When does Regulation Services step in?

One could start with the age-old question, who watches the watchers?

That question sprung to mind as Coventree (COF:TSX) rallied another 62% on volume in the first hour of trading this morning. This followed a big run between 2 p.m. and 4 p.m. yesterday; Coventree shares jumped from 60 cents to close at more than $1.20. Where are our protectors at Market Regulation Services Inc?

Their motto is “Protecting the Investor in Real Time”, after all.

A cursory review of Coventree’s Yahoo Finance news release page, SEDAR and Bloomberg.com failed to provide any insight into this sudden rally. By 10:30 a.m., it touched $1.74. Still, no news could be found.

Stockhouse posters suspect short-covering. Month end is coming, so perhaps they’re right.

There was a story around noon about Purdy Crawford requiring an extension to the ABCP workout deadline. And something about bank-backed paper not rolling over 100%, even now.

Sudden moves, particularly 100% jumps or 50% drops, are followed by something major. Good or bad. Stocks don’t just move like that on decent volume in the absence of reasons.

Could it be that a takeover bid is coming? Is the Caisse de depot (CDP), once the dominant shareholders of Coventree, going to bring it in-house to manage the coming five year workout of the non-bank asset backed commercial paper market? Is a major equity investment pending, ensuring Coventree’s solvency for years to come?

We are only left to speculate.

Now, there’s a system in place to ensure that sudden moves are met with public comment by listed companies. Market Regulation Services (“RS”) has the responsibility to monitor halts, press release dissemination, material news and so forth. Of the 4,000 or so public quotes in Canada, RS has them all – or so we think – linked to a variety of software programs. Triggers would include unusually high volumes or very quick moves in share prices.

It would appear that the lights on the dashboard are blinking.

Where is RS on the Coventree square today?

Snnnnzzzz.

MRM