A hearing panel of the Ontario Securities Commission (OSC) has approved a settlement with former mutual fund manager Ben Cheng in which he admitted tipping insider information about Amaya Gaming Group Inc., the OSC announced on Friday.
The settlement imposed a six-year ban on Cheng, a former co-chief investment officer and portfolio manager with Toronto-based Aston Hill Asset Management Inc., and ordered him to pay a $350,000 administrative penalty and $50,000 in costs.
According to the settlement agreement, Cheng admitted that in June 2014, he passed along insider information about plans for a major acquisition by Amaya, which he learned through Aston Hill’s participation in a financing for the company.
Cheng tipped John David Rothstein, then senior vice president and national sales manager at Aston Hill, about the Amaya deal. He also told Rothstein to pass along the tip to Frank Soave, an investment advisor at CIBC World Markets, in an effort to prevent Soave from pulling business from Aston Hill.
“Mr. Cheng’s involvement in insider tipping was a serious breach of Ontario securities law. The improper use of insider information leads to unfair advantages for those who use it and can undermine confidence in the integrity and fairness of public markets,” the panel stated in its oral reasons for approval.
Cheng also admitted to misleading OSC investigators and to disclosing to Rothstein what he told investigators, even though his testimony was supposed to remain secret.
In addition to agreeing to the industry ban and monetary sanctions, Cheng agreed to co-operate with the OSC’s investigation into insider trading and tipping involving Amaya — including a commitment to testify as a witness for the OSC, if required.
As a result, the panel stated, Cheng was “granted substantial credit for co-operation.”