Bay and wall street `spooked'

TSX energy sector takes hit, tech stocks retreat in New York TheStar.com - Business - TSX energy sector takes hit, tech stocks retreat in New York

January 05, 2008

Growing worries over the prospect of a recession in the United States weighed heavily on the Toronto Stock Exchange's main index yesterday, while resource issues retreated amid softer commodity prices.

The index tumbled immediately after the opening bell following data that showed weak U.S. job growth in December and rising unemployment.

The S&P/TSX composite index closed down 199.62 points, or 1.43 per cent, at 13,778.58 – its steepest decline in nearly three weeks. All of the TSX's 10 main groups finished lower.

The energy sector pulled back 1.4. per cent as the February crude contract on the New York Mercantile Exchange drifted $1.27 (U.S.) lower to $97.91 a barrel. Sector leader EnCana Corp. gave back 69 cents (Canadian) to $69.87 and Suncor Energy moved down $2.17 to $109.67.

Ivanhoe Energy Inc. shares dropped five cents to $1.50 as it announced it plans to start the second phase of gas exploration at the Sichuan project in China through its subsidiary Sunwing Zitong Energy Ltd.

The financial group moved down 1.2 per cent with CIBC down $2.05 to $68 while Scotiabank dropped $1 to $48.

The tech sector lost 2.5 per cent after an analyst at JPMorgan downgraded chip giant Intel Corp., citing a dip in orders from computer makers and high inventories. Research In Motion Ltd. retreated $8.20 to $103.46. The company makes almost two-thirds of its sales in the U.S. Celestica slipped 12 cents to $5.50.

wall street `spooked'

U.S. stocks had the steepest weekly loss since July.

Apple Inc. and Google Inc., among the best-performing technology stocks last year, tumbled as the Nasdaq composite index declined 98.03 points to 2,504.65.

Apple slumped $14.88 (U.S.), or 7.6 per cent, to $180.05, the biggest drop since April 2005, while Google fell 4.1 per cent to $657.

Intel declined $2, or 8.1 per cent, to $22.67, the most since January 2006.

"The market is spooking itself," said Gene Munster, an analyst with Piper Jaffray & Co. in Minneapolis. "It's natural for people to get nervous when everyone is getting nervous."

The Nasdaq's 5.6 per cent decline so far this year is the worst start since the electronic market opened in 1971.

Bed Bath & Beyond Inc., the largest U.S. home-furnishings retailer, fell $1.21, or 4.4 per cent, to $26.19 after its forecast in its quarterly earnings trailed estimates.

Alcoa, the world's second-largest aluminum company, fell $1.32 to $34.87. Home Depot, the largest home-improvement retailer, fell 86 cents to $24.96, an almost five-year low. Hewlett-Packard, the No. 1 personal computer maker, slipped $2.78 to $46.87.

SLM Corp., also known as Sallie Mae, declined $2.49, or 13 per cent, to $16.67 for the steepest drop in the S&P 500. The biggest U.S. educational lender said it will be more selective in pursuing loan originations and will cut services to borrowers.

The Dow Jones industrial average lost 256.54 points to 12,800.18 while the S&P 500 index moved down 35.53 to 1,411.63.

metals, auto-parts slip

On the TSX, the base-metals sector was off 2.17 per cent with HudBay Minerals down 70 cents (Canadian) to $18.60. Teck Cominco Ltd. retreated $1.02 to $35.

The February bullion contract was down $3.40 (U.S.) at $865.70 an ounce, taking the TSX gold sector down 0.55 per cent as Barrick Gold declined 47 cents (Canadian) to $47.96 after hitting an all-time high Thursday.

Shares of car-parts manufacturers plunged as well. Linamar Corp. fell $1.21, or 6.4 per cent, to $17.74. Martinrea Inc. declined 65 cents to $11.50. Magna International Inc. slipped 56 cents to $74.50, taking a three-day drop to 7.1 per cent.

Shawcor lands contract

ShawCor Ltd., a Toronto-based energy and industrial services company, said it has won a contract worth more than $40 million to provide pipeline coating services for EnCana Corp.'s Deep Panuke natural gas project off the coast of Nova Scotia.

That helped lift its shares 70 cents to $35.80, a gain of nearly 2 per cent.

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From the Star's wire services

Toronto stocks slide as resource issues ease

Fri Jan 4, 2008 10:50am EST

(Updates numbers, adds details, quotes)

TORONTO, Jan 4 (Reuters) - The Toronto Stock Exchange's main index was down sharply on Friday morning, pulled lower by soft oil prices and worries over the prospect of a recession in the United States.

The index's materials and energy sectors led the way down, slipping 1.3 percent and 0.9 percent respectively, as gold and oil prices eased back from Thursday's highs.

Barrick Gold (ABX.TO: Quote, Profile, Research) was off 58 Canadian cents, or 1.2 percent, at C$47.85, while the gold-mining subsector as a whole was down 1 percent. In the energy group, Canadian Natural Resources (CNQ.TO: Quote, Profile, Research) slipped 88 Canadian cents, or 1.2 percent, to C$74.48.

The key S&P/TSX composite index .GSPTSE was down 131.19 points, or 0.94 percent, at 13,847.01 with all of the TSX's 10 main sectors in negative territory shortly after the open.

The selloff came after two days during which record high oil and gold prices supported the resource-laden Toronto index. Spot gold advanced on Friday, but was still off Thursday's record high of $869.05.

Crude oil was down $1.03 at $98.15 a barrel after briefly touching a record $100.09 the day before.

Weaker-than-expected data on U.S. December job growth also helped undercut the Toronto index, due to heightened concern about the U.S. economy.

"It's all economic data this week," said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc. "So it's really a question of how strong or how weak the underlying economy is."

"Where on Wednesday the U.S. market was strongly down on the (Institute for Supply Management), at least strong commodity prices, principally oil and gold, held (Canada) in, but today that trend is reversing itself," Taylor said.

On Wednesday, the Institute for Supply Management reported that factory activity in the United States shrank unexpectedly in December, raising worries of a recession or stagflation.

The financials sector dropped 0.7 percent on Friday morning. Bank of Montreal (BMO.TO: ) was down 76 Canadian cents, or 1.4 percent, at C$55.28, and Bank of Nova Scotia (BNS.TO: dipped 60 Canadian cents, or 1.2 percent, to C$48.40. ($1=$1.00 Canadian) (Reporting by Leah Schnurr; Editing by Peter Galloway)

BWR+PDP Houses

Beware Of Boiler Rooms + How They Work

SEC target Theodore denies boiler room allegations

2008-01-03 17:00 ET - Street Wire

Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission

by Mike Caswell

George Theodore, the former chairman of Infolink Technologies Inc., denies allegations that he ran a boiler room in Florida that improperly raised $1.05-million. Mr. Theodore had previously asserted his Fifth Amendment privilege against self-incrimination in response to the charges. (All figures are in U.S. dollars.)

In a Sept. 13, 2007, civil complaint, the U.S. Securities and Exchange Commission said Mr. Theodore, 40, was the directing mind behind a 13-person boiler room that sold shares of University Lab Technologies Inc., an unlisted company that purportedly developed dietary supplements. One week after it filed the charges, the SEC secured an emergency injunction freezing University Lab's assets.

In October, Mr. Theodore pleaded the Fifth. He said he was aware of a federal criminal investigation into his activities and, on the advice of his lawyer, he refused to answer the allegations. Since then, no criminal charges have been filed.

In Nov. 23, 2007, Mr. Theodore filed an amended answer to the SEC's case, in which he drops his Fifth Amendment defence. He acknowledges that University Lab raised $1.05-million, but he denies allegations that the company employed salesmen who earned commissions of up to 55 per cent.

He is now discussing a possible settlement with the SEC on undisclosed terms.

SEC's complaint

Mr. Theodore's trouble with the SEC began on Sept. 13, 2007, when the regulator filed a civil complaint against him and University Lab in Florida. The SEC said Mr. Theodore, who also goes by the name George Theodoropoulous, used a Boca Raton boiler room to raise money from 46 investors in the U.S. and Canada. Salesmen under his direction cold-called potential investors, and offered them units of University Lab at 50 cents each. The salesmen said the company had contracts to place dietary supplements in 5,000 stores.

Some investors received a private placement memorandum that the SEC says misrepresented the investment. It failed to disclose that salesmen received stock representing up to 30 per cent of the units they sold, and, although it stated that the minimum investment was $25,000, that University Lab accepted investments of one-eighth of that amount.

On top of a $400-per-week salary, salesmen received commissions between 2 and 55 per cent, depending on their job, the SEC said. Fronters received 2 per cent, closers 7 to 15 per cent and loaders 35 per cent. Salesmen who sold shares to existing investors received the top commission, 55 per cent.

The SEC is seeking an order banning Mr. Theodore from penny stocks and banning him from serving as an officer or director of a public company.

Concurrent with the charges, the SEC secured an emergency order freezing University Lab's assets and appointing a receiver. On Sept. 17, Florida District Court Judge Linnea Johnson ordered Fort Lauderdale lawyer Michael Goldberg to take charge of the company's assets and to begin any legal proceedings necessary to recover investor money. Mr. Goldberg has not yet reported on his progress.

In announcing the case, the SEC acknowledged the help of the Saskatchewan Financial Services Commission and the Alberta Securities Commission. On Dec. 19, 2007, the ASC began a related administrative action against Mr. Theodore. It alleges that he improperly raised $250,000 from 15 Alberta residents for University Lab.

Theodore's answer

In his amended answer, dated Nov. 23, Mr. Theodore denies any wrongdoing. He admits that University Lab raised over $1-million from 46 investors between December, 1999, and May, 2007, but he claims that he did nothing wrong.

Most of his answer contains general denials, with no specifics. For example, his response to the allegation that University Lab paid commissions of up to 55 per cent, only says, "Defendant Theodore denies the allegations as they pertain to him."

Mr. Theodore says the SEC is not entitled to ban him from penny stocks, because the allegations cover a limited time period, they were not egregious, he did not benefit from the alleged fraud and he is not a recidivist violator. Mr. Theodore also says he relied on advice from University Lab's lawyer.

He is asking the court to dismiss the charges.

Since filing his answer, Mr. Theodore has started discussing a possible settlement with the SEC. On Nov. 26, Judge Johnson ordered both sides to agree upon a mediator, and to inform the court of their choice within 15 days. Three weeks later, the SEC filed an unopposed motion for an extension on the deadline for choosing a mediator, saying it is discussing a settlement with Mr. Theodore. The judge extended that deadline to Jan. 28, 2008.

Theodore at Infolink

In 2002, Mr. Theodore was the chairman of Infolink Technologies Inc., a junk voice-mail company that collapsed after media reports that its chief executive officer, Cesar Correia, did not disclose his criminal record. He had been convicted in 1984 for manslaughter, after he killed his abusive father.

Mr. Theodore left the company on Jan. 31, 2003, saying he needed to devote more time to his family and other business interests. He has since moved to Florida, where he now owns a $2.1-million home with his wife.

Infolink, which once traded at 50 cents, went private in December. Mr. Correia bought its shares for 4.72 cents each.