Key Takeaways:
Québec's financial regulator obtained a search warrant alleging TerraVest Industries Inc. executive chairman Charles Pellerin tipped off family members and acquaintances ahead of a major acquisition, sending shares down 31.6% on June 5.
"The allegations, if proven, represent a serious breach of market integrity that could expose the company to significant liability," said James Okafor, regulation analyst at Edgen. "Investors who traded during the period when privileged information may have been in play could have a valid claim for damages."
TerraVest shares closed at C$108.40 on the Toronto Stock Exchange on June 5, down from the prior session's close, after the Journal de Montréal reported that Quebec's Autorité des marchés financiers had obtained a search warrant citing allegations that Pellerin communicated privileged information about an acquisition before the deal became public. The Canadian Investment Regulatory Organization halted trading in TVK at 9:33 a.m. ET under a single-stock circuit breaker. The stock has lost 34% year to date.
Kalloghlian Myers LLP, a Toronto-based law firm specializing in investor class actions, said it is investigating a potential class action against TerraVest. If filed, the suit would seek damages for shareholders who bought TVK shares during the period when Pellerin allegedly shared non-public information. The company had recently completed several acquisitions, including the purchase of Colter Energy's Canadian assets announced May 15 and the acquisitions of Jet Peinture Plus Inc. and B & R Repair Inc. in late May. Six analysts covering TerraVest maintain an average price target of C$173.67, implying roughly 60% upside from the June 5 close, though the regulatory probe could alter that outlook.
This article is for informational purposes only and does not constitute investment advice.
