Source: The Canadian Press

CIBC has suspended two Montreal investment advisers accused of illegally leaking information about several big Canadian takeover deals.

“As result of the charges filed by the staff of the Ontario Securities Commission yesterday, these two individuals have been suspended immediately,” CIBC said in a statement Friday.

“We have and will continue to co-operate fully with the OSC investigation,” CIBC said. “We have no further comment at this time.”

A Toronto corporate lawyer, Mitchell Finkelstein, is also accused of having been involved in the alleged scheme.

One of the transactions involved the takeover of Placer Dome Inc. of Vancouver by Toronto-based Barrick Gold Corp. (TSX:ABX) in 2005.

Another was the takeover of Canadian door manufacturer Masonite International by Kohlberg, Kravis Rogers & Co. in 2004.

In a statement of allegations, the Ontario securities watchdog estimates the two investment professionals, their friends and family would have made about $2.6 million by buying shares before deals were announced and selling them afterwards at a profit.

The Ontario Securities Commission alleges they were fed advance, secret information about a total of four corporate takeovers in 2004, 2005 and 2007 by the Toronto lawyer, whose firm had clients involved in the deals.

Finkelstein, a partner at Davies Ward Phillips & Vineberg, allegedly passed the information to Paul Azeff, a friend at the Montreal office of CIBC World Markets and Azeff passed it to a co-worker, Korin Bobrow.

The OSC alleges Azeff and Bobrow engaged in illegal insider trading by virtue of their positions at CIBC’s investment arm (TSX:CM) and that all three men illegally tipped other people to the deals.

The regulator says the two Montreal men knew or should have known that they were prevented under securities law from making use of the inside information.

The allegations, announced Thursday by the regulator, have yet to be tested and haven’t been proven.