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A cannabis company executive who allegedly engaged in insider trading, which ultimately proved unprofitable, is being sanctioned in a settlement with the Ontario Securities Commission (OSC).

Ontario’s Capital Markets Tribunal approved a proposed settlement between the regulator and Thomas John Finch, who was director of corporate development at Cresco Labs Inc. — a cannabis company that, in 2020, sought to acquire Liberty Health Sciences Inc.

According to the settlement, Finch was involved in the merger discussions between Cresco and Liberty. However, they didn’t reach a deal. Instead, Liberty was eventually bought by a rival bidder, Ayr Strategies Inc.

The OSC alleged that, at the time, Finch had access to inside information, including the terms of competing offers for Liberty and the progress of acquisition talk. It said that, in late 2020, he acquired $143,406 worth of Liberty shares in two self-directed trading accounts.

“At the time Finch bought the shares, he possessed material non-public information about Liberty. He admits that information he learned about Liberty during the negotiations formed at least part of his decision to buy the shares,” the tribunal noted.

When the deal between Ayr and Liberty was announced in December 2020, Finch had a notional trading profit of profit of $117,854 on his Liberty shares. However, he didn’t cash out.

Instead, his shares in Liberty were exchanged for Ayr shares, which he continued to hold, and ended up selling for about $7,336.

As the tribunal noted “…he lost almost all of the $143,406 he invested.”

While Finch ultimately lost money on his trading, the tribunal stressed that his “misconduct was serious.”

“Insider trading is a fundamental abuse. It is unfair to other investors, and it erodes public confidence in the capital markets. Finch used information he gained through his employment for his personal benefit, contrary to his employer’s policy, and contrary to Ontario securities law,” it said.

Under the settlement, Finch agreed to be banned for 10 years, to pay a $235,000 penalty and $22,336 in costs — the financial sanctions have already been paid, the tribunal noted.

The panel ruled that the proposed settlement was “reasonable and in the public interest” and it approved the resolution.