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A regulatory hearing panel has dismissed allegations of illegal insider trading against a broker who was accused of buying into Amaya Gaming Group Inc. with inside knowledge of a pending transaction involving the firm.

The Ontario Securities Commission (OSC) released its decision dismissing allegations that Frank Soave, a broker at CIBC World Markets Inc. in Thornhill, Ont., improperly traded in Amaya based on inside information from John David Rothstein, senior vice president and national sales manager at Aston Hill Asset Management Inc. (Aston Hill was participating in the financing of Amaya’s acquisition.)

That Soave traded in Amaya after getting a tip from Rothstein was not disputed. The issue was whether he knew that the tip was based on inside information. The panel found that OSC staff did not prove that case.

“Although an inference of knowledge is possible, taking into account all the evidence, it has not been shown on a balance of probabilities that Mr. Soave knew that Mr. Rothstein was in a special relationship with Amaya,” the panel said in its decision.

“Nor is an inference of knowledge compelled by the facts, as Mr. Rothstein’s recommendation and other messages were consistent with his activities as a wholesaler. It was not unreasonable in the circumstances for Mr. Soave to have believed that these communications reflected recommendations from a portfolio manager as his post-purchase conduct suggests and as he testified,” it said.

Next, the panel considered whether Soave should have known the tip was insider information. Here again, it sided with Soave, finding that his position in the securities industry often includes receiving information from fund managers and wholesalers. “In the circumstances, it was not unreasonable for him to believe that the information came from a portfolio manager or analyst who was following Amaya,” it said.

The panel again noted a lack of proof. “In the panel’s view, staff have not proved on a balance of probabilities that Mr. Soave should have known of Mr. Rothstein’s relationship,” it said.

As a result, it concluded that Soave was not in a special relationship with Amaya when he bought its stock, and it dismissed the allegations against him.