An Alberta Securities Commission (ASC) panel has tossed out illegal insider trading charges against six individuals, ruling that the information they had when they traded didn’t represent inside information.

The ASC announced today that a regulatory panel has ruled that Robert Henry Stan, Anita Louise Roncin, Eugene Hiroshi Nagai, Timothy Peter Riordon, Kevin Ronald Wade and Kathryn Paula Stan “did not engage in illegal insider trading” of shares of Alberta-based coal mining company, Grand Cache Coal Corp.

ASC staff alleged that company insiders (and the wife of an insider) illegally sold, or illegally encouraged another investor to sell, their shares in Grande Cache because they had knowledge of information about the company which, if generally disclosed, would reasonably be expected to have had a significant negative effect on the firm’s share price.

However, the panel concluded that the alleged material facts, did not actually amount to undisclosed material facts, so there was no breach of Alberta securities laws or conduct contrary to the public interest. As a result, the allegations against all of the respondents were dismissed.

The basic question for the panel was if Grande Cache disclosed in May 2008 that its lower production resulted in lower than forecast sales volumes, would that additional disclosure reasonably have been expected to have a significant effect on the market price for its shares.

It found that there was no reasonable expectation that more specific disclosure of its missed sales projection would have a significant effect on the share price for a variety of reasons, including: it disclosed lower production and higher sales costs, it explained the reasons for lower production, quarterly results are less significant than annual results, and that the firm could not have been expected to predict the global financial crisis that began in autumn 2008.

While it found that no illegal insider trading had taken place in this case, in its ruling, the panel also “remind[s] all market participants of the care and scrutiny that must be undertaken by those closely associated with a reporting issuer to ensure that all material information has been generally disclosed before they either purchase or sell that issuer’s securities.”