A merchant banking firm and its director are being sanctioned by the British Columbia Securities Commission (BCSC) for insider trading in connection with a private placement.
A BCSC hearing panel approved a settlement with a company, Tavistock Capital Corp., and its director, Robert John Lawrence, that will see them pay $200,000 and be banned for three years.
According to the settlement, Tavistock purchased $625,000 worth of shares in a company listed on the Canadian Securities Exchange (CSE) in a private placement.
“Around the same time, Tavistock and others entered into consulting agreements with the issuer, pursuant to which they received prepaid consulting fees,” the BCSC said in a release.
The regulator said that the company then paid most of the money that was raised in the private placement to the consultants for consulting fees. The payments to the consultants represented a material fact that was not disclosed to the investors, it said.
By trading with knowledge of that undisclosed material fact — Tavistock sold its private placement shares for about $285,000 — the company engaged in insider trading, the regulator said.
The BCSC also found that Lawrence violated securities law by permitting Tavistock’s misconduct.
According to the settlement, Tavistock and Lawrence cooperated with the regulator’s investigation; settled the allegations, saving the regulator time and money; and, didn’t have any history of regulatory discipline.
The regulator’s enforcement action against other respondents in the case is ongoing, with a hearing slated to start Sept. 11.