawyer for Mr. Valentine, said her client denies that he breached the terms of the OSC's cease-trade order.

"Mr. Valentine has at all times acted in good faith and in a manner that he considered to be entirely consistent with the terms of the temporary cease-trade order," she said.

A spokesman for the OSC declined to discuss the details of Mr. Valentine's futures trading.

People familiar with the pending OSC hearing said they expect a heated debate between regulators and Mr. Valentine's lawyers over whether the cease-trading order applies to futures contracts or to the Chicago Mercantile, which is outside the commission's jurisdiction.

The OSC said yesterday that Refco officials alerted the commission on Aug. 16 about Mr. Valentine's account after it was widely reported that the former executive had been arrested by the FBI and charged with stock fraud. Mr. Valentine was earlier suspended from Thomson Kernaghan on June 13 and a week later the OSC banned him from working in the market.

Pierre Gloutney, chief executive officer of Refco Futures, said neither the firm nor any of its staff has been disciplined by regulators as a result of Mr. Valentine's trading account with the firm. He declined to discuss any details relating to Mr. Valentine's futures trading.

Toronto-based Refco is a subsidiary of Refco Group Ltd. LLC of New York. One of the largest futures trading firms in the country, Refco has about 100 registered brokers in nine offices.


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