Harried investors are mad as hell at the circus that is the stock market, fed up with the corporate clowns and they aren't taking it anymore.

Nope, they won't stand for anything less than a squeaky-clean board of directors. Elect a dubious character to your board and investors will make you pay big time ...

Oops! Strike that last paragraph from the record. Get me rewrite!

In the sad-sack world of investing, the circus is alive and well. Conrad Black lives. Yes, that Conrad Black, the one who once referred to corporate governance as a "fad."

Martin Ferguson

Yikes! Black creates shareholder value as a director of a public company. In six days. Believe it.

Frankly, the fickle market doesn't much give a damn about the reputations of board members. In fact, sometimes the market will reward you handsomely for creating attention-grabbing headlines by electing a board member with his reputation in tatters.

A wee Calgary oil company has done just that. Blackpool Resources recently elected former media mogul Conrad Black to its board at a time when the ex-CEO of Hollinger Inc. and its operating subsidiary, Hollinger International, is facing a plethora of legal and regulatory challenges.

Although Black is still a member of the British House of Lords, his career as a director of Blackpool lasted six days before the TSX Venture Exchange pressured him into stepping down on July 6 because of regulatory action that has been taken against him by the Ontario Securities Commission.

In March, the OSC accused Black, several of his colleagues and Hollinger Inc. of improper financial disclosure and making "misleading or untrue" statements in official filings. Black also faces a criminal investigation and civil suit from the U.S. Securities and Exchange Commission and is being sued, along with associates, by Hollinger International for $542 million US. None of the allegations against Black have been proved in court.

Yet, in a move that many suspect was designed to drum up interest in Blackpool and its sleepy shares, Blackpool (TSXV:BPX.a) ushered in Black as a director at its annual meeting on June 30 and announced that Lord Black of Crossharbour would be investing $1 million in the company.

The day before Black was elected, Blackpool's stock closed at 50 cents. In its first full day of trading after Black was elected, the shares rocketed as high as $1 and closed at 85 cents on volume of 366,200.

Stock in the Calgary junior oil and gas play had averaged volume of just over 5,000 shares in the two weeks before Black became a board member (the shares dipped 12 per cent the day after Black's resignation).

So, let's be honest here. Just about anyone can get a seat on a public company board in Canada - for a few days at least - and be embraced by the stock market. No doubt Black could be elected to another board of another obscure junior company and the market would cheer like mad before the TSX intervenes.

"I wouldn't touch it (Blackpool stock) with a 10-foot pole," says Peter Linder, adviser for the DeltaOne Energy Fund, which emphasizes junior oil and gas companies. "Any company that would have Conrad Black on the board is a company that I would not want to deal with."

Linder says he has never owned shares in Blackpool, but added that "if I'd have owned the stock (when Black was elected), I would have sold everything into the rally.

"I think any smart money would have fled on the runup," says Linder. "Blackpool is really a non-event in terms of the industry (the company's current production is 225 barrels of oil equivalent per day). I'm sure no reasonably sized producer would have had him on the board. It makes absolutely no sense for a company that has a good management team, good projects and good drilling opportunities to add someone like Conrad to the board.

Blackpool said it disagreed with the exchange's stance on Black and is considering appealing the decision.

The company also said Black would be a "special adviser" to the company and that he would still proceed with the $1 million investment.

When Black was elected as a director, Blackpool CEO Ron Shepherd described him as "one of the country's most accomplished and pre-eminent business figures."

Curiously, Shepherd made no mention of Black's troubles and the fact that he has resigned from several boards since the Hollinger scandal broke two years ago, including Hollinger Inc., CanWest Global Communications, Canadian Imperial Bank of Commerce, Sotheby's Holdings and Brascan Corp.

Shepherd also cited Black's experience in the oilpatch as former chairman of Norcen Resources in the 1980s.

According to the SEC, while Black was chairman of Norcen, he misled investors when he said that Norcen was acquiring shares in Hanna Mining for investment purposes.

Although Black admitted no wrongdoing in that case, he signed a "consent decree" not to breach SEC rules in the future.

Yet, in a red-hot energy market, apparently none of the controversy swirling around Black matters to those who pumped their dollars into Blackpool after the company made headlines by electing Black as a director.

The challenge for Blackpool now is to sustain investor interest and avoid becoming just another run-of-the-mill penny stock.

Of course, that shouldn't be too difficult, judging by the goofiness of the market.

Blackpool could always usher in another headline grabber currently embroiled in a corporate governance scandal to the board to replace Black.

That's a tough act to follow, but a couple of names come to mind - Vic De Zen, the former chairman of Royal Group Technologies who has been under investigation by the RCMP; and Boaz Manor, the man embroiled in the hedge fund scandal involving Portus Alternative Investment Management.

Or they could elect a class act to the board and watch the market shrug its shoulders.

* SAGE WORDS: "When in 1994, Hollinger (International) went public, Black retained voting control, and so he never worried much about outside investors, behaving more like a feudal lord than a CEO of a publicly traded entity."

- James Surowiecki, The New Yorker magazine, February, 2004.

Hot Stock

UEX INC.

TSX:UEX $2.75 Up 92 cents (+50.3%) on 13.28 million shares (based on weekly stats through July 14 for Canadian stocks over $1)

California investment guru Jim Dines has dubbed Saskatchewan "the next boom province" because of its rich uranium deposits. That may be an overstatement but there's little doubt about uranium's allure to speculators who piled into UEX after the Vancouver exploration company released encouraging interim results from a drilling program in northern Saskatchewan. The stock traded over 12 million shares in two days.

Cold Stock

COOLBRANDS INTERNATIONAL

TSX:COB.SV.B $2.55 Down $1.55 (-37.8%) on 7.13 million shares (based on weekly stats through July 14 for Canadians stocks over $1)

Even Eskimo Pie brain freeze couldn't stop stockholders of Coolbrands from dumping their shares as the Markham company delivered frigid quarterly results. The maker of frozen treats lost $6.9 million or 12 cents a share compared to a profit of $11.2 million or 20 cents per share a year ago. The stock has crashed almost 90 per cent since Coolbrands lost a lucrative contract with Weight Watchers International a year ago.

Financial data compiled from The Canadian Press Stockgroup

(Gyle Konotopetz can be reached at gyle@businessedge.ca)
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