U.S. and Canadian securities regulators simultaneously settled charges against a Toronto-based investment banker Tuesday, who was found to have engaged in improper trading ahead of corporate acquisitions.
The Ontario Securities Commission (OSC) and the U.S. Securities and Exchange Commission (SEC) both announced settlements with investment banker, Richard Bruce Moore, formerly of CIBC and UBS, today. Last week, the OSC unveiled allegations against him related to two incidents of improper trading, and today both the OSC and SEC announced that they have reached deals to settle these allegations (although the SEC’s charges only relate to one of the two incidents).
In particular, the regulators charged that Moore traded on information that he learned through his job of pitching investment ideas to the Canada Pension Plan Investment Board (CPPIB), which led him to conclude that UK-based engineering and manufacturing company, Tomkins plc, was to be acquired by the CPPIB. He then traded on that information, which the OSC charged amounted to an undisclosed material fact, generating a profit of $275,611.
In the second incident, the OSC said that Moore inadvertently received an email from a partner at private equity firm, Birch Hill Equity Partners, which revealed that it was the winning bidder in a takeover fight for HOMEQ Corp., and the price of the transaction. He then traded on that information, generating a potential profit of approximately $46,175.
The OSC found that Moore’s conduct was contrary to the public interest in both of these cases. And today, it approved a settlement agreement that will see him pay just over $500,000 to the OSC; receive a 10 year ban on trading, serving as a director or officer of any reporting issuer or registrant, or relying on an exemption; and a 15 year ban from registration.
The OSC says that he agreed to a voluntary penalty of $300,000 for the Tomkins trading, which represents all of the profits related to his trades plus approximately $25,000. He must also pay costs of $75,000 to the commission; disgorge all profits obtained from the HOMEQ trading ($43,268) and pay an administrative penalty of $86,000, which represents two times the profits made in that instance.
According to the OSC’s order, Moore has provided certified cheques to cover his monetary penalties; indicating that these penalties are actually being paid, which is often not the case with regulatory sanctions in Canada.
He also settled with the SEC in relation to his trading in Tomkins — which took place in American Depositary Receipts (ADRs) on the New York Stock Exchange (NYSE) — by agreeing to pay more than US$340,000, comprised of US$163,293 in disgorgement, US$14,905 in prejudgment interest, and a US$163,293 penalty. He also agreed to an SEC order that will bar him from the securities industry or participating in a penny stock offering. That deal is subject to court approval.
The OSC notes that Moore voluntarily revealed the HOMEQ trading during the OSC’s investigation of the Tomkins trading incident, that he expressed remorse and resigned from UBS; and that its sanctions reflect credit for his cooperation.
“We have made it a priority through our Insider Trading and Market Abuse Team to identify and pursue cases of insider trading and abusive trading,” said Tom Atkinson, director of enforcement at the OSC. “This individual used confidential, material information for his own gain, which is abusive of our capital markets and will continue to attract a vigorous enforcement response from the OSC.”
Commenting on the simultaneous settlements, Scott Friestad, associate director of the SEC’s division of enforcement, said, “In today’s interconnected markets, the cooperative relationships among securities regulators mean that those who choose to engage in international insider trading should expect to face consequences across the globe.”