The Ontario Securities Commission (OSC) Friday ordered former analyst Ming Chao Zhao, a.k.a Michael Zhao, of Toronto to pay roughly $1.1 million for insider trading.
According to the OSC, between June 2010 and December 2011, while an investment banking analyst at BMO Nesbitt Burns, Zhao used information available to him through his job to purchase shares in five reporting issuers, all of which were involved in merger and acquisition transactions. He accessed the information about the transactions through a shared network drive.
The shares were bought through an online discount brokerage account with TD Waterhouse. The TD account had been opened by a family member with a different last name.
Zhao’s trading in the account was not disclosed to BMO contrary to its compliance policies.
In the OSC settlement agreement, Zhao admits to orchestrating the trades and having realized a profit of $416,719.
As part of the settlement, Zhao was ordered to pay an administrative fee of $750,000 and to disgorge the total profits made from the trades. As well, Zhao was ordered to pay an additional $30,000 in costs.
As well, the OSC also permanently banned Zhao from becoming or acting as a registrant or becoming a director or officer and from trading securities, with the exception of mutual funds, exchange-traded funds and index funds in a registered account. Finally, Zhao cannot become a director or officer of an issuer for 10 years.