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by Mike Caswell

The Canadian Investment Regulatory Organization has begun proceedings against Toronto's Clarus Securities Inc., claiming that it participated in the manipulation of Canadian Securities Exchange cannabis listing Liberty Health Sciences Inc. in 2017 and 2018. The firm allowed a group of related client accounts to execute matched orders, CIRO claims. The activity came as Clarus was raising money for Liberty Health and had acted as an agent in the transactions that created the company, according to CIRO.

The allegations are contained in a notice of hearing that CIRO released on Friday, Dec. 1. In addition to Clarus, the notice names the firm's president, James Christodoulis, as a respondent. The case, as set out in the notice, arises from a manipulation of Liberty Health conducted by related client accounts, with those accounts holding a significant number of the company's shares after it listed in 2017.

The manipulative trades, as set out by CIRO, began on the first day that Liberty Health traded and continued for at least nine months. The trading involved Clarus entering matched orders that were co-ordinated and "did not occur under normal market conditions," according to CIRO. Given the number of orders and their size, Clarus and Mr. Christodoulis knew, or should have known, that the trading was manipulative in nature, CIRO contends.

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