Introduction

In March 2025, the Financial Markets Administrative Tribunal (TMF) rendered two decisions involving market manipulation in Autorité des marchés financiers c. Veillette[1] and Autorité des marchés financiers c. Ferreira[2]. These cases illustrate how market manipulation may arise through a coordinated conduct between two or more individuals affecting the forces of supply and demand driving market prices, and how the integrity of the financial system can be found to have been undermined.

The TMF found that Michael Ferreira (Ferreira), President/Chief Executive Officer and director of X-Terra Resources Inc. (X-Terra) since 2023, and Claude Veillette (Veillette), the main shareholder of X-Terra, breached sections 195.2 and 199.1 of the Quebec Securities Act prohibiting (i) unfair practices and the influence of the market price or the value of securities by means of unfair, improper or fraudulent practices as well as (ii) the creation or contribution to a misleading appearance of trading activity in, or an artificial price for, a security.

Context

X-Terra, known as “Corporation Comète Lithium” since 2023, is a mining exploration company listed on the TSX Venture Exchange (TSX). Until 2023, Ferreira was responsible for X-Terra’s capital-raising campaigns, investor outreach as well as the general visibility of X-Terra. Veillette was a day trader that traded both personally and through a holding company.

In November 2018, X-Terra announced that it concluded a definitive exploration and option agreement under which X-terra had the option to acquire a 100% undivided interest in mining titles subject to the completion of a private placement of a minimum of $1.5 million and approval by the TSX. Between November 2018 and April 2019, X-Terra was actively seeking to raise this capital.

During this period, Veillette and Ferreira acted in a coordinated manner to influence the market price of X-Terra’s shares in order to attract potential investors to the private placement. More specifically, Ferreira organized a promotional campaign on the internet and on social media in order to increase the trading volume and the price of the stock. Ferreira also organized the publication of six press releases at strategic moments. Veillette was informed by Ferreira of the various promotion tactics and was requested to place orders at specific moments, for specific amounts and prices. Veillette and Ferreira had regular exchanges on the progress of the promotional campaign, the timing of upcoming press releases, and their respective trading activities in X-Terra’s stock. These exchanges laid the groundwork for a coordinated effort to influence the market’s perception of the company’s value and activity.

Overall, Ferreira placed 29 orders either personally or through his holding company whereas Veillette placed 26 orders personally and through his holding company. Several of these latter orders were placed at Ferreira’s explicit request.

Market Manipulation

The scheme implemented by Ferreira and Veillette relied on two interrelated components: a promotional campaign designed to increase the visibility of X-Terra’s shares and coordinated trading activities intended to influence the market price and trading volume of X-Terra’s shares.

The TMF noted that during the relevant period, X-Terra’s share price fluctuated between $0.085 and $0.175, with daily trading volumes reaching up to 590,000 shares. A significant portion of this activity was attributable to the coordinated trading between Ferreira and Veillette. The TMF concluded that their actions created temporary and artificial liquidity in the market, thereby distorting the natural forces of supply and demand. This conduct misled other investors and undermined the integrity of the financial market.

Both Ferreira and Veillette entered into settlement agreements with the Autorité des marchés financiers (AMF), which were subsequently approved by the TMF. Under his settlement agreement, Veillette agreed to an administrative penalty of $45,000, a 24-month prohibition from acting as a director or an officer of an issuer (excluding his own company), and a 15-month trading prohibition (with phased exceptions). Under his settlement agreement, Ferreira agreed to an administrative penalty of $48,000, along with a 42-month prohibition from acting as a director or an officer of an issuer, and an 18-month trading prohibition requiring all transactions to be executed through a registered dealer.

The TMF noted that the agreed-upon sanctions took into consideration the seriousness of the breaches, their duration, the number of orders placed, the individuals’ knowledge of the capital markets, their collaboration with the AMF, the absence of gains, and their implication in the market manipulation scheme.

Takeaways under Quebec law

Market manipulation is expressly prohibited by the Quebec Securities Act. Sections 195.2 and 199.1 are designed to preserve the integrity of the capital markets by prohibiting conduct that distorts the natural forces of supply and demand.

The Ferreira and Veillette cases approving their settlement agreements demonstrate that market manipulation doesn’t always involve large and complex financial schemes or even personal gains from the involved parties. Relatively simple and quiet trading coordination between a company insider and a shareholder following a carefully designed online marketing campaign can have serious consequences for both the company and the impleaded individuals if the targeted conduct undermined investor confidence and the proper functioning of capital markets.

The author wishes to thank student Erika Perrier-Antaya for her assistance in authoring this publication.

[1] Autorité des marchés financiers c. Veillette, 2025 QCTMF 8

[2] Autorité des marchés financiers c. Ferreira, 2025 QCTMF 18