A Vancouver man who admitted to insider trading has agreed to a three-year trading ban and to make a payment equal to the illicit trading’s profits plus 50% to a regulator.
In a settlement with the British Columbia Securities Commission (BCSC), Aaron Keay admitted to violating the public interest when he directed a couple of relatives to purchase shares in a venture company when he had inside information about the company — namely, that it was going to be involved in a reverse takeover transaction (RTO) — and when he told the TSX Venture Exchange (TSXV) that he wasn’t aware of any trading in the shares.
The company’s stock was halted in May 2022, given the pending transaction, and trading didn’t resume until February 2023, after the deal was approved.
Once trading resumed, the shares acquired by Keay’s relatives could have been sold for a profit of $200,000 to $225,000, the regulator said — although, at this point, the shares haven’t been sold.
According to the settlement, Keay admitted that directing the share purchases amounted to insider trading, as he was deemed to be in a “special relationship” with the company, and had known about the RTO, which hadn’t been publicly announced.
He also admitted to violating the public interest by denying knowledge of the trading to the TSXV.
To settle the case, he agreed to pay $337,500 to the BCSC — which represents the potential insider trading profits plus 50% — along with a three-year trading ban and a one-year ban on serving as a director or officer of a public company.
“It is a significant mitigating factor that Keay voluntarily approached the executive director about settlement and entered into this settlement agreement prior to the issuance of a notice of hearing, which has resulted in savings of time and costs,” the settlement noted.
The settlement also said that Keay “has expressed remorse for his conduct.”