A former Research in Motion Ltd. vice-president accused of buying shares of Certicom Corp. before RIM unveiled a takeover bid for the company in 2008 has been banned from serving as a director or officer of a public company for five years and has been ordered to pay $150,000.
The Ontario Securities Commission unveiled the sanctions Thursday, but a hearing panel rejected an additional penalty for Paul Donald that was sought by commission staff, which wanted him prohibited from trading shares for 10 years.
An OSC panel ruled last summer that Mr. Donald had acted “contrary to the public interest” when he bought $305,000 worth of Certicom shares before the takeover bid was announced after hearing about the company during a RIM golf retreat for company executives.
The OSC alleged Mr. Donald chatted with Chris Wormald, RIM’s vice-president of strategic alliances, during a private dinner that evening, and Mr. Wormald discussed RIM’s stalled plans to buy Certicom. The OSC alleged Mr. Donald contacted his broker the next morning to place a buy order for Certicom shares.
The commission alleged he earned a profit of $295,000 when he sold his holdings after RIM completed its takeover of Certicom in 2009. Mr. Donald left RIM in 2009 after 10 years at the company.
The OSC hearing panel did not agree that Mr. Donald was guilty of improper insider trading, saying Mr. Donald did not meet the legal definition of someone in a “special relationship” with the company at the time he bought his shares. But it said he nonetheless used the information improperly, and concluded his behaviour was contrary to the public interest and “abusive of the capital markets.”
In the sanction decision released Thursday, the OSC panel concluded a 10-year ban on trading shares sought by OSC staff was an excessive penalty in a case involving behaviour “contrary to the public interest,” and said a five-year ban from serving as a director or officer of a public company was more appropriate.
“Our concern was with Donald’s use of confidential information he obtained as a result of his position as an officer of RIM, and the sanctions we impose should serve to deter such behaviour by Donald and others in similar positions of trust in the future,” the panel said.
“Accordingly, we consider a prohibition on acting as an officer or director of a reporting issuer more appropriate in this case than a prohibition on trading securities.”
The panel said that while Mr. Donald has not demonstrated any appreciation that his conduct was improper, the commissioners did not think he poses a serious risk of committing future abuses.
The panel ordered Mr. Donald to pay $150,000 toward the OSC’s investigation costs, which represented about 69 per cent of the commission’s total costs. Mr. Donald was also officially reprimanded for his conduct.