The Ontario Securities Commission is bringing another case concerning institutional investors allegedly trading ahead of a private placement.

The OSC announced Thursday it will hold a hearing on Aug. 19 to consider a settlement agreement, with Jefferson Banfield, formerly the trading and advising officer of Banfield Capital Management Inc. The OSC alleges Banfield engaged in a couple of instances of unlawful trading on behalf of the BCM Arbitrage Fund. The fund was wound up in 2001.

The OSC is seeking a trading ban, a reprimand and costs of its investigation. The actual agreed upon sanction will be revealed if the settlement is approved by the commission next week.

The OSC staff’s allegations, which have yet to be proven, claim that Banfield shorted the stock of two companies (Burntsand and Kasten Chase Applied Research) on behalf of the BCM fund ahead of financings by the firms. The OSC alleges the short sales came after Banfield Capital was solicited to invest in a special warrants offering on behalf of the fund, and prior to general disclosure of the offering. It says that these trades are contrary to the prohibition against unlawful insider trading under the Securities Act.

The OSC has recently brought a couple of other cases with similar allegations; noting that it is investigating trading around other private placements.