CP Ships insider-trading action settled

Former investors in CP Ships Ltd. are being asked to sign up for a piece of a settlement in class-action lawsuits against the company that was filed after it overstated its profits and faced allegations of illegal insider trading.

According to a statement Monday from Siskinds LLP, which acted for the plaintiffs in the Ontario proceedings, the $12.8-million deal is not an admission of wrongdoing.

But it appears to bring to an end the tale of CP Ships, which was sold in a friendly takeover to Germany’s TUI AG in 2005.

In August, 2004, CP Ships said it had overstated its 2003 earnings, blaming accounting discrepancies. Its stock sank by more than 20 per cent.

Then, in December, 2004, CP Ships acknowledged that four of its executives sold stock in the firm with advance knowledge of the bookkeeping issue.

Among them was then-chairman Ray Miles, who, partly by exercising stock options, made a $3.5-million profit in May, long before the August announcement.

A company probe determined the trades were made inadvertently and without an intention to break any corporate rules or securities laws. A 2005 Ontario Securities Commission investigation also concluded that CP Ships should be let off with only a warning, praising the co-operation investigators received from the company. The executives agreed to pay restitution of $1.4-million.

Class actions on behalf of shareholders were launched in Ontario, British Columbia and Quebec. An Ontario court approved the settlement last month, with a Quebec judge following suit in January. As a condition of the settlement, the B.C. suit was dropped.

Siskinds LLP put out a statement Monday advising anyone who bought CP Ships securities between Jan. 29, 2003, and Aug. 9, 2004, or who held CP Ships securities on Aug. 9, 2004, to file their claims by June 7, 2010.

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Unregistered Securities Result in $135 Million South Florida Ponzi Scheme

The founders and co-owners of the Miami-based real estate development company Royal West Properties, Inc. have been charged with fraud for conducting a $135 million Ponzi scheme. The Securities and Exchange Commission (SEC) alleges that Gaston E. Cantens and his wife allegedly sold promissory notes to investors after acquiring various properties and later financing their sale.

According to the civil complaint filed by the SEC, the Cantens targeted members of the Cuban-American community. Well-known within the close-knit community, the couple gained the trust of mostly elderly investors whom they met at charitable and religious gatherings, and at events hosted at their Miami home. Mr. Cantens also allegedly used his connections as an alumnus and board member at the Belén Prep School to recruit investors. Outside of their immediate community, investors were attracted by televised commercials broadcast on Spanish-language channels nationwide.

Despite the Cantens not being registered with the SEC under the federal securities laws to make securities offerings to investors, reportedly no questions were asked of the couple that a community regarded as old friends.

In a statement given by Director of the SEC’s Miami Regional Office, Eric I. Bustillo commented on the couples’ recruiting tactics, saying that “They portrayed themselves as a pious couple closely involved with educational and religious organizations, while in reality they were living lavishly off money from defrauded investors.”

Along with allegedly using investor money to repay earlier investors, the SEC also contends that the Cantens misappropriated more than $20 million to fund personal business ventures, pay themselves high salaries, and allocated an estimated $1 million to their children and grandchildren citing “consulting fees”.

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