Paradigm Capital Inc., a privately owned investment dealer in Toronto, is in damage control after a confidential, 38-minute conference call relating to a client's equity offering mysteriously found its way onto YouTube.

The investment industry's self-regulatory body, the Investment Industry Regulatory Organization of Canada (IIROC), would not say whether it is investigating the incident, but a source in the financial community said it's likely there have been complaints.

The call was an interview with Dick Weir, co-founder and CEO of Texas energy-storage company EEStor Inc. EEStor is a secretive start-up developing what many are calling a "game-changing" battery system for electric cars, consumer electronics and energy storage on the grid.

Toronto-based Zenn Motor Co., a maker of low-speed electric cars that trades on the TSX Venture Exchange, owns a minority stake in EEStor and its future is largely tied to the U.S. firm's success. In early July, after EEStor said it had reached a major technical milestone, Zenn hired Paradigm Capital to co-lead a $10-million equity offering that would be used by Zenn to increase its ownership in EEStor to 10.7 per cent from 3.8 per cent.

On July 7, Zenn filed a short-form prospectus for the offering, which closed on July 14 and raised $9.28 million. A week later, on July 21, an audio recording of a telephone interview with Weir appeared on YouTube.

During the conversation, Weir offered details about EEStor's ownership structure, its industry relationships, the status of its technology and how much it plans to sell its energy storage system to Zenn under an exclusive contract.

Ian Joseph, president of Paradigm Capital, confirmed his company had facilitated the call to gather research for potential purchasers of Zenn shares. "We serve institutional investors," he said. "This is a normal part of the process."

There is nothing wrong with conducting such research on the part of investor clients, said Connie Craddock, vice-president of public affairs at IIROC. "What matters is whether it's material, non-public information."

Asked how the recording made it onto YouTube, Joseph said the source of the leak has not been verified. "I have no idea," he said, adding that his firm acted quickly to remove the recording from the Internet site and has received no complaints. "Nobody from our firm was responsible for it being on the Internet," he said.

But Paradigm, in what sources on Bay Street are calling a huge embarrassment for the company, still did not stem the flow. The recording had been live on the Internet for roughly a day before being removed, long enough for the community of bloggers that religiously follows EEStor to make transcripts and audio copies.

"Paradigm is going to take a very bad kick in the pants by the regulator, either publicly or quietly," said one source in the investment community.

The big question is whether the information in the interview is, in fact, material. If it is, it raises the issue of whether institutional investors should benefit from information – in this case, in their possession for two weeks – not generally available to retail investors.

Zenn CEO Ian Clifford said in a statement that the questions posed to Weir were "general in nature" and that the "essence of the responses were all within previously disclosed public information" andno additional disclosures were necessary, he said.

Buzz on Internet blogs that follow EEStor suggest the details of the Weir conference call did reveal new information.

Institutional investors who took part in Zenn's offering bought shares at $3.50. Since the filing of the prospectus on July 7 to when the audio recording was found online July 21, Zenn's shares jumped 45 per cent to $4.98. Yesterday, the shares rose 28 cents to $6.40.