The Ontario Securities Commission (OSC) is to consider settling insider trading charges against a former BMO Nesbitt Burns analyst.
The OSC announced that it has slated a hearing for May 17 to consider whether to approve a settlement with Ming Chao Zhao, a former investment banking analyst with BMO, who is accused of insider trading in five stocks. According to the regulator’s allegations against him, Zhao came into possession of undisclosed material information about five companies (Menu Foods, Consolidated Thompson, Forzani, Pacific Northern, and Canmarc) as a result of his position at BMO.
In particular, it says that he learned of pending M&A deals involving the five firms, as BMO was involved in these M&A transactions as a financial adviser, and that he had access to relevant documents about the deals on a shared network drive.
The OSC charges that he accessed that information on the shared drive, and then traded ahead of these deals through an online discount brokerage account with TD Waterhouse, which was held by a family member with a different name. The existence of the account was not disclosed to BMO, as required. That trading earned a profit of approximately $416,000, it says.
The OSC is alleging that Zhao was considered to be in a special relationship with these firms as a result of his position at BMO, and that his trading amounts to illegal insider trading and conduct contrary to the public interest. The allegations have not been proven, and the terms of the settlement will only be revealed if the commission approves the deal that was reached between OSC staff and Zhao on May 2.