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OSC unveils sweeping insider trading case

Ian Telfer

Brigitte Bouvier/The Globe and Mail

Ontario's stock market watchdog has unveiled a sweeping insider trading case involving one of Canada's most prominent mining executives and an employee at a leading independent Bay Street firm.

The sprawling set of allegations announced on Tuesday includes a charge that Goldcorp Inc. chairman Ian Telfer helped disguise ownership of some shares to assist an old friend who is now at the centre of an insider trading and tipping scheme. The Ontario Securities Commission has accused Mr. Telfer, whose Vancouver-based company is one of the world's largest gold producers, of acting against the public interest. Mr. Telfer dismissed the allegations against him as "grasping at straws."

The regulator's case is focused on Eda Marie Agueci, executive assistant to the chairman of brokerage firm GMP Securities LP, who is alleged to have used her position at the firm to learn about forthcoming corporate deals. The OSC alleges Ms. Agueci set up brokerage accounts to trade on the information before it was made public, and tipped a network of friends, relatives and business contacts about the deals so they could also buy shares.

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The commission alleges the trading scheme yielded profits of $962,000 for eight people involved in buying shares, making the case the second major insider trading matter the OSC has launched in recent months. In January, it accused Jowdat Waheed, former chief executive officer of Sherritt International Corp., of illegal insider trading, alleging he and partner Bruce Walter profited from insider information during the prolonged takeover battle for Baffinland Iron Mines Corp.

Under new chairman Howard Wetston, the OSC has pledged to crack down on illegal insider trading, which involves the improper use of undisclosed information to trade shares. The commission has invested heavily in new computer technology to detect suspicious trading patterns in a bid to address long-standing concerns that regulators are missing widespread illegal trading.

While the latest case involves corporate deals that GMP was involved in as an adviser, none of the firm's senior employees – including chairman Eugene McBurney – are alleged to have been involved.

In a statement on Tuesday, the firm said it has suspended Ms. Agueci pending the outcome of the case, and said her alleged activities would contravene the firm's policies and procedures. "GMP takes these allegations very seriously and will co-operate fully with the investigation," the company said.

The commission alleges Ms. Agueci, who was also an executive assistant for GMP's mining group, sought out information about six major takeover deals for which GMP served as an adviser, and bought shares in the companies using her own trading account, as well as an account in her mother's name, and a "secret account" set up by her brother-in-law.

When asked to talk about the allegations on Tuesday, Ms. Agueci declined to comment.

The OSC said Mr. Telfer did not participate in the insider trading scheme, but is alleged to have helped Ms. Agueci, a close friend for 20 years, buy shares of a company he was helping launch in her secret brokerage account.

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The OSC said the $5,000 worth of shares she bought at Mr. Telfer's urging were part of a private share offering in 222 Pizza Express Corp., which Ms. Agueci allegedly purchased using an account set up in the name of her brother-in-law, Santo Iacono. The commission alleged that Ms. Agueci was the owner of some of the shares, and that Mr. Telfer should have known it was wrong to enable a transaction "in which the beneficial owner of the shares was falsified."

The shares ultimately yielded a profit of $500,000, which the OSC alleged Mr. Iacono reinvested at Ms. Agueci's direction in shares of companies she learned were involved in takeover deals.

The commission also claims Mr. Telfer taught Ms. Agueci how to send BlackBerry PIN text messages that would not leave an e-mail trail that could be monitored by GMP's compliance staff, whose job is to ensure the firm's employees abide by securities laws. The OSC said this conduct was "contrary to the public interest" because it helped her avoid disclosure obligations at the brokerage firm.

In an interview on Tuesday, Mr. Telfer denied the allegations and said he will defend himself vigorously.

"I am shocked, surprised and amazed that the OSC is taking this position," he said.

Mr. Telfer said it was not wrong to put Ms. Agueci's relative on the list to buy shares in Pizza Express. He said he has awarded the right to buy shares in private placements to more than 100 people over the years, and it was not uncommon for those people to put the shares in the name of a relative.

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"I put a relative of a friend on a private placement list," Mr. Telfer said. "They say I was involved in trying to keep their shareholding confidential, which is not true," he added.

Mr. Telfer said he believes the OSC has unjustly zeroed in on him to have a high-profile target in its investigation. "They are grasping at straws here," he said. "I was not involved in any incorrect trading."

The OSC's case also names Dennis Wing, CEO of investment firm Fort House Inc., who is alleged to have bought shares before five of the six deals Ms. Agueci allegedly tipped friends about in 2007 and 2008. The OSC also alleges Mr. Wing paid her $25,000. Mr. Wing said on Tuesday he had no comment on the allegations.

Mr. Wing was one of seven people who bought shares of NU Energy Uranium Corp. in 2007 based on a tip from Ms. Agueci, the OSC alleges. Telling a friend that Mr. Wing wanted to buy her dinner to thank her, Ms. Agueci said in an e-mail that is among OSC documents: "I have better ways of being thanked.....$$$$$."

With reports from Tara Perkins and Boyd Erman

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