The CEO of a small cap biotech has been sanctioned by the British Columbia Securities Commission (BCSC) for failing to file insider trading reports on time.
A regulatory hearing panel imposed a $50,000 penalty on Ahmad Doroudian, the CEO and a director of Vancover’s BetterLife Pharma Inc., after finding that he violated securities requirements by failing to report hundreds of trades in the company’s stock on a timely basis between March 2019 and October 2023. Those trades involved five million shares of stock and almost $1 million in market value.
According to the regulator’s order, Doroudian has no formal disciplinary history, but he has a history of failing to comply with insider trading filing requirements.
“Since 2011 staff have sent Doroudian 15 invoices for late-filed insider reports, 11 before staff started the review that led to this proceeding,” the notice said. “He has not paid the last nine of those invoices totalling $30,350, including $23,050 in late fees.”
However, it also noted that he didn’t benefit from the late filing, that there’s no evidence that investors were harmed, or that he was deliberately hiding his trades. It also said that Doroudian has since brought his reporting up to date.
Yet, the panel also found that “there is clearly a need for a deterrence message on top of late fees,” saying that it’s “important to demonstrate to the market that there can be consequences for late insider reporting above and beyond late fees and that the accuracy of what is filed matters.”
“Imposing a penalty in a case like this one sends an important deterrence message to insiders,” the panel said. “It can cost a lot more than $50 per report to file late. Deterrence is created by ensuring that the rational economic decision is for public company directors, officers and significant shareholders to invest time or money up front on either filing reports personally or hiring a service provider to help with timely filing.”