The Ontario Securities Commission (OSC) announced Tuesday it will hold a hearing on May 19 to consider a settlement agreement with Fernando Postrado. The regulator alleges the Toronto man traded ahead of a couple of merger deals based on inside information supplied by his son, an accountant at KPMG.
The allegations have not been proven, and the details of the settlement will only be revealed if they are approved by the commission after a hearing.
According to the allegations, “Fernando was tipped by his son, Andrei”, who worked in the real estate and construction tax department at KPMG LLP (Canada).
“Andrei obtained confidential undisclosed material information at KPMG” about two unnamed companies that were about to be acquired, the OSC alleges, and he passed this information along to his father, who then traded on it through his online discount brokerage accounts with BMO InvestorLine, Questrade Inc., and HSBC Securities Canada Inc.
The trading generated a profit of over $100,000 in one case, the OSC says, and just US$4,605 in the other.
KPMG says that it co-operated with the OSC’s investigation, and that it terminated the employee after the allegations came to light.
“Given the firm’s commitment to conduct ourselves at all times with the highest integrity and respect for the law, we were appalled to learn of these allegations against our former employee,” the firm said in a statement.
“We are confident that this was an isolated incident and is in no way reflective of how we conduct our business. KPMG is committed to continuing to provide our clients with best in class professional service while protecting their privacy and the confidentiality of their information.”