With great sophistication comes great responsibility - OSC

Handing down a $200k charge to a seasoned investor and chairman of a major public company, the OSC said the more sophisticated a market participant is, the more responsibility they must bear.

In approving a settlement agreement with Goldcorp Inc chairman Ian Telfer – fining him $200,000 for investigation costs and barring him from market activity – the Ontario Securities Commission has said that the more sophisticated a market participant is, the more responsibility they must bear.

“Participation in Ontario’s capital markets is a privilege that comes with significant responsibilities, particularly for sophisticated participants like Mr. Telfer,” said Tom Atkinson, OSC director of enforcement.

In spite of the chastisement, the OSC’s penalty was relatively light, as it could have banned him from acting as a director or officer of a public company.

Telfer admitted to advising Eda Marie Agueci, who then worked for a GMP Securities as executive assistant to the chairman, on how to use BlackBerry PIN messages instead of email “with very close friends" saying, "Messages don’t go to the gmp (sic) server. They go straight to blkberry (sic)”. 

Given her position, she was subject to strict rules for monitoring of her communications and personal trading. However, she subsequently used BlackBerry PIN to communicate with others in relation to trading securities. She is facing allegations that she orchestrated an insider trading ring, one in which Telfer had not been implicated.

In the settlement, Telfer acknowledged that it was improper to advise Agueci to use BlackBerry PIN as those messages could not be monitored by GMP and also admitted his conduct fell below the standard expected from someone in his position.

Telfer also admitted to having advised Agueci not to purchase shares in a private transaction in her name, resulting in a transaction where the beneficial owner of the shares wasn’t disclosed.

The shares in were 222 Pizza Express Corp, a shell company listed on the NEX board of the TSX Venture Exchange of which Telfer was a significant shareholder and consultant. The shares were purchased for $5,000 and subsequently sold for approximately $500,000.

Telfer admitted that he ought to have known there was a real risk Agueci might have a beneficial interest in those shares that was not monitored by her employer as required, and that, if her interest in or trading authority over the shares had been disclosed, her employer’s compliance department would have been able to monitor that trading.

Telfer received a reprimand from the Commission and must pay $200,000 toward the cost of staff’s investigation. He will also not to directly or indirectly, trade, or arrange for trading by others, in securities of issuers of which he is a promoter for a period of one year.