An IT manager from Mississauga is in hot water with the OSC following accusations of insider trading and tipping in advance of a deal that netted him and another $80,000.
The OSC alleges that Satish Talawdekar, who worked at MacDonald Dettwiler & Associates (MDA), received word that his company was about to acquire a large subsidiary of Loral Space and Communications Inc. in 2012 and subsequently used his personal line of credit to buy approximately $45,000 in shares just days before the company announced the partnership.
“At 9:25 PM on June 26, 2012, MDA publicly announced the acquisition,” according to an OSC statement. “Talawdekar became aware of the acquisition in the course of his employment before there was general disclosure by MDA.
“Talawdekar purchased MDA shares (on June 21, 2012) with knowledge of a material, undisclosed fact. He also conveyed the substance of the material non-public information respecting the acquisition to his friend, (Anand) Hariharan before it was generally disclosed.”
MDA shares jumped 28 per cent, from $44.65 to $57.13, a day after the deal. Talawdekar pocketed an extra $11,673.60 on his investment after selling the 1000 shares he purchased on June 27, 2012 – a 26.3 per cent return.
The OSC also alleges that Talawdekar called Hariharan, an aircraft maintenance engineer, and informed him about the deal before it was announced, prompting him to buy 220 call option contracts on June 26. That transaction gave him the right to buy 22,000 Loral shares if the price rose to target price identified in the contracts.
Hariharan sold all of the contracts the day after the deal, earning him a cool $68,683 (U.S), a 623 per cent return, according to the OSC.
Prior to these allegations surfacing about Talawdekar’s activities, he had not purchased MDA securities for over 20 months and had not drawn upon his line of credit for at least 10 months.
“Talawdekar, as an employee of MDA, was a person in a special relationship with MDA in accordance with subsection 76 (5)(c)(i) of the Act
at the time of the subject trading,” the report claims.
“While Hariharan’s conduct involving the purchase of Loral call option contracts as outlined above did not technically contravene s. 76(1) of the Act (because Loral was not an Ontario reporting issuer), his conduct impugned the integrity and fairness of the capital markets because of the misuse of material, confidential information obtained from Talawdekar. Consequently Hariharan’s conduct was contrary to the public interest.”