April 4, 2012 by Canadian Underwriter
A Medicine Hat, Alberta insurance agent has reached a settlement agreement with the Alberta Securities Commission, in which he agreed to pay $70,000 for his role in a 2009 insider trading scheme.
According to the settlement agreement and undertaking, James Roger Douglas, an insurance agent with Co-operators Insurance Company, knew and was a good friend of John Herbert Holtby for 30 years.
Holtby became a trustee of Eveready Income Fund (EIF) in 2005, and became a director of Eveready when EIF converted from a trust to a corporation in 2008.
Holtby introduced Douglas to Richard Bruce Kowalchuk, an investment adviser with CIBC Wood Gundy, in or about 2005. Kowalchuk became Douglas’s investment advisor.
The three men established a trading account in Douglas’s name in September 2005. Although the account was in Douglas’s name, it was agreed the three men would direct trading in the account and all three had a financial interest in the account. But when signing a form to establish the account, Douglas answered ‘no’ to the question of whether his investment advisor or any other persons or entities had a financial interest in the account.
On April 29, Eveready announced it had signed a definitive agreement to be acquired by Clean Harbours Inc.
Prior to that date, the agreement says, Douglas saw account statements indicating Holtby, who was under a blackout and could not purchase Eveready securities, and/or Kowalchuk had purchased a total of 28,000 Eveready shares during the month leading up to the sale.
The shares were sold for approximately $200,000 on the day of the announced acquisition, and Douglas made a profit of $40,000.