Ask Donald Lawson if he remembers the Windfall stock scandal of 40 years ago, and the veteran investment dealer replies grimly: "More than I want to."
While summer 1964 evokes memories of the Beatles, the parliamentary flag debate and the Vietnam War, veteran Bay Street players have a different recollection: a wild speculative ride that ended in losses, tears and investigation.
That summer, Mr. Lawson's company was underwriting shares for Windfall Oil and Mines Ltd., a junior company controlled by the respected mining promotion couple, George and Viola MacMillan.
By the end of the summer, the MacMillans were branded as market manipulators, and "Windfall" had become shorthand for corruption and betrayal, in the same way that Enron and WorldCom are today.
It was "a tense time," says Mr. Lawson, now 75, although he says the firm he headed, Moss Lawson & Co., came out of the turbulent period with its reputation intact.
Not everyone did. Amid feverish speculation about potential mineral finds in Northern Ontario, Windfall stock rose by 10 times in four weeks before crashing amid revelations that its core samples contained nothing of commercial value.
That crash sparked an Ontario Royal Commission spearheaded by Mr. Justice Arthur Kelly, who issued a damning indictment of the MacMillans, various public officials, and the limp oversight of mining promoters by the Toronto Stock Exchange and the Ontario Securities Commission.
"It had a cathartic impact on the community perception of what was happening in the mining market," says James Baillie, who in 1964 was a young lawyer assisting in the Kelly inquiry and later became OSC chairman. "I think Kelly's report moved us along the path of securities regulation in a very effective way."
It was part of the process that nudged the TSE from being a cozy brokers' club to an institution better devoted to serving the public, says Christopher Armstrong, a York University historian who has written a two-volume history of Canadian financial markets.
"It wasn't the dawn of a new day or anything, and it doesn't mean people aren't going to sell bum mining stock," Prof. Armstrong said, but it did push regulators and laws in the right direction.
It blackened the reputation of Viola MacMillan, who was the well-regarded doyenne of the mining industry. The MacMillans, who sat on core samples for four weeks without disclosing assay results, were accused of selective dissemination of the truth, while leaving the distinct impression they were on the verge of hitting something big.
James Scott, the reporter for The Globe and Mail who covered the case, overheard George MacMillan commenting in a downtown Toronto bar: "If you want to be poor all your life, don't buy Windfall."
The MacMillans escaped penalties in the Windfall escapade, but faced charges for wash trading -- creating the false impression of trading activity through bogus accounts -- involving another of their companies. George was let off but Viola, who commanded the stock-trading side of the partnership, served eight weeks of a nine-month jail sentence.
But Windfall was also a product of its time, a zesty period when Northern Ontario was alive with the possibility of riches. There had already been massive uranium finds. Then in April, 1964, Texas Gulf and Sulphur Co. had confirmed a huge discovery of zinc, copper and silver in Kidd Township, near Timmins.
That set off a flurry of activity as promoters pushed the stock of any company with claims in the general area.
It led the MacMillans to buy claims near the Texas Gulf find. It drove Windfall stock from 56 cents to $5.60, as rumours floated that George MacMillan was carrying around rich samples in the trunk of his car.
The MacMillans not only refrained from telling the truth about Windfall, Mr. Justice Arthur Kelly wrote in his report, but the statements they did make were framed to be misleading and "must have been calculated so to be."
Ms. MacMillan's tale contains arresting parallels with that of home-style maven Martha Stewart, another strong woman with a reputation for making it in a male-dominated world.
Like Ms. Stewart, Ms. MacMillan became the target of a regulatory and legal backlash after a period of speculative excess.
She attracted both critics and defenders: Some saw her as a victim of her own greed and hubris; to others, she was made an example and scapegoat when others guilty of worse crimes were running free.
Like Ms. Stewart, recently convicted of lying to authorities in an insider trading scandal, she was finally penalized for a violation that was tangential to the central allegations against her.
The period was stressful for Mr. Lawson, who during July, 1964, was pulled between the demands of Ms. MacMillan who, like Ms. Stewart was considered by many a control freak, and keeping the TSE informed on how the market in Windfall shares was being managed. In his view, he did the best he could.
The MacMillans were basically good people who made a mistake, says Mr. Lawson, who still does private client work for HSBC Securities, which acquired Moss Lawson six years ago. But after Windfall, Moss Lawson got out of the business of underwriting junior mining issues.
As Windfall led to a tightening of TSE listings, it drove junior mining stocks, as well as their promoters, off the Toronto exchange and on to the Vancouver Stock Exchange, which became the leading juniors market.
Prof. Armstrong said it signalled a wider skepticism about the fairness of these speculative markets. The scandal, after all, implicated Ms. MacMillan, a pillar of the mining industry as a key builder of the Prospectors and Developers Association of Canada.
It was always assumed there were scoundrels in the penny stock game, but Windfall showed scandals could emanate from ostensibly respectable circles.
It also exposed the absolute compliance of regulators. One OSC official, whose wife actually owned Windfall shares, told the Kelly inquiry that a particularly demanding TSE request for disclosure by the MacMillans was out of the question. "You just don't go to Viola MacMillan and say: 'I want this,' or 'We are going to do this.' I mean, you don't do that to Viola MacMillan," he told the Kelly inquiry.
The massive mining runup of July, 1964, was one of those orgies of speculation when a hot market in a certain commodity pulls in all types of people, including inexperienced punters who are sitting ducks for hucksters and promoters.
These cycles of greed end in huge crashes and big losses, followed by tightened regulation and a retreat of the bitterly burned amateurs. So it happened with Windfall, with another Canadian mining sham, Bre-X Minerals Ltd. in the mid-nineties, and with the Internet and telecommunications bubble of the late nineties -- and it will happen again.
"It was one of those periods when people who aren't ordinarily in the market get into the market," says George Linton, who was the Report on Business's market reporter at the time of Windfall. "They get in there, they get burned, they stay away for another 20 years and they come back."
But Viola MacMillan's later career should be encouraging for Martha Stewart because it proves there are second acts for fallen doyennes.
After her jail term in 1967, she regained her stature in the mining industry, won a legal pardon, and, before her death at 90 in 1993, was honoured with the Order of Canada.
Chronology of a stock scandal
April 16, 1964: Texas Gulf announces massive copper and zinc find near Timmins, Ont., setting off a wave of speculation.
April 18: Viola MacMillan accumulates claims near the site, which end up with Windfall, controlled by her and her husband George.
July 3: George MacMillan extracts core sample from the Windfall site.
July 6: Shares of Windfall, recently below 60 cents, soar to record $2.02 in heavy trading as rumours fly of new Timmins strike.
July 13: TSE demands up-to-date statement of assay results; Windfall says core samples of completed drilling have not been sent for assay.
July 22: The Globe and Mail reports that "millions of dollars are being gambled daily on gossip and rumour and hope despite clucking sounds from Toronto Stock Exchange officials that are intended to warn the unsophisticated about the dangers of playing the game."
July 27: Telegrams of bogus assay results sent to newspapers from unknown source.
July 30: Stock rises amid rumour that assay result is excellent with heavy copper and zinc content. But after trading closes, Windfall discloses that assays show no value. Having once traded up to $5.60 and closing at $4.15 that day, shares plunge overnight to 80 cents.
July 31: Opening delayed for 35 minutes because of rush of "sell" orders.
Aug 5: Ontario Premier John Robarts announces Royal Commission to probe Windfall fiasco. Mr. Justice Arthur Kelly is later named commissioner.