The Ontario Securities Commission (OSC) has scheduled a hearing consider a settlement with an investment banker over allegations that he engaged in questionable trading after chance encounters led to the accidental disclosure of inside information.
The OSC said Thursday that it will hold a hearing on April 16 to consider a settlement with Richard Moore, who worked at CIBC World Markets for approximately 20 years in commercial, corporate, and investment banking (in both Canada and the United Kingdom), and was later managing director, investment banking, diversified industrials, at UBS Securities Canada Inc.
The allegations, which have not been proven, relate to trading in two different stocks, which the OSC alleges was carried out with knowledge of undisclosed material facts; although the circumstances surrounding the disclosure of the alleged inside information are unusual.
The OSC outlined its charges in a notice of hearing issued Thursday, indicating that, in 2010, Moore traded in Tomkins plc, a London Stock Exchange listing, through two offshore accounts. It says he purchased over £500,000 in Tomkins shares after deducing that it would likely be acquired by the Canada Pension Plan Investment Board (CPPIB). That conclusion, the OSC alleges, was based on both rumours that a takeover was likely, and observations from a friend and senior representative of the CPPIB.
These observations included a chance encounter at a charity function, where the CPPIB executive ran into Tomkins’ CEO, but declined to introduce Moore to the CEO, or to reveal his identity. Later that day, another person confirmed the CEO’s identity to Moore. And, after that encounter, it says that Moore initiated his trading, which generated a profit of $275,611.
In the second instance, the OSC says that Moore inadvertently received an email from a partner at private equity firm, Birch Hill Equity Partners, which revealed that it was the winning bidder in a takeover fight for HOMEQ Corp., and the price of the transaction.
“Instead of returning the email and advising [the executive] that he had received the email in error, Moore took steps to purchase securities of HOMEQ,” the OSC charges. It says that he bought $244,524 worth of its stock, and made a potential profit of approximately $46,175, based on its acquisition price.
The commission charges that this accidental disclosure put Moore in a special relationship with HOMEQ, since he learned of an undisclosed material fact from the Birch Hill executive, who was himself in a special relationship with HOMEQ, in circumstances where Moore should have known about the nature of that relationship.
The OSC is alleging that Moore’s conduct was contrary to the public interest in both of these cases. It says his trading in Tomkins “fell below the standard of behaviour expected from someone in Moore’s position and given his extensive experience in the capital markets industry.”
Ib the case of HOMEQ the OSC alleges, “Moore misused confidential information belonging to Birch Hill for his personal profit, which also falls below the standard of behaviour expected from a someone in his position and with his industry experience.”