The Ontario Securities Commission is inviting market players who may have been involved in dodgy trading around pending private placements to turn themselves in — in exchange for lighter sentences.

At a hearing Friday, the OSC approved settlement agreements between its staff and investment dealer Paradigm Capital Inc., a Paradigm salesman, Patrick McCarthy and a former RBC Global Investment Management Inc. fund manager, Eden Rahim. OSC enforcement chief Mike Watson told the hearing the commission is currently reviewing more than 300 private placements and special warrant offerings for similar activity. He noted that the OSC has identified “a number of potential Securities Act violations”.

“Market participants who are aware of improper trading activity associated with private placements or special warrants offerings may wish to avoid a full investigation by coming forward now and receiving credit for their cooperation,” said Watson. “We will be following up on our review with all appropriate action.”

In Friday’s settlement agreement, the respondents admitted their conduct was contrary to the public interest. McCarthy and Rahim were found to have participated in a transaction that resulted in shares being sold by persons who had knowledge of a material fact that had not been generally disclosed to persons who had no knowledge of that fact. Paradigm was found to have failed to properly supervise and restrict the activities of McCarthy.

Both McCarthy and Rahim were reprimanded, had conditions placed on their registrations, and each agreed to pay $30,000 to the costs of the investigation. McCarthy also agreed to take the Canadian Securities Course on securities law and regulations. For its part, Paradigm was reprimanded, ordered to pay $30,000 in costs and a penalty of $55,755. It also agreed to implement a revised policy regarding its handling of confidential material information while acting as an agent on behalf of an issuer.

The OSC noted that its allegations do not involve the conduct of the issuer involved, Bioscrypt Inc., or its management. “The conduct at issue concerns the responsibilities of investment dealers, institutional salespersons and portfolio managers for the management of information provided during the course of marketing a private placement of securities prior to general disclosure of the private placement.”

It noted that this investigation was initiated by a referral from Market Regulation Services Inc.