Bill Morneau’s father sold 200K shares in family co. days before tax changes

[MillerTime GFG]

I don't see a thread on this anywhere, nor do I know if it's being discussed, but this is pretty unbelievable. Worthy of its own thread imo.

Is this not the very definition of insider trading?

https://globalnews.ca/news/3889576/b...gains-tax/amp/

[Knut]

Yeah but the conservatives.......

[CorsiHockeyLeague]

How is this a problem? He announced the changes December 7, and they would have come into effect January 1st. Everyone had an opportunity to make that sort of deal during the three weeks before the change came into effect. The most you could say is that he had a bit longer than most to get it done.

EDIT: Unless the issue is the drop in value associated with the annoucement... which yeah, actually, thinking about it further, is an issue.

[chemgear]

Nevermind all the other news Morneau has been in over the last month or two with his finances (blind trust or not to blind trust, loophole over conflict of interest laws, etc.)

[opendoor]

Given that the Liberals campaigned on the fact that they were going to raise the marginal tax rate for income over $200K to 33%, I don't really see anything suspicious here. It's right in their election platform:

We will give middle class Canadians a tax break, by making taxes more fair.

When middle class Canadians have more money in their pockets to save, invest, and grow the economy, we all benefit.

We will cut the middle income tax bracket to 20.5 percent from 22 percent – a seven percent reduction. Canadians with taxable annual income between $44,700 and $89,401 will see their income tax rate fall.

This tax relief is worth up to $670 per person, per year – or $1,340 for a two-income household.

To pay for this tax cut, we will ask the wealthiest one percent of Canadians to give a little more. We will introduce a new tax bracket of 33 percent for individuals earning more than $200,000 each year.

https://www.liberal.ca/wp-content/up...ddle-class.pdf

These tax changes were a given the moment they won a majority in October.

[Slava]

I can't remember, but were there even any tax changes that affected this share sale? Wasn't it pure income tax in that announcement, in which case this is completely irrelevant?

[CorsiHockeyLeague]

Capital gains are part of income...

[opendoor]

Originally Posted by Slava

I can't remember, but were there even any tax changes that affected this share sale? Wasn't it pure income tax in that announcement, in which case this is completely irrelevant?

Any change in income tax rates necessarily affects capital gains tax rates so that'd affect share prices given that there'd be a small window to dispose of assets and pay capital gains taxes under the lower rate.

But like I said above, these rules were already clearly laid out in the election platform. Anyone who bothered to pay even the slightest bit of attention to the election would've known that income over $200K was going to be taxed at a higher rate for 2016.

[Slava]

Originally Posted by CorsiHockeyLeague

Capital gains are part of income...

Capital gains aren't part of income, although as noted below, the rate would increase as a result.

Originally Posted by opendoor

Any change in income tax rates necessarily affects capital gains tax rates so that'd affect share prices given that there'd be a small window to dispose of assets and pay capital gains taxes under the lower rate.

But like I said above, these rules were already clearly laid out in the election platform. Anyone who bothered to pay even the slightest bit of attention to the election would've known that income over $200K was going to be taxed at a higher rate for 2016.

Yeah I guess I skipped that part in my head . It was a foregone conclusion as you said, and frankly for a guy who in that article is mentioned as having many dispositions and acquisitions through the years this is going to be hard to prove.

[Wormius]

Well, you could argue that if he thought making that announcement would have caused the share prices to drop then that might be insider trading. Indeed they did drop after his announcement, but the stocks were also trending downward at the time. A few other stocks took a small hit on the day of the announcement though.

[Oling_Roachinen]

Originally Posted by opendoor

Any change in income tax rates necessarily affects capital gains tax rates so that'd affect share prices given that there'd be a small window to dispose of assets and pay capital gains taxes under the lower rate.

But like I said above, these rules were already clearly laid out in the election platform. Anyone who bothered to pay even the slightest bit of attention to the election would've known that income over $200K was going to be taxed at a higher rate for 2016.

So now you want to bank on politicians and parties keeping their promises? Ha, yeah right.

He sold 100,000 shares at a price of $15.20 per share on Nov. 23, 2015. shares were worth 15 on December 3, 2015 when he sold another 100,000 of them. On December 7, 2015 they were worth 14.90 prior to the announcement and 14.09 a week later.

He sold his shares for $3,200,000 prior to the announcement. Shortly after they were worth $2,818,000. If he in anyway was tipped off by his son, that's nearly $400,000 he 'saved' from information that was not available to the public. It could also be a coincidence, or him acting on his own judgement with no information from his son. And while the stock may or may not have gone down as a result of the announcement, it's still a question of whether his father acted on the basis of any insider information that his son may or may not have provided.

[evman150]

I see no problem with this. He acted on very public information.

Total nothingburger.

In related news, I still can't stand Pierre Poilevre.

[Oling_Roachinen]

Originally Posted by evman150

I see no problem with this. He acted on very public information. .

No the announcement was not public.

If he sold his shares because of the platform, fine, absolutely fair game. Smart decision making and everything is hunkydory.

If he sold his shares because his son told him they were officially announcing the changes later that week - (and as such the market was expected to dip and did so) - that's a huge absolute problem and is not in anyway okay.

[Ashasx]

Well, until the announcement is made official, the market price reflects the possibly small chance that a change won't be made. By definition, if Morneau told his father about the announcement, that is insider trading.

[CorsiHockeyLeague]

Originally Posted by Slava

Capital gains aren't part of income, although as noted below, the rate would increase as a result.

Yes, actually, they are. See section 3(b) of the Income tax act. One half of capital gains are included in income, which is then taxed at the normal income rate. Accordingly, any change to income tax rates affects the amount you pay on capital gains.

[Slava]

Originally Posted by CorsiHockeyLeague

Yes, actually, they are. See section 3(b) of the Income tax act. One half of capital gains are included in income, which is then taxed at the normal income rate. Accordingly, any change to income tax rates affects the amount you pay on capital gains.

Well you win. I'm not digging into the income tax act. I realize that the income tax rate affects what you pay on capital gains and acknowledged that oversight.

[OMG!WTF!]

He should never have had control of his shares in the first place. Of course it's insider trading. There's always some anticipation of an event priced into stock value but news usually causes an emotional sell off or buy frenzy...the conclusion of the anticipation.

[CorsiHockeyLeague]

Originally Posted by Slava

Well you win. I'm not digging into the income tax act. I realize that the income tax rate affects what you pay on capital gains and acknowledged that oversight.

Who in their right mind would decline an invitation to read the delightful prose throughout Part I of the Income Tax Act? Clearly there's something wrong with you.

[Slava]

Originally Posted by OMG!WTF!

He should never have had control of his shares in the first place. Of course it's insider trading. There's always some anticipation of an event priced into stock value but news usually causes an emotional sell off or buy frenzy...the conclusion of the anticipation.

Aren't these the father's shares? That's the way I read it, but I could be 0/2 here. If they were though, he can have control.

[llwhiteoutll]

Originally Posted by evman150

I see no problem with this. He acted on very public information.

Total nothingburger.

In related news, I still can't stand Pierre Poilevre.

The changes were not public until Morneau announced them on December 7 2015. Morneau Sr. moved 200k shares in the two weeks before the announcement, which is the most volume for him since 2011.

Hilarious that people bitch about small business owners passively investing, then just brush it off when an elected official insider trades to the tune of millions