The Ontario Securities Commission has filed allegations against Eugene Melnyk, chairman of Biovail Corp., accusing him of failing to file proper insider trading reports.

In its statement of allegations, the regulator said the filings relate to trades in Biovail shares that were held in a number of trust accounts set up by Melnyk in 1996 to hold a large chunk of Biovail stock for himself, his family members and friends. The trustees were based in the Cayman Islands.

The OSC also made allegations against Roger Rowan, president of brokerage Watt Carmichael Inc. and a former Biovail director. He was responsible for much of the trading in the trust accounts that held the Biovail shares, although Melnyk “exercised or shared control or direction” over the accounts, the OSC said.

Melnyk and Rowan repeatedly breached Ontario securities law by failing to file insider trading reports concerning a large number of trades in the trust accounts in 2002, 2003 and 2004, the OSC alleges. As many as 5,000 trades were made in those accounts during that period, the OSC said.

In addition, the OSC allegations stated Melnyk “acted contrary to the public interest by failing to disclose his complete holdings (and changes in his holdings) to the public.”

Melnyk also failed to provide “complete and accurate information in 2004, 2005 and 2006 circulars, the OSC alleges.

The OSC also alleges Rowan traded Biovail shares for the trust during “blackout” periods when trading by directors and employees was prohibited, and that Melnyk “knew or should have known” that the trading was taking place and didn’t stop it.

The commission alleges Rowan and Watt Carnmichael failed to produce documents in a timely manner and altered a document to conceal information from OSC staff.