The Ontario Securities Commission has leveled illegal insider trading allegations against a brokerage firm, an institutional broker and a fund manager with RBC Global Investment Management Inc.

The OSC issued a notice of hearing and statement of allegations Tuesday against Paradigm Capital Inc., Paradigm rep Patrick McCarthy and Eden Rahim, a portfolio manager at RBC Global Investment Management and portfolio manager of the Royal Canadian Growth Fund.

A hearing to consider a settlement agreement will be held June 11. The OSC indicates that it is seeking reprimands, costs, registration restrictions against all the respondents, and an order that Paradigm change certain practices and procedures, among other possible sanctions. The full sanctions will not be public until the settlement is approved by the commission.

The OSC alleges that Rahim acted contrary to the public interest by agreeing to sell shares of a stock, Bioscrypt, in the secondary market after being informed of a material fact which had not been generally disclosed (it was planning a private placement). The OSC says that this trade was against RBC’s insider-trading policy for portfolio managers. The regulator suggests that the breach was not egregious, saying, “although not intended or anticipated by Rahim, his conduct contributed to shares of Bioscrypt being sold by persons with knowledge of a material fact respecting Bioscrypt which had not been generally disclosed, to persons who had no knowledge of that material fact.”

It also alleges McCarthy acted contrary to the public interest by agreeing to facilitate the trade, despite Bioscrypt having been placed on a Paradigm Restricted List. It also says the firm’s conduct was contrary to the public interest in failing to properly supervise McCarthy and other employees when Bioscrypt was on its Restricted List.