TORONTO (Reuters) - Canadian securities regulators on Tuesday implicated mining executive Ian Telfer in an alleged insider trading scheme, saying he helped the main defendant in the case disguise her illegal trading activities.
Telfer, a well-known Canadian mining entrepreneur who currently serves as chairman of Goldcorp (G.TO), denied the allegations, which were spelled out by Ontario Securities Commission (OSC) in a statement posted on its website.
The case is the second of its kind this year involving high-profile Canadian mining executives, suggesting a more vigorous approach by regulators who have a reputation for being more lax than their U.S. counterparts. The OSC is the country’s main securities watchdog.
Telfer, who is also chairman of Uranium One UUU.TO, did not directly participate in the scheme, the OSC said. Instead he helped Eda Marie Agueci, a GMP Securities executive assistant, conceal a scheme in which she tipped off family and friends about hot stocks based on information she had obtained through her job.
Agueci, who has worked in the securities industry for more than 20 years, could not be immediately reached for comment.
GMP Capital Inc (GMP.TO) said in an e-mail the alleged activities are in clear contravention of its policies and it will cooperate fully with regulators. It said Agueci has been suspended pending the outcome of the matter.
The OSC named nine people and one company as being directly involved in the scheme, which allegedly took place between April 2007 and February 2008.
The statement said Agueci, through her associates, traded shares of six listed companies on the basis of confidential information. All told, the defendants accrued profits of about C$962,000 ($962,000) from the scheme, according to the OSC.
One of the accused is Dennis Wing, a founding partner of Canadian investment bank, First Marathon. The OSC said Wing paid Agueci a total of C$25,000 for privileged information, including a tip about the pending takeover of NU Energy Uranium Corp by Mega Uranium Ltd MGA.TO in 2007.
Wing could not be reached for comment.
Specifically, Telfer is accused of helping Agueci buy shares secretly under her brother-in-law’s name and disguise the transactions from her employer.
The deal in question involved the purchase of 500,000 shares of a company called 222 Pizza Express Corp in a private offering in April 2008, according to the OSC.
Soon after the transaction, 222 Pizza evolved into Gold Wheaton, a gold company bought out by Franco-Nevada last year in a cash-and-share deal worth about C$830 million.
Telfer “advised and guided Agueci in avoiding detection by GMP of her email communications,” the OSC said. “His conduct was contrary to the public interest.”
In an interview with Reuters, Telfer denied any wrongdoing and suggested it is common practice to issue shares in the name of relative.
“It’s not unusual when you’re allocating shares for people to say ‘oh, can you put it in the name of my wife, or in the name of my kid,’ or whatever. There’s nothing wrong with that,” Telfer said.
“In this particular case, somebody said, ‘could you put it in the name of my sister or brother-in-law, and I said ‘yeah, sure, fine,’ and I never thought any more about it.”
The case is likely to put a fresh spotlight on the OSC, which has a reputation as a toothless market enforcer, having failed to secure convictions in many high-profile cases, such as the multibillion-dollar BRE-X scam in the 1990s.
In January, the OSC accused former Sherritt International (S.TO) CEO Jowdat Waheed and executive Bruce Walter of using insider information in their acquisition of a 30 percent stake in Baffinland Iron Mines, a deal that closed last year.
($1 = $1 Canadian dollar)
Reporting By Pav Jordan, Allison Martell, Julie Gordon and Jeffrey Hodgson; Editing by Frank McGurty and Matt Driskill