BUSINESS

Slapping the showman

The Calgary Stampeders’ owner gets an 18-year trading ban

JENNIFER WELLS January 29 1996
BUSINESS

Slapping the showman

The Calgary Stampeders’ owner gets an 18-year trading ban

JENNIFER WELLS January 29 1996

Slapping the showman

BUSINESS

The Calgary Stampeders’ owner gets an 18-year trading ban

Ask Larry Ryckman how he is feeling these days, and he quotes Bob Dylan: “I’ve seen better days, but who hasn’t?” Well, few have seen as lousy a financial day as Ryckman did last week when the Alberta Securities Commission slammed the 36-year-old promoter and owner of the Calgary Stampeders with an 18year stock trading ban. For the same period of time, Ryckman will also be prevented from serving as an officer or director, and that includes the Stampeders. Speaking from his Calgary home, Ryckman says he is worried about how the ASC’s decision looks. “It could leave a question in the public’s mind about my integrity,” he says.

He has a point. Ryckman’s troubles date back to 1992, when he was chief executive officer of Westgroup Corp. Westgroup was a Calgary-based mini-conglomerate, once known as Smoky Resources, that under Ryckman ran businesses in everything from food services to oilfield equipment. From his corporate penthouse in Calgary’s Canterra Tower, Ryckman was an active trader in his own company. So active that he “forgot” to file 2,489 insider trading reports spanning almost three years to the fall of 1992. For that he paid $25,300 to the ASC and agreed not to trade Westgroup for six months.

But according to the ASC, Ryckman traded Westgroup shares through a Los Angeles brokerage 18 days later, on Dec. 8,1992. Later that month, Ryckman departed Westgroup. Subsequently, the ASC investigation concluded that Ryckman had manipulated trading in Westgroup through 34 accounts,

including trusts held for his children, Aaron, Kiera and Lauren. “One does not set out to manipulate markets in family accounts,” says Ryckman of the ASC’s findings.

The evidence against Ryckman was gathered, in part, by SMART (Stock Market Analysis for the Reconstruction of Trades), a computer program developed by the RCMP. It was the SMART program that matched the buyers and sellers—in this case, Ryckman and Ryckman, or his representatives.

One of Ryckman’s techniques was wash trading, simultaneously buying and selling shares, artificially buoying the stock. While the price was high, says the ASC, the Ryckman group were net sellers of more than a million Westgroup shares. Said the commission: “The conclusion is inescapable that the scheme was deliberate.”

Ryckman and controversy go together, starting with a Red Sea oil deal gone wrong in the 1970s and culminating in the flameout of Archer Communications Inc. Archer was the company behind QSound, which once was pumped by Madonna as a revolution in 3-D sound. Ryckman was both company head and promoter. Archer reached a market capitalization of $300 million. Before the stock collapsed, Archer had made Ryckman millions.

Then, he did what rich promoters like to do: he bought a sports team, the Stampeders. In the spring of 1992, he signed B.C. Lions quarterback Doug Flutie, who promptly helped the Stamps win the Grey Cup. “He’s a putz,” says Vancouver stock promoter Murray Pezim from his sick bed at St.

Paul’s Hospital upon hearing of Ryckman’s trading ban. “I built the whole thing [the Lions] up and he came along and almost destroyed me by stealing my quarterback.” Just about the time the Stampeders won the Grey Cup, Ryckman lost control of Westgroup. He says he has “virtually” not traded in Alberta since. But he has been busy. In November, the Vancouver Stock Exchange (VSE) delisted Aabbax International Financial Corp., of which Ryckman and his wife, Elaine, were directors. Included in the reasons for delisting was what appeared to be the sale of three million Aabbax shares without regulatory approval to the Ryckmans, among others, and exorbitant management fees billed to Aabbax by Ryckman Financial Corp., Ryckman’s holding company.

In light of the ASC ruling, Ryckman says he will refrain from doing any trading at all, VSE or otherwise. “I have a lot of respect for the system,” he says. “I don’t want to anger any of the regulatory bodies.” Ryckman knows that while the jurisdictional rules around trading borders are vague, trading, say, on the Toronto Stock Exchange would likely lead to securities commission hearings there.

Instead, he says he will appeal the ASC’s decision to the Alberta Court of Appeal within the next two weeks. Interestingly, he offered no defence in the two days of the five-day hearing he did attend. The key reason for his silence, he says, was the commission’s failure to recognize a conflict of interest involving ASC prosecutor Raymond Coad, whose law firm had once acted for Ryckman. In the absence of a defence, he says, “the ASC has been able to bring forward all of this damning evidence—all of this allegedly damning evidence—and it’s been unanswered.”

If the ASC’s decision is upheld, Ryckman will be on the hook for $492,640.14, part of the cost of the three-year investigation. Ryckman says that is a lot of money “only if I have to pay it in a day. If I’m allowed a reasonable amount of time to pay—three to six months—it’s not a problem.”

Meanwhile, Ryckman seems more concerned with appearances than the penalties. “Will it affect the banks’ opinion of me?” he wonders. “My business associates? Season ticket holders?” For a veteran player, those seem disingenuous questions to ask.

JENNIFER WELLS