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The taxpayer, a certified financial analyst, was the co-head of institutional trading at a Canadian investment firm and an investment industry veteran with over 25 years of experience. He was licensed by securities regulators in several Canadian and U.S. jurisdictions, including as a trader and dealer in securities.

In the first two months of 2009, he liquidated his holdings in both of his brokerage accounts and converted them to cash. He testified he did this because he originally intended to pay down his mortgage when it was scheduled to renew. Instead, he saw “an unprecedented opportunity to invest in stocks that met his investment criteria given that the market was considered by many to have bottomed out in its decline during the financial crisis that started to hit the markets in 2008.”

In the remaining ten months of 2009, he bought and sold stocks of 34 issuers costing about $2,500,000, involving 38 purchase transactions and 50 sale transactions, realizing a total gain of about $550,000. His average hold period of stocks was about 50 days and his average return on any particular stock was about 30 per cent.

He testified that he gleaned information on the markets from his day job, even though he did not necessarily need to know this information to do his job. In addition, he estimated he spent about 45 minutes daily reading and watching business and market news. He also followed market analysts and research.

In five cases, he sold his stock positions within the first week of buying them. In ten cases, sales began within 30 days of purchase and in 20 cases, within 60 days. In at least one other case, he started selling the day after he bought – even before his purchase settled – for a gain of less than 1 per cent. In his Canadian account, the longest hold period was 274 days while in his U.S. account, the longest hold period was under 30 days.