A woman enters the offices of MacDonald, Dettwiler and Associates in Richmond, B.C., Tuesday, January 8, 2008.RICHARD LAM/The Canadian Press
An information technology manager at MacDonald Dettwiler & Associates Inc. is facing accusations of insider trading and tipping in advance of a takeover deal the company negotiated in 2012.
The Ontario Securities Commission alleged Satish Talawdekar learned about his company's plans to acquire a major subsidiary of Loral Space & Communications Inc. in 2012, and used his personal line of credit to buy $44,365 worth of MDA shares just days before the company announced the deal.
The OSC said MDA's shares climbed 28 per cent the day after the deal was announced on June 26, 2012, netting Mr. Talawdekar a profit of $11,673. The regulator said Mr. Talawdekar had not bought MDA shares for more than 20 months prior to the deal and had not used his line of credit in 10 months before making the purchase.
A statement of allegations released Wednesday said Mr. Talawdeker was not involved in working on the deal, but was a manager in the IT department at MDA's Brampton, Ont., office, and sat near the team of employees working on due diligence for the acquisition.
The regulator alleged Mr. Talawdeker phoned a childhood friend, Anand Hariharan, and told him about the deal before it was announced. The OSC alleged Mr. Hariharan bought 220 call option contracts on June 26 prior to the announcement, which gave him the right to buy 22,000 Loral shares if the price rose to the strike price set out in the contracts.
The OSC said Mr. Hariharan sold all of the contracts the day after the deal was announced, earning a profit of $68,683 (U.S.) for a 623-per-cent return in one day.
The OSC said Mr. Hariharan's purchase of call options did not breach insider trading provisions of the Ontario Securities Act because Loral was not an Ontario listed company, but said his conduct "impugned the integrity and fairness of the capital market." He is accused of conduct contrary to the public interest.
The OSC said staff have reached a settlement agreement with Mr. Hariharan that will go before a hearing panel for approval on March 31. Details of the proposed settlement will not be released unless the deal is approved by the commission.
Janet McFarland