Insider trading and suicide in Canada: a buddy story
By Andrea Hopkins and Pav Jordan
TORONTO (Reuters) - The phone call on Christmas Eve 2007 was like all the others. Gil Cornblum, a respected Toronto lawyer, told his law school buddy, an unemployed consultant named Stanko Grmovsek, that a corporate merger was about to take place -- and to start buying stock.
The old friends had turned a profit that way dozens of times already, using confidential information garnered on deals by Cornblum to invest in companies ahead of major market moving news like mergers and acquisitions.
The merger in question was hardly high-profile -- a U.S. manufacturer of construction equipment, Terex Corp, was buying ASV Inc, which designed and made track machines -- but it led the duo to their biggest take ever, a nearly US$1 million pay day.
It was also big enough to alert authorities to Grmovsek's and Cornblum's audacious 46-deal, 14-year insider trading scheme -- Canada's largest ever. Over that span, they netted more than $9 million, according to Canada's securities regulator.
The scheme came to light less than two weeks after the biggest hedge fund insider trading case in history, involving the Galleon Group as well as executives at several blue chip U.S. firms.
The Canadian case may have brought in less lucre, but the details -- laid out in court documents and legal filings from the Ontario Securities Commission, the U.S. Securities and Exchange Commission and the U.S. District Court -- read like a paperback detective novel on white collar crime.
On Tuesday, Grmovsek, 40, pleaded guilty to criminal charges; one day earlier, Cornblum, his closest friend and best man at his wedding, jumped to his death from a Toronto highway bridge. Both men had been cooperating with authorities in the U.S. and Canada. Continued...