Black Cat Syndicate is hunting traders suspected of manipulating its stock by repeatedly bidding below the gold miner's share price.
Black Cat Syndicate is hunting traders suspected of manipulating its stock by repeatedly bidding below the gold miner's share price.
The West Perth-based company gained orders from the WA Supreme Court on Monday requiring stockbroker Barclays Capital Asia to hand over the records of clients who have made and then cancelled orders for 100,000-plus Black Cat shares.
While Barclays Capital is not suspected of any wrongdoing, Black Cat is expected to gain sensitive client information from the broker as part of an investigation into suspected market manipulation.
"We now have evidence of a pattern of conduct," Black Cat lawyer Stephen Penrose told the court on Monday.
The Paul Chapman-chaired miner is using the Supreme Court pre-action discovery processes that allow companies considering launching a legal action to obtain important orders. Potential defendants or parties with important information can be required to hand over documents or other details.
Black Cat launched its discovery action against Barclays Capital on December 23, shortly after the Australian Securities Exchange had identified the broker as having lodged the promptly cancelled low bids being investigated by the miner.
The ASX only identified the broker to Black Cat's legal team at Thomson Geer after Justice Jenni Hill handed down an urgent ruling in favour of the miner on December 17.
Justice Hill ruled the market operator should identify those "involved in placing specific bids for the purchase of Black Cat shares on-market".
Lawyers for Barclays Capital and Black Cat were in court on Monday to establish a regime for sharing and protecting information provided to the miner under the court's disclosure rules.
Barclays Capital must share relevant client names, addresses and trade records going back to July 1.
The court was told on Monday that the investigation by Black Cat involves people who engaged in what is known as underbidding, where offers were made below the prevailing price and withdrawn before being executed.
Mr Penrose said the intra-day placement and cancellation of orders for Black Cat shares was "at the heart" of the campaign being investigated.
"They were placed and removed - placed or fiddled with," he said. Mr Penrose said Black Cat was trying "to identify the underbidders across the campaign as a whole".
He told Justice Stephen Lemonis that Black Cat might have to go back to the ASX or seek information from other brokers about the suspected campaign.
Justice Lemonis granted the document orders sought by Black Cat involving Barclays Capital, saying its legal teams had spelt out a potential cause of legal action.
"That does not say anything about whether that cause of action will succeed or the strength of that cause of action" the judge said.
He limited the time and scope of confidentiality orders sought by Barclays Capital, but gave both parties a clear and quick pathway to apply to the court if any issues arose relating to the document exchange process.
Black Cat operates the Kal East, Paulsens and Coyote gold projects, and is working on the Mt Clement antimony project.
Its share price surged from 80 cents in early July to $1.43 in mid-October as the gold bullion price surged, but plunged back below $1 when the gold price eased in late October.
The stock began recovering in late November as the gold price surged and traded as high as $1.56 in late January. It closed at $1.40 yesterday, giving it a market capitalisation of $1.02 billion.
In granting the orders in December requiring the ASX to identify the brokers behind the suspect trades, Justice Hill said there were reasonable grounds to believe the market operator would have the information that would identify the bidders or potential bidders.
"Where there is a suspicion that market manipulation has occurred, it is in the interests of justice that the applicant be provided with documents that will enable it to take action in respect of the wrong to which it complains," he said.
