Did Goodale's income trust announcement leak early?

Some market observers are wondering if the federal government's announcement on income trusts leaked early, allowing those in the know to profit.

• FROM Nov. 23, 2005: Ottawa cuts dividend taxes to 'level playing field' with income trusts

On Wednesday, just before 6 p.m. EST, the federal finance department officially announced it would cut the tax on dividends and would leave trusts alone. That's the type of news that is always announced after stock markets close at 4 p.m. EST because it would give a boost to those types of securities.

But trading in many trusts and dividend-paying stocks became much heavier than usual in the hour or two before the market's closed on Wednesday, and share prices rose sharply.

Forensic accountant Al Rosen said it looks to him that Bay Street knew the details of Goodale's announcement well before he made it.

"Clearly, there was a leak between 2 and 4 [p.m. EST]," he told CBC News.

For example, the share price of BCE, which pays a rich dividend, climbed 4.9 per cent on Wednesday. The last hour featured a noticeable uptick in price and volume.

Similarly, income trusts like Aeroplan Income Fund and Yellow Pages Income Fund saw their unit prices jump 6.1 per cent and 6.6 per cent, respectively. Volume and prices turned up in late afternoon trading.

"We are seeing much greater rises that tell us someone knew or many people knew it [the coming Goodale announcement] was not just a clarification, but that dividends would be taxed at a lower rate and [income] funds would not be taxed at all," Rosen said.

Market Regulation Services, which monitors trading activity on the Toronto Stock Exchange, said it noticed unusual trading activity on Wednesday and is looking into it. A spokesperson said the spike in trading activity doesn't necessarily mean that something is amiss.

'There was no leak': Goodale

Goodale denied Friday that there had been any leak of his announcement. "We are always very careful and very discreet," he told reporters. "There was no leak."

In Monday's raucous question period in the House of Commons, opposition MPs demanded an investigation into allegations that finance officials leaked details of the income trust announcement.

Goodale called the allegations "drive-by smearing."

"Surely the minister understands the need to maintain investor confidence," Conservative MP Monte Solberg told the Commons.

"Why is he not calling in the RCMP? What is he afraid of?"

Judy Wasylycia-Leis, the NDP's finance critic, said she's asked the RCMP to look into the matter of how the new policy was announced.

Goodale said he hasn't contacted market regulators. "The last thing they need is any political engagement," he said.

"I have made inquiries within my office and within the department and I'm satisfied that all of the proper rules were followed appropriately," Goodale said outside the Commons.