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A Bombardier Challenger 650 business jet on the tarmac before the start of the 2017 Asian Business Aviation Conference and Exhibition at Shanghai's Hongqiao Airport on April 10, 2017.JOHANNES EISELE/AFP

Quebec’s securities regulator says it is probing stock transactions by Bombardier Inc.'s executives as trouble builds for the Canadian plane and train maker.

The Autorité des marchés financiers (AMF) made the announcement late Thursday, saying it is reviewing the transactions made under Bombardier’s implementation last August of a special share sale plan for senior executives, as well as various announcements made by the company since then.

The executives include president and chief executive officer Alain Bellemare; chief financial officer John Di Bert; and divisional presidents David Coleal, Fred Cromer and Laurent Troger.

On Aug. 15, the day the company established the plan, Bombardier’s Class B shares closed at $4.64. They ended Thursday’s session at $2.09. The AMF said it asked the company to suspend until further notice any sale of securities under its Automatic Securities Disposition Plan (ASDP) and to notify brokers of its request.

The probe adds to the challenges for Bombardier and for Mr. Bellemare. The company’s shares have dropped since last Thursday’s disclosure that it would need to tap US$635-million in funds from selling its Downsview Toronto property to meet a goal of breaking even on a cash-flow basis this year, plus or minus US$150-million. It also announced it would lay off 5,000 workers and sell assets for proceeds of US$900-million.

The regulator’s announcement is an escalation of actions from Wednesday, when it confirmed it would look at recent movements in Bombardier’s share price as part of regular systematic checks. “What we’re announcing today is that we’re intensifying those verifications," AMF spokesman Sylvain Théberge said on Thursday. The regulators will analyze the sequence of events starting when Bombardier put the ASDP in place up until the third-quarter earnings announcement last week.

Bombardier said it will co-operate with the AMF. It said it has taken “necessary measures” to halt all sales of securities under its share sale plan until further notice. The ASDP had been reviewed by the AMF prior to its establishment in August, the company said.

“The AMF is simply doing its job. It’s part of its overall mandate to conduct these reviews. The organization monitors all announcements and movements on markets under its jurisdiction,” said Bombardier spokesman Olivier Marcil.

“With the pressure on Bombardier’s stock, preceding and following the release of our financial results on November 8, some had raised doubts about trading that may have occurred in the last months. In this context, we welcome the review of the AMF and we hope that it will be conducted as quickly as possible. We will fully collaborate with the AMF’s review.”​

Bombardier announced on Aug. 15 that it was setting up the ASDP, which it said was “in accordance with applicable Canadian provincial securities legislation.” The plan allows certain senior Bombardier executives to exercise stock options and sell securities as part of their overall performance-based compensation, the company said in a news release at the time.

Stock-trading records show 12 Bombardier executives placed more than 35 million options and other stock awards in the plan. At Aug. 15′s closing price of $4.64, the stock was worth more than $110-million, The Globe and Mail calculates. Many of the stock options are set to expire in 2022.

Under Canadian securities laws and Bombardier’s own trading policies, the company’s senior executives are subject to limits on their ability to sell shares of the company, the plane maker said in the August news release. The special plan addresses this issue by permitting trades to be made via pre-arranged instructions given when participants are not in possession of any material undisclosed information, the company said.

Automatic share sales plans allow senior executives to exercise options and sell shares without running afoul of insider trading regulations, which forbid executives from trading shares while they have material information that has not been disclosed to shareholders. Companies are only supposed to create new automatic plans at a time when executives do not have undisclosed material information.

Bombardier said sales of shares under the plan would be carried out by an independent broker following the trading parameters, price and volume limits and other instructions set out by the executives, the company said. Participants in the plan will not exercise any further discretion or influence over the disposal of shares, the company said.

“The ASDP plan reflects sound corporate governance and compensation policy,” Bombardier said in the August release. “It allows for the realization of earned long-term incentive compensation in an organized manner.”

Under the program, top executives transferred control of their securities to independent securities broker, Solium Capital, starting Aug. 15. The company imposed a 30-day delay before sales could begin.

Bombardier’s shares hit a seven-year high of $5.45 on July 11, but fell sharply in October and early November after the company released disappointing financial results, unveiled major job cuts and revealed it would sell off a string of assets. Bombardier’s shares have lost more than $6-billion in value since the share-sale program was announced in mid-August.

There are no reports of option exercises or share sales by Bombardier executives under the program so far, but some transactions under the ASDP do not have to be reported within the usual five-day time frame.

Securities filings on Canada’s SEDI disclosure system show only that executives began transferring securities to the control of Solium Capital starting Aug. 15.

A prominent Quebec business columnist, Michel Girard, has written repeated criticisms since August about Bombardier’s decision to set up the automatic share sale program, saying the company should not have allowed any share sales during a period in which Bombardier was planning a major restructuring program.

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