SEC examines Calandra's Ivanhoe links. Investment guru's endorsement of energy, mining companies has raised suspicion
globeandmail.com
By BARRIE McKENNA
Saturday, January 24, 2004 - Page B3
WASHINGTON -- Investing guru Thom Calandra's enthusiastic endorsement of Canadian promoter Robert Friedland's high-flying energy and mining companies appears to be at the centre of a probe by the U.S. Securities and Exchange Commission.
Mr. Calandra, author of the on-line newsletter The Calandra Report, abruptly resigned Thursday as chief commentator for the CBS MarketWatch website after missing a deadline to hand over personal stock trading records to the company.
Dana Welch, his San Francisco-based lawyer, said the SEC has asked for records of his stock trades, copies of his newsletter and copies of e-mail alerts he sent to his subscribers.
The SEC opened an informal probe into his trading in December after Forbes Magazine raised questions about his enthusiasm for Mr. Friedland's Ivanhoe Energy Inc. and Ivanhoe Mines Ltd., she said.
Although a letter he received from the SEC did not mention the Ivanhoe companies, she assumed that the Forbes article was the trigger, she said. "In my experience, that's the way the SEC works. They see something in the press and they look into it."
The article said that "no one applauds louder than Thom Calandra" for Ivanhoe Mines and Ivanhoe Energy, companies with substantial market capitalization but scant profit.
Ms. Welch said Mr. Calandra, 47, is co-operating fully with the SEC. John Heine, an SEC spokesman, refused all comment.
Officials of the Ivanhoe companies did not respond to questions about the inquiry. There was no indication that Canadian authorities were taking action.
"I won't be commenting on whether we're investigating that particular matter," said Ontario Securities Commission spokesman Eric Pelletier.
According to The Wall Street Journal, the SEC probe is focused on whether Mr. Calandra bought stock ahead of news about the companies he was writing about and then sold the stock after prices rose, a form of "pump and dump."
In a Nov. 10 issue of the paid-subscription newsletter, Mr. Calandra said Ivanhoe Energy shares, then trading at roughly $6 (U.S.) on the Nasdaq, would soon be propelled as high as $15 because of projects in Iraq and China.
In the same issue, he readily admitted that he had "exposure to Robert M. Friedland's Ivanhoe complex" and has flown for free to Mongolia, China and London aboard Ivanhoe Mines' corporate jet. He also acknowledged that he owns shares in Ivanhoe Energy and African Minerals, a privately held nickel and platinum stock controlled by Mr. Friedland.
"I paid full price for my shares in the open market, with no company-sponsored discounts of any type," he wrote. "When I sell them is my business because I have every right to profit from my intense research."
In a statement, he suggested that he resigned in part because of the stress of the SEC inquiry. "While it's been tremendously rewarding professionally, it has also been stressful," he said of his eight years at MarketWatch. "And the SEC's informal inquiry adds to this stress. So I've decided to take time off to focus on my family, who I adore. I look forward to the conclusion of the SEC's inquiry."
MarketWatch said it is looking into whether Mr. Calandra may have broken the company's employee stock trading policies. He was allowed to own stocks as long as he fully disclosed any potential conflicts to his subscribers and then waited at least 48 hours before making trades in any stocks that he mentioned.
"We are confident we have appropriate policies," MarketWatch chief executive officer Larry Kramer said in a report on its website. "What we don't know is whether they were followed, and that's what we're trying to find out." He added that the company ordered Mr. Calandra to stop trading entirely two days after he received the SEC letter inquiring about his activities. |
