A trader who alerted a hedge fund client about a couple of pending block trades that his firm was working on — information that the fund manager then traded on — is being sanctioned in a settlement with regulators.
On Nov. 7, a hearing panel of the Canadian Investment Regulatory Organization (CIRO) accepted a settlement with Robert Russell Weir, a former registered representative with Stifel Nicolaus Canada Inc. in Toronto, who admitted to violating the self-regulatory organization’s rules by disclosing potentially confidential information to an unnamed hedge fund manager.
According to the settlement, in 2020, Weir, who was head of sales and trading at Stifel at the time, told a hedge fund client about a couple of large block trades that his firm was working on and had discussions with the hedge fund about its possible participation in those transactions. One involved another dealer seeking to divest a portion of their holdings in a certain stock, while the other involved a shareholder trying to sell millions of shares in another issuer, the settlement noted.
The fund manager allegedly traded on the information about the details of the forthcoming transactions — selling the stocks short and generating potential profits of almost $120,000 in one instance, and more than $258,000 in the other.
The fund manager engaged in those trades without Weir’s knowledge, the settlement noted.
“The integrity of the capital markets requires regulated persons to adhere to the highest standards when dealing with potentially confidential information,” it said.
Under the settlement, Weir agreed to a six-month suspension, to pay a $75,000-fine and $5,000 in costs, and to complete the Conduct and Practices Handbook Course from the Canadian Securities Institute (or equivalent) before re-entering the industry.