The Ontario Securities Commission is accusing a couple of senior executives with illegal insider trading and tipping in the machinations over the ultimate sale of junior miner, Baffinland Iron Mines Corp.
The OSC is accusing a former consultant to Baffinland with using insider information he learned about the firm to ultimately bring together a hostile takeover bid for the firm. The commission alleges that Jowdat Waheed, who was a consultant at Baffinland from February to April 2010, received confidential information about the firm, including details of its negotiations with ArcelorMittal S.A. about a potential joint venture.
It claims that he passed along some of this information to a friend, Bruce Walter; that the two formed a company (Nunavut Iron Ore Acquisition Inc.) to launch a bid for Baffinland; and that, they “acted contrary to the public interest by using material facts and confidential information belonging to Baffinland to purchase a toehold and launch a hostile take-over bid which put Baffinland in play.”
The OSC says the accused knew the hostile bid would disrupt the joint venture negotiations between Baffinland and ArcelorMittal, and that their bid effectively deprived Baffinland shareholders of the opportunity to benefit from a possible joint venture with ArcelorMittal.
The allegations have not been proven. The OSC has scheduled the first hearing in the case for February 15.
Ultimately, Baffinland was taken over in a joint bid by ArcelorMittal and Nunavut, and the accused men remain directors of the firm.