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

[VladtheImpaler]

Originally Posted by CorsiHockeyLeague

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.

Ha, Tax Law was my favourite subject in law school. I took every available course related to tax law.

[llwhiteoutll]

Originally Posted by Slava

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.

They were Morneau Sr’s shares, he can buy and sell so long as he discloses. That’s why we know how this share dump compares to his prior volumes.

[Jacks]

I posted this in the federal politics thread. Love or hate Poilievre he was pretty good in the 3rd video on this page.
http://www.cbc.ca/news/politics/poil...tion-1.4425716

[cal_guy]

Originally Posted by llwhiteoutll

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

28,000 or 1.5% of all CCPC account for 80% of all passive income or $500,000 in income a year on a asset base of around $10 million. The top 0.1% accounts for 50% of all passive income and they generate $1 million of income on a asset base of around $20 million.

[opendoor]

Originally Posted by Oling_Roachinen

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.

Everyone with even the slightest interest in finance knew what changes were coming. Accountants all over the country were advising high income clients to consider disposing of assets in 2015 rather than 2016 in order to avoid the tax increase before there was any official announcement:

https://www.collinsbarrow.com/upload...h-Nov-2015.pdf

http://www.mondaq.com/canada/x/44114...ral+Government

Here's a KPMG bulletin from October 28th, 2015:

You should consider accelerating income into 2015 versus 2016 (or, where possible, deferring expenses or deductions until 2016) if you are affected by the newly elected Liberal government’s election platform promise to introduce a new 33% tax bracket (up from 29%) for annual incomes of more than $200,000. Since it appears that the rate increase will not take effect until 2016, individuals at the new top marginal tax rate will realize a 4% federal savings on ordinary income (such as salary or bonuses) received in 2015 rather than in 2016, which could result in combined federal and provincial absolute tax savings ranging from 1.9% in British Columbia to 7.75% in Alberta, depending on your province of residence.

Accelerating other kinds of income into 2015 versus 2016 could also yield tax savings. Depending on your province of residence, you could see absolute tax savings on capital gains ranging from 0.95% to a high of 3.88%.

https://home.kpmg.com/content/dam/kp...s-tnfc1530.pdf

That doesn't mean he couldn't have had insider information, but a high income individual selling off taxable assets in the fall of 2015 after the Liberals, who'd just spend months campaigning on the fact that they were raising taxes on $200K+ income brackets, just wont he election isn't the least bit suspicious on its own. That effect is part of the reason the stock market lost 6-7% of its value from the election to Dec. 31st before rebounding in the new year.

[CampbellsTransgressions]

Where there's smoke there's fire

[Kjesse]

I tend to agree this looks bad but there was some writing on the wall at least. A very informative post above by opendoor.

I think the bigger problem is Morneau is not coming clean (watch the news clips of the debates with Poilievre) and its being exposed in the lower house.

He just needs to answer the questions instead of giving a list of numbered companies members of the conservatives own. That backfired on him massively.

Just come clean and move on. Don't deflect. He was effectively saying that maybe the ones asking the questions were the ones doing something wrong, so don't ask me if I am. That was kind of foolish for such a smart guy. If the answer doesn't hurt you, just answer. He's trying to not answer in the hope the issue disappears and even his own party should hold his feet to the fire (internally of course) and get to the bottom of the matter.

Here is the Poilievre move that made headlines. He's a very impressive fellow:

http://www.cbc.ca/player/play/1105287747717

[GGG]

This is also a red herring at best and criminal at worst.

It's distracting from the much more disturbing point that he is not following the ethics officer recommendation of either recusing himself from decisions that affect his holdings, dispersing of his assets or putting them in a blind trust. He introduced pension reform legislation that benefited morneau-shapel while holding the assets.

Even the appearance of the conflict a problem here.

[Oling_Roachinen]

Originally Posted by opendoor

Everyone with even the slightest interest in finance knew what changes were coming. Accountants all over the country were advising high income clients to consider disposing of assets in 2015 rather than 2016 in order to avoid the tax increase before there was any official announcement:.

This doesn't matter. At all. This is ethics 101.

There are two possible situations.

A) Sr. sold his stocks because his son told him that the announcement was going to become official.
B) Sr. sold his stocks for any other reason.

If it's A, that's a huge ethical and potentially legal issue. If it's B, all good, smart business.

[opendoor]

Originally Posted by Oling_Roachinen

This doesn't matter. At all. This is ethics 101.

There are two possible situations.

A) Sr. sold his stocks because his son told him that the announcement was going to become official.
B) Sr. sold his stocks for any other reason.

If it's A, that's a huge ethical and potentially legal issue. If it's B, all good, smart business.

OK, so there's no public evidence that it was A. High income earners all over the country sold off assets to get them taxed at the lower 2015 rate.

If there's other evidence of insider trading, then absolutely it's worth the outrage and both Morneaus should be in serious trouble. But if all the evidence that exists is Morneau Sr. selling some stock in the fall of 2015, then it's an exceedingly flimsy case for that. You didn't need a relative in the Department of Finance to know that someone with income over $200K realizing capital gains in 2016 would be more expensive than doing so in 2015 once the Liberals won the election. Many high earners all over the country did the same thing.

[OMG!WTF!]

Originally Posted by opendoor

High income earners all over the country sold off assets to get them taxed at the lower 2015 rate.

Computers were not selling in anticipation of news. I'm not sure exactly what % of TSX volume comes from algorithmic computerized trading but in 2015 most of the volume on the NYSE was computerized. And Morneau Shappell is traded in the States too. So these major announcements do cause immediate reaction in the markets even if they are not a surprise. If you knew when the announcement was coming, it would be wise to dump your shares at the last minute to try to avoid the typical computerized sell off. Doing what every other high net worth stock holder did is one thing. But timing it like that is fishy. Pretty sure Jr told Sr exactly when to sell. It would be blatant if he bought them back at a lower price. But assuming he did not, it's just fishy.

[Oling_Roachinen]

Originally Posted by opendoor

OK, so there's no public evidence that it was A. High income earners all over the country sold off assets to get them taxed at the lower 2015 rate.

If there's other evidence of insider trading, then absolutely it's worth the outrage and both Morneaus should be in serious trouble. But if all the evidence that exists is Morneau Sr. selling some stock in the fall of 2015, then it's an exceedingly flimsy case for that. You didn't need a relative in the Department of Finance to know that someone with income over $200K realizing capital gains in 2016 would be more expensive than doing so in 2015 once the Liberals won the election. Many high earners all over the country did the same thing.

Of course there's no evidence, but that's what was insinuated by people like Boulerice.

But the other side of your argument, if it was so obvious, why December 4? It was so obvious when the liberals were elected, why not sell October 20? Pure coincidence he sold the week of the announcement? Potentially, absolutely. Potentially not.

And it's easy to say that it was so obvious in retrospect. But there was far from certainty to the point that you're being dishonest. A couple reports saying "should, may, could, expect, anticipate" is far from confirmation even if it was the most likely event. Some theorized that it would go retroactively from January 2015, which means selling in December 2015 would have no bearing, they already missed the boat. There was precedence for that, Ontario Liberals had changed their tax laws retroactively in July 2014 coming into force January 2014. Others noted the wording of Trudeau saying tax law ready by January 2016, not implemented January 2016, leaving room for it to occur even later. Like the fiscal year of April 1, 2016 being another potential date, leaving months to review and plan. And again, don't have to look far for precedence of that...Notley's Albertan government had the new tax rates come into effect October 1, 2015 - prorating it. Not January 1, 2015.

[Northendzone]

regardless of whether or not sr. knew anything, the optics are horrible.

how many more missteps for the minister as he has been on quite a roll lately as it seems that he gets over something, and then something new pops up to keep him in the media spin cycle.....

[Resolute 14]

When you have a finance minister who has already had numerous ethical lapses, it becomes really hard to give him the benefit of the doubt. That's why this is an issue. It's also why Trudeau needs to shuffle Morneau out of the finance post. Every single thing he does is going to be scrutinized and presented in the worst way possible. It's going to dog Trudeau's government until the PM bows to necessity. And Morneau has nobody to blame but himself.

[GaiJin]

What I'd like to know, is did the family buy any back once the share price dropped?

[Slava]

Originally Posted by Northendzone

regardless of whether or not sr. knew anything, the optics are horrible.

how many more missteps for the minister as he has been on quite a roll lately as it seems that he gets over something, and then something new pops up to keep him in the media spin cycle.....

Isn't that really just a way to say "I don't like him and the Liberals, but this also doesn't appear to be illegal."?

Originally Posted by GaiJin

What I'd like to know, is did the family buy any back once the share price dropped?

I looked through the transactions and there isn't much of note. He gets shares granted and those transactions are there. It's clearly the largest sale over those two transactions, but he had another for about $930k in June 2015 as well.

[Northendzone]

^ I don't think so, I just think the optics don't look good. but I will acknowledge that it is possible that sr. had no idea and that his timing was very good. given they both built the business I am assuming they are both smart men and understand the concept of the firewall between them and that jr. would not provide sr. with any information that is not available publically.

I think if you are in the public eye, you should sometimes make decisions that may hurt you personally a little bit, but that pass the sniff test for the average canadian.

the minister keeps tripping himself up. but like anything else, this will pass in a week or so.

just for fun, I'd be interested to know how much tax sr. saved thanks to the timing of his sale. I am assuming that he is already a very rich man, and even if he saved $25,000 - it is a drop in the bucket.

[Slava]

Originally Posted by Northendzone

^ I don't think so, I just think the optics don't look good. but I will acknowledge that it is possible that sr. had no idea and that his timing was very good. given they both built the business I am assuming they are both smart men and understand the concept of the firewall between them and that jr. would not provide sr. with any information that is not available publically.

I think if you are in the public eye, you should sometimes make decisions that may hurt you personally a little bit, but that pass the sniff test for the average canadian.

the minister keeps tripping himself up. but like anything else, this will pass in a week or so.

just for fun, I'd be interested to know how much tax sr. saved thanks to the timing of his sale. I am assuming that he is already a very rich man, and even if he saved $25,000 - it is a drop in the bucket.

LOL, come on. I think that a lot of these people are already hurting themselves by getting into the public eye in the first place. It's unreasonable to think they should knowingly make poorer decisions just to try to placate people.

[OMG!WTF!]

Originally Posted by Slava

LOL, come on. I think that a lot of these people are already hurting themselves by getting into the public eye in the first place. It's unreasonable to think they should knowingly make poorer decisions just to try to placate people.

I think it's not unreasonable at all. All insiders of public companies have to make those decisions all the time. Actually they don't. More often than not they're made for them on the form of rules governing the conduct of sales and purchases around news releases. This happens to be an ex corporate release done by a corporate insider. It's a weird situation but given Morneau's super shady past I would easily conclude that he and Sr were talking.

[Red Slinger]

It's hard to say whether this is insider trading or not. However, someone in Morneau's position should be extra diligent to ensure that there isn't even any hint of impropriety.