Several advisors are now in hot water for acting on a tip from a securities lawyer -- a move that runs afoul of the OSC.
The Ontario Securities Commission
pinned the accusations against Mitchell Finkelstein, who lost his gig with Davies Ward Phillips & Vineburg after the OSC launched an official investigation in 2010, alleging the lawyer fed tips to Paul Azeff, a CIBC investment advisor in Montreal who was an old fraternity friend.
"They assert that they had good reason, based on due diligence, to purchase the target shares and no motivation to engage in illegal activity that they understood, as professionals and registrants, would prejudice their successful careers," the OSC report alleges.
The decision represents a rare victory for the OSC as it’s one of the few times they’ve successfully prosecuted lawyers, bankers, brokers, or financial advisors for crossing inside trading boundaries. The decision is also a rare for the regulator in a tipping case. These types of cases can be extremely difficult to prove since the evidence is almost always circumstantial.
Several others, Korin Bobrow, also from Montreal, and Howard Miller and Francis Cheng, both from Toronto, were proven to have connection with three transactions. All were accused of participating in illegal insider trading in six instances involving inside information about pending M&A deals from November 2004 to August 2007.