Among the young, striving professionals who inhabit Kitchener’s Country Stone Tennis and Squash Club, the talk in the members’ lounge will often turn to stock market pipe dreams after a few tension-burning rounds. Last fall, as club owner and local entrepreneur Robert Kelly inspired everyone's fancy—including his own—with tales of glittering fortunes to be made on the distant Alberta Stock Exchange, the talk began to focus on a certain junior oil and gas exploration company called Surf Oils Ltd. of Calgary. Within months, after a chance meeting between Kelly and Surf Oils’ president, Ron Boal, Kelly and a group of local investors began making large purchases of Surf stock on the open market as well as taking 35 per cent of the company through three private placements of stock issued by Surf. The effect on Surf stock—as this group of Southern Ontario investors moved into grab control of the company—was dramatic. From obscurity at 75 cents a share, Surf shot up during a meteoric rise in less than six months to a peak of $9 a share, an increase of more than 1,000 per cent.
When the crash came, it was one of the fastest and most disastrous stock tumbles of the year. Within two days,
Surf stock sagged from $7.50 to $4 a share; within two weeks, it had collapsed altogether. By last week, when it bottomed out, carrying the last of its Kitchener investors along with it, Surf was scraping along at $1.40 a share.
Starting this week, a few interested parties are beginning to ask questions: namely the RCMP, the Vancouver, Alberta and Toronto Stock Exchanges, the Alberta Securities Commission, as well as the Toronto head offices of three leading brokerage houses whose Kitch-
ener branches lost money by extending Kelly’s credit to buy Surf stock (“margin buying”) far beyond normal practice. “This Surf story could turn into a real scandal,” observes one Calgary broker, who, like almost everyone connected with the affair, demands to be kept anonymous.
How Kelly, barely 30, seems to have managed to whip Surf into such a frenzy is the question currently puzzling everybody. What the authorities are investigating is how the stock was g pressured upward to such dizzying § heights in so short a time and why the g brokerage houses extended so much g credit to Kelly to purchase the stock in the first place, as it was Kelly’s debt and * a slight dip in the share value (a “mar|gin call”) that caused the collapse to ^snowball out of control. No one questions Kelly's enthusiasm over Surf’s prospects. With a number of good properties, especially in the U.S., Surf looked good enough for Calgary’s Albany Oil and Gas Ltd. to bid the equivalent of $2.50 a share to buy it up in the aftermath of last week’s disaster.
Whether more serious legal or regulatory consequences have yet to flow, Kelly is already feeling a bitter personal sting for his apparent unseemly haste to reach the moon. Last week Kelly had to sell off his athletic club too—the very place where the dream was hatched.
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