Source: The Canadian Press

A Toronto corporate lawyer and two stock traders in Montreal are being accused of illegally leaking information about several big Canadian takeover deals.

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 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 in ill-gotten profits 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.

The OSC says Toronto lawyer Mitchell Finkelstein — a partner at Davies Ward Phillips & Vineberg — passed the information to Paul Azeff, a friend at the Montreal office of CIBC World Markets and Azeff passed it to a coworker 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 OSC’s notice of hearing indicates that Finkelstein and Azeff were fraternity brothers at the University of Western Ontario, and that Bobrow and Azeff had known each other since high school.

Additionally, the OSC claims that a client of Azeff’s that recieved some of the information, in turn passed it along to a pair of advisors with TD Waterhouse Canada Inc., Howard Jeffrey Miller and Man Kin Cheng.

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

A hearing in the case has been scheduled for Jan. 11, 2011.

With files from James Langton