Virginia Heffernan, principal of GeoPen Communications, is a science and business writer who specializes in writing about mineral and energy resources. She provides research and writing services to both corporate and government clients and is a regular contributor to publications such as Investment Executive, The Northern Miner and Canadian Consulting Engineer. www.geopen.com/
“From the Ground Up” is an autobiography of one of Canada’s most notable mining women Viola MacMillan, best known for her involvement in the infamous Windfall mining scandal of 1964. Although her autobiography presents her side of the controversial story some gaps and context were missing. Virginia Hefferernan’s thorough investigation cleared up many of those gaps and provided much needed context in the “Afterword” final chapter of the autobiography.
Afterword (March 2001)
The frenzy begins
“Some of the drillers started buying stock through their brokers, who would have told their other clients that if the drillers were buying, there must be something in the core. The market activity just blossomed from there, almost regardless of what the MacMillans did,” says Ford. Blossomed is an understatement. On Monday morning, Windfall shares opened at $1.10. Before the market closed at 3:30 PM, 1.57 million shares had changed hands and the price had reached $2. When rumours that the core contained 2.4% copper and 8% zinc surfaced later in the week, the trading accelerated and by the closing bell on July 10th, the price had doubled again to $4. “Such trading removed from the market any semblance of order and reduced it to a scene of uncontrollable speculative frenzy,” observed Justice Arthur Kelly, the judge who presided over the royal commission.
In the absence of any concrete information, the press and brokerage houses latched onto rumour. They became enthusiastic boosters of the Windfall play, fuelling even more optimism in the market. The Northern Miner congratulated the “Mining MacMillans” for taking an intelligent gamble on the Prosser claims and The New York Herald Tribune reported a “major base metal drill core.” Brokers added credence to the rumours by reporting them to investors as fact. “Frustrated by their efforts to get accurate information and feeling under compulsion to provide whatever information was available, (the brokers) gave out such reports as they were able to gather,” concluded Justice Kelly. Just like during the Bre-X mining scandal that was to hit three decades later, the information mongers whose impartiality is so vital to the investing public were either unable or unwilling to see that the emperor was wearing no clothes.
Throughout this frenzy, the MacMillans kept their lips sealed save for two statements issued to the press on July 7th and again, under orders from the TSE, on July 15th. Both releases were equivocal, saying little more than that the first hole had been stopped at 530 feet, the core had not yet been sent for assay and drilling would continue. The second release read as follows:
“In view of the activity in the shares of Windfall Oil and Mines Limited over the past weeks, a meeting was held yesterday afternoon at the offices of the Ontario Securities Commission with the officials of the Company and of the Toronto Stock Exchange to review the situation.
At this discussion it was established, to the satisfaction of those present, that no assays of drill cores taken from the property have been made to date. No such assays have been made, since the first drill hole of the Company had not yet been completed. Any stories of assay results are unfounded and do not come from the Company.
The Company advised that it will be recommencing drilling shortly to complete the first hole. When this drilling has been completed, the cores will be assayed and the results announced forthwith. This work will take some time. To lessen the possibility of rumours during the period of this work all cores will be under guard. No information will be released by the Company in regard to the cores until the assays are completed.”
There is little question that the MacMillans knew the core that had intersected the target anomaly was worthless from the moment the drillers pulled core barrel out of the ground. George MacMillan was an experienced prospector who would have been able to determine from visual examination that the core was nearly barren and the conductive material graphite, not sulfides. This inescapable conclusion was reinforced several times throughout the 23 days of market activity. On July 6th the MacMillans submitted two small pieces to Technical Service Laboratory in Toronto and were told that the results showed nothing of value. Windfall’s consulting geologist, Dr. J.W. Ambrose, also had a chance to examine the core on July 6th. A week later, he confirmed that his tests revealed nothing of significance. Still, drilling resumed on July 18th even though the target zone had already been intersected.
George did not any submit samples for assay until July 24th, more than two weeks after stopping the hole for the first time and a day after completing the hole to 863 feet. According to witnesses for the royal commission, he told Swastika Laboratories Ltd. to take its time and report the assays by letter rather than phone. Consequently, the public did not find out the core was worthless until the last day of July. “George knew what he was doing,” says Brown. “He was quite capable of realizing there was nothing in the core. There was some fault or guilt in that.”
Meanwhile, mainly during the first week of the market activity, Viola MacMillan was buying and selling shares of Windfall through her stable of junior companies, which collectively had the option to purchase 100,000 shares of Windfall at 40 cents and another 900,000 shares at 40-70 cents . Under a clause in the option agreement, the sudden rise in Windfall’s share price compelled MacMillan to take up the shares or else forfeit the options. That day, her companies sold almost half a million shares at prices ranging from $1.01 to $2. Limited selling the next day was followed by modest purchases on July 8th. On July 9th, as rumours giving assay results of 2.4% copper and 8% zinc surfaced, MacMillan’s companies sold another 333,200 shares as the price broke through the former high of $2.10. The same day, Ambrose tried to reach the Macmillans by telephone to convey the results of his testing. He left a message with the answering service, but never received a return phone call. On July 10th the companies sold an additional 73,400 shares at $3.00-4.00. By the time the market closed that day, the options had been exercised and the bulk of MacMillan’s trading activity was complete.
The royal commission investigation, which – for the first time in Canadian history – had used a computer to analyze the Windfall trading activity, estimated MacMillan made a profit of $1.46 million on Windfall by trading though her controlled companies during July 1964. Losses by other investors totaled $2.7 million.
The TSE was partially to blame for this inequity. Throughout the heavy trading, the Exchange did virtually nothing to calm the frenzy or insist on disclosure that would confirm or deny the rumours swirling around Windfall. The only action the TSE took was to demand that Windfall disclose more accurate information about the mineral content of the drill core with the threat that if a satisfactory press release was not issued by July 13th, trading in Windfall would be suspended.
The TSE’s attempt at enforcement was about as effective as the threats of an impotent schoolteacher wagging a finger at unruly students. Windfall’s forced disclosure (see pg. 19) was belated and vague, only serving to convince speculators that the company must have something big, since there was nothing in the release to suggest otherwise. The TSE did not suspend trading.
“The apparent acceptance of the uninformative statements, coupled with the fact that trading was permitted to continue, had the effect of confirming, in the public mind, confidence in the truthfulness of the rumours and creating the impression that something beyond the bare words of the statement had been made known to the Exchange officials, and that what the rumours alleged concerning the mineral worth of the core had been substantiated by the facts,” concluded Justice Kelly. “The failure of the Exchange to take action earlier, and its failure to press to a conclusion of the action it threatened to take, can be explained only by … a reluctance to interfere with the continuance of trading.”
But how did a penny stock scandal — as common as a beehive hairdo in those days — lead to a royal commission, an investigation normally reserved for issues of major national or provincial importance?
First, there was the character at the centre of the investigation. Macmillan had a high profile not only among the general public, many of whom would remember her recent appearance on “To Tell the Truth,” but among the financial and political community. Although she was generally admired by her peers for her dedication to the mining industry and her work for the PDAC, she had her detractors. “She had put a few people on the spot previously while trying to improve matters for the mining industry,” says Tom Cole, a lawyer and former director of Windfall who handled most of MacMillan’s business transactions. “She trod on quite a few toes.”
Second, there were implications that several political figures, including Minister of Mines George Wardrope, were directly involved in the Windfall affair. “One of the reasons Windfall was picked on was because there were a couple of newspaper stories about cabinet ministers being involved in the trading,” says Justice Hartt. “The stories fueled the investigation, but we couldn’t find any connection with the cabinet ministers at all.” (OSC director John Campbell, however, was charged with breach of trust).
Third, the trading volume was enormous by 1960s standards – 13.3 million shares worth $36.7 million traded in 26,418 separate transactions – and the losses by the public substantial. “The rise in the market price of (Windfall’s) shares during the month of July was almost unparalleled both in height and duration. The sudden drop in the price of its shares, when the long-delayed assays indicated the absence of any mineral of commercial value, left many investors poorer for the experience,” wrote Justice Kelly in his final report. “There was inevitably much questioning as to how the loss occurred.”
The commission involved 144 witnesses and 416 exhibits. About 80% of the 800 investors asked to give their opinion on speculative mining stocks in light of the Windfall affair responded. After 44 days of hearings, Justice Kelly concluded that the TSE’s efforts at self-regulation were woefully inadequate, that OSC director John Campbell’s involvement in the trading was “shocking,” and that the MacMillans were largely to blame for the run-up and subsequent crash in Windfall stock.
But the MacMillans defended the allegations against them using technically sound if not wholly believable arguments. They said they were merely following standard industry practice when they failed to disclose the results of their drilling program immediately. Well, yes and no.
George said he removed the core from the site not to feed the rumour mill, but to deter snoopers because there was no core shack on-site. This was a reasonable explanation. Members of the PDAC had recently been warned to lock up their core to ward off organized spies – including brokerage representatives and mining company personnel – seeking confidential information for stock market speculation. The OSC itself ordered Windfall to lock up the core on July 13, which only served to fuel expectations of a bonanza. “Nothing can create a market for you more than to have an official body put your core under lock and key,” observes Ford.
The MacMillans also said it was standard practice to wait until a hole is finished to assay the core and release results to the public. True. Although it is unusual for a 900-ft. hole to take a whole month to complete, companies usually finish at least one hole before sampling core and sending representative samples for assay.
Furthermore, although George was reprimanded for failing to disclose what he saw in the core, this type of visual examination without the support of assays is no longer considered acceptable for disclosure purposes. The current regulation was designed in the spirit of protecting investors from inflated estimates of value, not judgements of worthlessness, but is strictly enforced nonetheless. The conclusion reached by geological experts called by the royal commission was that there could be no question about the value of the Windfall core based on visual examination. But Ambrose – the Windfall consultant who himself had deemed the core worthless – defended the MacMillan’s silence over the matter. “I have no intention of quibbling with my professional colleagues,” he told the commission. “But to announce from a visual examination that a core contains no mineral value is merely an unsupported opinion until an assay is done.”
As for her trading activity during the market run-up, MacMillan argued that as underwriter of the stock, she had a responsibility to maintain a stable market. The underwriting agreement gave her companies options on 100,000 Windfall shares at 40 cents and an additional 900,000 shares at prices of 40-70 cents. Under a clause in the agreement, she was forced to exercise these options by the rise in Windfall’s stock price. The only way she could achieve the dual feat of maintaining a stable market and raising cash to cover the options, she argued, was to sell into the market. The average price at which she sold shares, either through her own account or through her controlled companies, was $2.06, although the stock frequently spiked above $4 and peaked at $5.65.
“The only way the MacMillans could control the market was to sell into it to keep the market from becoming any more volatile than it already was,” says Ford. “My overwhelming feeling on this, having known the MacMillans for so long, is that they weren’t out to make money as a result of speculation. They wanted to find mines and they were successful to a large degree, and this was another one they hoped would turn out the same. I just can’t accept, knowing them, that they tried to make something out of nothing. It just wasn’t in their nature.”
Justice Kelly took quite a different view. “The urge to distribute the underwritten and optioned stock made it undesirable that any positive statement as to the actual value be made while the distribution was going on. To complete the sale of the Windfall Company shares under option…….. it was necessary that the public be kept unaware of the negative results of the drilling,” he wrote in his final report. “Without going into the fallacious reasoning upon which they justified their silence, the conclusion cannot be avoided that the uncertainty as to the truth or falsity of the rumours was deliberately allowed to continue, and that the elaborate security measures and the emphasis on the absence of assays were employed to perpetuate the belief that there was some factual basis for these rumours.”
In 1965 George and Viola MacMillan were charged with defrauding the public by manipulating the shares of Windfall Oils and Mines. They would not be tried and acquitted for another four years.
In the meantime, more trouble lay ahead for Viola MacMillan, who by then had resigned as president of the PDAC to avoid smearing the organization’s reputation. The unprecedented use of computers to analyze some 26,000 stock transactions during the Commission investigation had inadvertedly revealed that one day in July, MacMillan bought and sold several thousand shares of Consolidated Golden Arrow Mines Ltd., one of her junior companies that held a stake in Windfall.
Just before the market opened on July 10th, MacMillan told her broker to sell 244,000 shares of Golden Arrow on behalf of two of her companies and buy the same number of shares for friends and neighbours. Specifically, she asked the broker to sell 44,000 shares for Airquests Ltd. at 25 cents per share and buy 44,000 shares for nine individuals at 25 cents per share. She also instructed him to sell 200,000 shares held by MacMillan Prospecting & Development Co. Ltd. for 25 cents per share and buy the same amount at the same price for George.
About an hour after the market opened, Viola called the broker again, asked him what Golden Arrow was trading at and, after hearing the stock price had jumped to 58-65 cents, told him to sell a total of 6,000 shares for the nine individuals. Later in the day, she instructed him to sell 10,000 shares for George at 64-65 cents per share for a profit of about $4,000. The total trades in Golden Arrow on July 10th amounted to 393,000 shares, compared with just 850 shares the previous day.
The huge volume of single day trading leapt off the computer screen and raised a red flag for commission investigators. Even though she did not benefit personally from the trades, MacMillan was charged and convicted of wash trading – the act of buying and selling large blocks of a stock in order to create a false or misleading appearance of market activity. Neither she nor George testified at her subsequent trial. She was sentenced to a nine-month jail term, fined $10,000, and – at the age of 64 – escorted to Toronto’s Don Jail. Her appeal was unsuccessful, but for once Macmillan’s gender worked in her favour. The appeal judge changed the sentence to an “indefinite period not exceeding nine months” because “the appellant is female.” This slight change in wording opened the doors for MacMillan’s early release.
MacMillan’s wash trading conviction was the first in Canadian history. The OSC had tried to convict the promotors of Avonic Mining twice in 1957 but both trials resulted in a hung jury based on the argument that the public didn’t get hurt. “Viola had just been convicted of a practice that is almost as common, but just as illegal in Canada, as contraception,” wrote Cameron Darby in Saturday Night. “She was simply behaving like your average billionaire promoter, operating a business, which, with government acquiescence, has always been ten percent production and ninety percent piracy.” The judge, also calling the trading an “act of piracy”, ruled that a jail term was necessary because a fine alone would be regarded as a license to continue such trades.
There are many theories about why MacMillan was convicted of a crime otherwise overlooked. Some say there was lingering resentment towards MacMillan, as a woman, for assuming she could take such an esteemed position in a man’s world. Others argue that MacMillan sealed her own fate by making enemies on Bay Street and in government circles as an outspoken advocate for her own interests and for those of the industry. Some question the strength of her legal defense. Observers also point to a strong feeling among the public that someone had to take the blame for the money lost on Windfall and other properties surrounding the Texas Gulf discovery. With all these cards stacked against her, MacMillan was a sitting duck when the computer analysis highlighted her unusual trading activity of July 10, 1964.
Stock price manipulation remains a murky area for market regulators. In 2000 portfolio managers and traders at RT Capital Management, the Royal Bank of Canada’s pension management arm, allegedly conspired to enhance their performance numbers by manipulating stock values at the end of the day using a practice called “high closing.” The OSC fined the Royal Bank $3-million and the TSE suspended 12 traders and fined them a total of $360,000. The charges stunned the financial industry because high closing, like wash trading in the 1960s, was accepted as common practice. In both cases, a shift in regulatory attitude prompted the authorities to take action against individuals in order to send a message to the whole industry about tolerance for unethical practices.
During her incarceration at the Women’s Guidance Centre in Ingleside, Ontario, Viola and George exchanged letters almost daily. Viola’s letters are, unsurprisingly, laden with instructions regarding the couple’s various accounts, companies and residences. It was perhaps the first time in her life that MacMillan felt truly impotent, and she had difficulty ceding control over her business matters to George. She had flashes of anguish and indignation over her fate. “It will be hard for me to catch up and orient myself back to that wonderful record I had before this dreadful mess,” she writes shortly after her incarceration. And later: “I have moments when all my hard work and achievements come tumbling down and I think of all the rascals getting away with so much.”……..“I am praying that I will be released soon …. surely they have had their pound of flesh.” She often cried herself to sleep.
But the “Old Vi”, that optimistic dynamo that thrived on adversity, penetrated the gloom whenever MacMillan contemplated her release. “After this very unpleasant experience, I’m sure our lives will be richer and fuller,” she reassures George. “I’m sure there will be still time left in our lives for us to do some good and be a friend to man.” She even instructed George to keep his ear to the ground for exploration opportunities because she was anxious to find another mine. Ever conscious of her public appearance, she gave George a specific list of clothes and accessories she would need for her release. She may have been the first and last prisoner at the Women’s Guidance Centre to request that a fur coat be brought to her jail cell.
MacMillan also comes across as religious and empathetic in her letters. She took visits from various clergy and prayed often, actions which may have helped her secure an early release, since three of the questions on the parole application inquired about religious affiliation and church-going habits. Despite her own worries, her letters were sprinkled with references and messages of goodwill to others who were suffering from illness or anxiety. She clearly missed George and frequently referred to the good times they had and would have together. “Did I tell you that I’m still in love with you?” she asked at the opening on one dispatch. But she rarely referred to her conviction or expressed any kind of remorse for her actions other than to ask George “where did we fail?”
During her incarceration, a cast of characters was working feverishly behind the scenes to secure her early release. Most of the arguments for her parole revolved around her age – 64 – , her frail health (she had a heart condition) and her reputation preceding the conviction. MacMillan had befriended some powerful people in business and politics, including Kelso Roberts, former Attorney General of Ontario and Vera Conant, the widow of former Ontario Premier Gordon Conant. Her trial lawyer, Joseph Sedgwick, was quick to offer these alliances with “highly reputable citizens” as proof of her good character.
Tom Cole, MacMillan’s long-time solicitor, wrote a personal appeal saying he believed MacMillan had “no idea that she was breaking the law” when she traded the Golden Arrow shares. “It follows, naturally, that I do not believe detention is going to affect a non-existing propensity to crime,” he wrote to Frank Potts, Chairman of the Ontario Parole Board. The campaign worked and MacMillan was released on parole after serving only seven weeks of her nine-month sentence.
The early release angered many who felt that MacMillan was given special treatment because she was wealthy. At the time, there was a loose policy that inmates with an outstanding charge, such as MacMillan’s fraud allegation, should be denied parole until the other charge was heard. “It is intolerable that there should be different rules for the rich and the poor in this province,” said Morton Shulman, then an NDP member of the federal legislature. But Shulman’s protest fell on mostly deaf ears as MacMillan amassed an expert legal team, including Kelso Roberts, to defend her against the fraud charges.
On February 10, 1969, almost a year after Viola’s release from jail on the wash trading conviction, George and Viola MacMillan were acquitted on both counts of fraud. Judge Harry Deyman said he could find no evidence that they had influenced the price of or falsely promoted Windfall stock. He said that the Texas Gulf discovery combined with a large volume of buy orders from the Timmins area on the weekend of July 4-5th, 1964, were to blame for the rapid acceleration in Windfall’s share price. Furthermore, the judge said he could find nothing fraudulent in the MacMillans’ statements to the press on July 6th and July 15th, even though the Crown alleged that the couple could have done more to quell rumours about the value of the core. “The MacMillans didn’t deceive anyone. I can’t find their action in waiting for a core assay wrong,” Deyman told the courtroom.
The domino effect
The Windfall affair was to have repercussions far beyond destroying the MacMillans’ reputation. The royal commission investigation uncovered serious weaknesses in the regulatory practices of the TSE, which had approved Windfall’s ambiguous release of July 15th and failed to suspend trading in shares of the company during the speculative frenzy. Justice Kelly questioned whether the exchange functioned as a watchdog or as a “private gaming club” designed to line the pockets of some of its associates.
The OSC also came under attack. “What was the Securities Commission doing, if anything, during this episode?” asked Joubin, the famous geologist cum prospector, in a memo to Justice Kelly regarding the Windfall affair. “If they were active, results certainly indicate that they were not effective!” Why not? Who should be effective in such cases? Does anyone know?” OSC director John Campbell’s simple explanation was: “you just don’t go to Viola and say ‘I want this’ or ‘we are going to do this.’ I mean, you just don’t do that to Viola MacMillan.” Campbell was suspended for his involvement in Windfall trading and later resigned from the civil service altogether.
So, in a perverse sense, the MacMillans did the investing public a favour. A new and improved Securities Act came into force with the relationship between the OSC and TSE more clearly defined. The TSE cleaned house and discouraged new speculative stock listings by introducing tougher rules for junior oil and mining companies. “Toronto was planning to clean up its act,” recalls Brown. “They wanted the blue chip stocks in and the scoundrels out.” There was a “sea change” in the stock market, agrees Frank Kaplan, reporter for The Financial Post during the Windfall affair. “The securities commission and the stock exchange felt that they had been very badly misled by Bay Street,” he says. “They started to use the regulations to prosecute aggressively.”
As a result, many of the penny stocks and their promotors moved to the Vancouver Stock Exchange (VSE), which welcomed the new business. “Between 1964 and 1967 the backbone of the Toronto penny stock market, the sharp-eyed, quick-tongued promotors, masters of hyperbole, slid into Vancouver en masse,” wrote authors David Cruise and Alison Griffiths in Fleecing the Lamb. Toronto became staid, conservative and blue chip. Vancouver became the new Wild West.
The PDAC also went down with MacMillan. The organization that she had toiled so long and so hard to build crumbled under the weight of the Windfall allegations. All prospectors and promoters were painted with the same brush. “The PDAC association virtually fell apart,” says Kaplan. “No one wanted to have anything to do with it, and the big companies wouldn’t let their people go to the annual convention. A few guys kept it going with great difficulty.” The PDAC would eventually recover its strength and respectability, but it would take several years of mostly volunteer work to repair the damage done by Windfall.
The Windfall court appearance was to be Viola MacMillan’s last public outing for some time. “She went totally underground,” says Kaplan. The dreams of finding another mine that sustained her through her darkest days in jail never came true. She and George tried to get some new ventures going after her release from jail, but none of them panned out. She was forgotten by the press and felt shunned by many of her former colleagues. She lost George in 1978. Her other love, the mining industry, mirrored her demise. Penny stocks fell out of favour with investors, at least temporarily, and bigger companies – with the exception of gold producers- were battered by low metal prices throughout much of the seventies and eighties.
Pardon cleans the slate
But supporters continued to work behind the scenes to restore MacMillan’s reputation. In 1978, about two weeks after George’s death, MacMillan received a pardon for her wash trading conviction from the federal government. “This pardon is evidence of the fact that the National Parole Board, after making proper inquiries, was satisfied that the said Viola Rita MacMillan, nee Viola Rita Huggard, was of good behaviour and that the conviction should no longer reflect adversely on her character,” the document reads.
A pardon in Canada does not imply that the conviction was misguided, but rather that the convicted deserves to carry on without the shadow of past offences blocking the way to employment and other benefits. “It has everything to do with the nature of the person,” says Tom Cole, who was instrumental in securing the pardon. “A lot of people felt a little later like she’d had a pretty raw deal, and I think that was also relevant.” Macmillan kept the pardon a secret, sealing the actual statement in an envelope marked “not to be opened until my death.” Although the news did leak out before she died, she considered the conviction and subsequent pardon “one of those closed subjects that she didn’t want to talk about,” says close friend Thelma Brown.
Perhaps emboldened by her pardon, MacMillan began to step out gingerly for the first time in years. Kaplan remembers giving a speech at a PDAC convention luncheon in March, 1980 and spotting MacMillan in the crowd. He believes this was the first time she had appeared at a mining function since being released from jail in 1968.
If the pardon helped MacMillan recover her private dignity, her donation to the Museum of Nature in Ottawa did wonders for her public reputation. In 1989 she pledged $1.25 million – almost as much as her profit on Windfall – to help the museum purchase the William Pinch mineral collection, a spectacular assembly of 16,000 mineral specimens considered among the top five of its kind in the world. In recognition of her generous donation, the museum named the collection the Viola MacMillan Mineral Gallery. “With her donation, (MacMillan) has helped ensure that all Canadians will have the opportunity to share in her passion,” said the Pinch campaign newsletter.
Following the purchase of the Pinch collection, MacMillan was inducted into the Canadian Mining Hall of Fame and became a member of the Order of Canada on her 90th birthday: “Viola MacMillan had two careers in the mining industry. First, over a period that spanned four decades, she and her husband teamed up as prospectors and developers of several substantial mineral deposits across the country. Her success as a mine finder and financier was substantial, but she was also the driving force behind the transformation of a small, regional association of prospectors into an internationally recognized association of professionals involved in all aspects of mineral exploration in Canada,” her Hall of Fame citation reads.
On August 26, 1993, just four months after her Order of Canada investiture, MacMillan collapsed on her way to the bank. She was rushed to the hospital but couldn’t be revived. Joubin, who had become her closest companion in her final years but could not claim to be a relative, was barred from her hospital room. She died of a heart attack at the age of 90, alone but not forgotten.
Only MacMillan knew for certain if she acted out of self-interest during that fateful summer in 1964. But regardless of her motivation, there is general agreement that her actions are less damning when viewed in the context of the stock market culture at the time. The whole market was badly regulated and prone to manipulation, particularly around the time of the Kidd Creek find, but Windfall was picked on because MacMillan’s high profile and the possible involvement of powerful politicians made for an especially compelling case. “All the penny stocks were going wild and there were bucket shops up and down Bay Street. It was within that atmosphere that Windfall took place,” says Justice Hartt. “I think the royal commission operated strictly in isolation, out of context of what was happening on Bay Street.”
As the RT Capital Management scandal of 2000 reminds us, regulators are still grappling with ways to discourage “common practices” in the market that also happen to be unethical. Finding a scapegoat is sometimes the only answer.