Regina vs. Sid Rosen, Irving Kott and others

Securities
Investor Fraud

Flogging in Somed Mines

This was a stock market scheme involving shares of an obscure Quebec company called Somed Mines Ltd.  The case heard in May, 1976 involved allegations of stock market manipulations, which included bribes to stockbrokers to encourage selling to their clients.  Unique to this case was my role as a witness.  Crown Counsel (now Honourable Justice) David Doherty felt it unnecessary to call me as his final witness because his case submissions had gone well.  However, defense counsel decided to call me as their witness and in the box I went.  This was an extraordinary experience as their examination-in-chief of me was brief while Crown Counsel was then able to ‘cross’ me and extract the key points of my stock trading analysis.  

The result was a conviction and a fine of $500,000 levied against the accused by Judge Addison, a fine which was thought to be the largest ever against an individual in Canada.

This case convinced me to never invest in the stock market with various activities going on such as:

  • Blowing a position
  • Stiffing
  • Flogging
  • Warehousing
  • Draped
  • Tomb stoning
  • Wash trading
  • Backdooring
  • Running a box

This terminology is not in the accountant’s handbook.  This uniqueness of knowledge is characteristic to most types of business.  A case study approach allows a forensic accountant to gain insight into a variety of business and industry situations.