An Alberta Securities Commission (ASC) panel has dismissed illegal insider trading allegations against a Calgary couple, ruling the circumstantial evidence collected by ASC investigators was not enough to prove the allegations.

The ASC dismissed allegations that two former employees with Pembina Pipeline Corp. (PPC), Sherry and Gary Hagerty, traded on inside information when Gary bought stock in Provident Energy Ltd., while that company was engaged in takeover discussions with PPC. ASC staff alleged that they traded with knowledge of the takeover talks, contrary to securities laws and the public interest.

However, the panel ruled that the illegal trading allegations, whichlargely relied on circumstantial evidence, were not proven. The decision notes that the evidence didn’t include any specific event that alerted them to the existence of a takeover deal. Instead, it says that ASC staff argued that the trade was uncharacteristic for the couple, that it was highly profitable, its timing was suspicious, that their explanation lacked credibility, that their subsequent conduct demonstrated consciousness of guilt, and that Sherry had the opportunity to learn of the acquisition on the day before the trade.

According to the decision, the Hagertys argued to the contrary, and suggested that the case was based on “the mere possibility that something nefarious happened”.

The panel did find the trade somewhat suspicious. However, it said, “That the trade was somewhat uncharacteristic and profitable, and its timing conspicuous, does not make it illegal. Nor does this enable us to infer, as illegality would require, that Sherry had inside information.” It concludedthat there wasn’t “clear and cogent evidence” that Sherry learned of the combination the day before the trade. As a result, it found that the allegations were not proven.

However, the panel did find that Sherry Hagerty made an untrue statement to ASC investigators, which contravened securities laws.”Whenever staff’s oversight function is impeded by the provision of untrue statements to the ASC, the public interest is put at risk,” it said. It will consider possible sanctions for that violation at a future hearing.

The panel tentatively set July 2 as the date to schedule a timetable for the delivery and hearing of evidence into possible sanctions.