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The OSC alleges Mr. Azeff, Mr. Bobrow and their circle of friends and clients earned more than $3.4-million in profits on trading based on tips from Mr. Finkelstein.Peter Power/The Globe and Mail

Lawyers for three men accused of insider trading in a case involving Bay Street lawyer Mitchell Finkelstein have asked an Ontario Securities Commission hearing panel to immediately dismiss some of the allegations against them for lack of evidence.

The three accused – Paul Azeff, Korin Bobrow and Howard Miller – have not yet begun presenting their defence in an ongoing hearing, but have tabled a motion to have elements of the matter dismissed in mid-hearing after OSC staff concluded testimony from their witnesses earlier this week.

Mr. Miller is seeking to have all the allegations against him dismissed, while Mr. Azeff and Bobrow are seeking dismissal of some allegations relating to trading on certain deals.

Mr. Miller's lawyer, Simon Bieber, told an OSC hearing panel that OSC staff have failed to show that Mr. Miller knew or ought to have known he was receiving material insider information about takeover deals involving Masonite International Corp. in 2004 and Dynatec Corp. in 2007.

"There is little if any direct evidence to support staff's case. The case is built on circumstantial evidence and inferences," he said.

The OSC panel said Thursday it expects to rule later next week on the motions.

Mr. Finkelstein, a former partner in the mergers and acquisitions practice at law firm Davies Ward Phillips & Vineberg LLP, is not part of the dismissal request. He is accused of tipping Mr. Azeff – an old friend and fraternity brother – about six takeover deals being worked on by his firm.

Mr. Azeff, a former investment adviser at CIBC World Markets Inc. in Montreal, is accused of illegal insider trading based on Mr. Finkelstein's tips, and also passing along information to a network of clients, friends and family members. Mr. Azeff's business partner at CIBC, Mr. Bobrow, is also accused of insider trading and tipping in the case.

The OSC case also names two former investment advisers at TD Waterhouse Canada Inc. – Mr. Miller and business partner Man Kin (Francis) Cheng – who are accused of trading and passing along tips to clients after allegedly learning about some of the takeover deals from a client of Mr. Azeff's.

Mr. Cheng is also not participating in the dismissal motion. His lawyer told the hearing panel Mr. Cheng could not afford the cost of preparing arguments on the motion but said he hoped Mr. Cheng would be considered if the panel finds in favour of Mr. Miller.

Mr. Finkelstein's lawyer, Gordon Capern, will begin presenting his defence on Friday. Mr. Finkelstein is expected to take the witness stand in his own defence.

Mr. Bobrow is seeking dismissal of one allegation he acted contrary to the public interest in trading involving a takeover of MDSI Mobile Data Solutions Inc. in 2005, which is one of six deals named in his case.

Mr. Azeff is also seeking a dismissal on the same MDSI allegation, and has also asked the commission to reject the allegation he tipped people on the Dynatec deal. Both form only a small part of the allegations he is facing.

Lawyer Tyler Hodgson, who is representing both men, said no evidence has been presented that they had material inside information about MDSI or that they communicated with a client who was buying the shares.

In response to panel questions, Mr. Hodgson said it is not adequate for the OSC to assume Mr. Azeff could have talked to the client if there was no proof of any communication.

"There's always the possibility of contact, but in our submission, possibility is not adequate," he said.

OSC lawyer Donna Campbell urged the panel to reject the motions, arguing the test for winning a "non-suit motion" for dismissal is harder than winning in a final decision after the hearing is over. She said the parties have to show there was no evidence to form the basis for a case, which is not the situation in this case.

"This is unlike what will be done at the end, which is weighing of the evidence," she told the panel.

Earlier in October, the OSC called witnesses who were former clients of Mr. Azeff and Mr. Bobrow, who can only be identified as Leon K and Hillel F because the OSC panel ruled they are covered by a ban on publishing the last names of clients of the brokerage firms involved in the case. Both men testified they may have been told by Mr. Azeff or Mr. Bobrow that some companies were "in play" before takeover deals were publicly announced, but both said they couldn't remember any details of conversations and both said they did not believe they were receiving material insider information.

Mr. K said "there was nothing at all" to suggest to him that a rumour about a takeover of Masonite in 2004 was coming from an insider.

Mr. Bieber, who is representing Mr. Miller, said the testimony showed Mr. Miller had no reason to think the rumours he subsequently heard from Mr. K were insider information, especially since Mr. K is an accountant and not connected in any way to Masonite.

The deals at the centre of the case include major takeovers between 2004 and 2007, including the $3-billion offer for Masonite in 2004 and a $10.3-billion bid for Placer Dome Inc. in 2005.

The OSC alleges Mr. Azeff, Mr. Bobrow and their circle of friends and clients earned more than $3.4-million in profits on trading based on tips from Mr. Finkelstein.