Regulators now using 'patterns" to prosecute illeg
Post# of 4611
Posted On: 09/30/2014 8:47:37 AM
Regulators now using 'patterns" to prosecute illegal behavior in our markets!
OSC launches insider trading case against Bay Street lawyer
Janet McFarland, The Globe and Mail
2:35 PM, E.T. | September 29, 2014
http://www.bnn.ca/News/2014/9/29/OSC-launches...awyer.aspx
Bay Street lawyer Mitchell Finkelstein deposited a total of over $42,000 in cash in his bank accounts within days of the announcement of four takeover deals he is accused of tipping a friend about between 2004 and 2007, an Ontario Securities Commission lawyer alleged Monday.
The OSC launched its case Monday against Finkelstein, a former partner in the mergers and acquisitions practice at Davies Ward Phillips & Vineberg LLP who is accused of tipping a long-time friend about six takeover deals being worked on by his firm. He left Davies in 2010 when the OSC allegations were revealed.
His friend, Paul Azeff, a former investment adviser with CIBC World Markets Inc. in Montreal, is accused of improperly buying shares based on Finkelstein’s tips and also passing along the information to a wide network of family members and clients. The case also includes allegations of insider trading and tipping against Korin Bobrow, who was Azeff’s business partner at CIBC.
The men all deny the allegations, which have not been proven.
OSC lawyer Donna Campbell said Monday that the case will be a “records case,” relying on records about phone calls between Finkelstein and Azeff, as well as trading records and e-mails.
“This is a case about failure of integrity in those who are trusted with great responsibility,” Campbell said.
She said the OSC’s case will be built by showing patterns of repeated behaviour, including patterns of accessing non-public information, patterns of phone calls between Finkelstein and Azeff and patterns of profitable trading by family members, friends and clients of Azeff and others named in the case.
The deals at the centre of the case include some major takeover bids in Canada between 2004 and 2007, including the $3-billion offer for Masonite International Corp. in 2004, the $10.3-billion bid for Placer Dome Inc. in 2005, as well as bids for Legacy Hotels REIT and Dynatec Corp. in 2007.
Campbell said Finkelstein was personally working on some of the deals, while others were being handled by different lawyers at Davies, but Finkelstein allegedly accessed the files through the firm’s computer system.
Campbell alleged Finkelstein made telephone calls to Azeff after learning about takeover deals, and on occasions had meetings with Azeff in Toronto or Montreal after the deals were announced.
She alleged Finkelstein deposited piles of $50 and $100 bills in two bank accounts after meetings with Azeff around the time of four of the deals. The cash totalled $42,500, including $24,350 deposited after the Dynatec deal, she said.
Finkelstein, who grew up in Montreal, met Azeff when both were members of the same fraternity at the University of Western Ontario in the late 1980s. He joined Davies in Toronto in 1998 and became a partner two years later, specializing in financings and takeover deals.
The OSC case also names two former investment advisers at TD Waterhouse Canada Inc. – Howard Miller and Man Kin Cheng – who are accused of trading and passing along tips to clients after allegedly learning about the same deals from one of Azeff’s clients.
Campbell said the OSC plans to call seven witnesses in the case including Mr. Cheng’s wife.
The OSC alleges Azeff, Bobrow and their circle of friends and clients earned more than $3.4-million in profits on trading in shares based on tips from Finkelstein, which were passed along to a wide circle of people.
Prior to the Masonite deal announcement, for example, the OSC alleges Azeff, Bobrow and their friends and clients acquired $15-million of Masonite shares through 150 accounts. On one day before the deal was announced, Azeff and his group accounted for 45 per cent of all trading in Masonite shares, Campbell said.
She said members of the Azeff group earned a 54-per-cent profit from shares of MDSI Mobile Data Solutions Inc. from one day of share purchases before a takeover bid for the company was announced.
Also Monday, the OSC heard testimony from its first witness, a former colleague of Finkelstein’s from the mergers group at Davies. Lawyer Mark Connelly said Finkelstein was “a top notch lawyer” who worked on several major deals, including the Masonite transaction.
Connelly also said he became concerned about Masonite’s rising share price in the days before the deal was announced. He said he and Finkelstein contacted the Toronto Stock Exchange to discuss the unusual trading pattern, but said TSX staff were not particularly concerned.
He said Davies had an open culture between 2004 and 2007 and files on some merger deals were not hidden behind a firewall. In those cases, he said it was not hard for lawyers to access files on others’ cases, and could search the system by key words.
He said the system was changed after the OSC case came to light in 2010.
http://www.bnn.ca/News/2014/9/29/OSC-launches...awyer.aspx
OSC launches insider trading case against Bay Street lawyer
Janet McFarland, The Globe and Mail
2:35 PM, E.T. | September 29, 2014
http://www.bnn.ca/News/2014/9/29/OSC-launches...awyer.aspx
Bay Street lawyer Mitchell Finkelstein deposited a total of over $42,000 in cash in his bank accounts within days of the announcement of four takeover deals he is accused of tipping a friend about between 2004 and 2007, an Ontario Securities Commission lawyer alleged Monday.
The OSC launched its case Monday against Finkelstein, a former partner in the mergers and acquisitions practice at Davies Ward Phillips & Vineberg LLP who is accused of tipping a long-time friend about six takeover deals being worked on by his firm. He left Davies in 2010 when the OSC allegations were revealed.
His friend, Paul Azeff, a former investment adviser with CIBC World Markets Inc. in Montreal, is accused of improperly buying shares based on Finkelstein’s tips and also passing along the information to a wide network of family members and clients. The case also includes allegations of insider trading and tipping against Korin Bobrow, who was Azeff’s business partner at CIBC.
The men all deny the allegations, which have not been proven.
OSC lawyer Donna Campbell said Monday that the case will be a “records case,” relying on records about phone calls between Finkelstein and Azeff, as well as trading records and e-mails.
“This is a case about failure of integrity in those who are trusted with great responsibility,” Campbell said.
She said the OSC’s case will be built by showing patterns of repeated behaviour, including patterns of accessing non-public information, patterns of phone calls between Finkelstein and Azeff and patterns of profitable trading by family members, friends and clients of Azeff and others named in the case.
The deals at the centre of the case include some major takeover bids in Canada between 2004 and 2007, including the $3-billion offer for Masonite International Corp. in 2004, the $10.3-billion bid for Placer Dome Inc. in 2005, as well as bids for Legacy Hotels REIT and Dynatec Corp. in 2007.
Campbell said Finkelstein was personally working on some of the deals, while others were being handled by different lawyers at Davies, but Finkelstein allegedly accessed the files through the firm’s computer system.
Campbell alleged Finkelstein made telephone calls to Azeff after learning about takeover deals, and on occasions had meetings with Azeff in Toronto or Montreal after the deals were announced.
She alleged Finkelstein deposited piles of $50 and $100 bills in two bank accounts after meetings with Azeff around the time of four of the deals. The cash totalled $42,500, including $24,350 deposited after the Dynatec deal, she said.
Finkelstein, who grew up in Montreal, met Azeff when both were members of the same fraternity at the University of Western Ontario in the late 1980s. He joined Davies in Toronto in 1998 and became a partner two years later, specializing in financings and takeover deals.
The OSC case also names two former investment advisers at TD Waterhouse Canada Inc. – Howard Miller and Man Kin Cheng – who are accused of trading and passing along tips to clients after allegedly learning about the same deals from one of Azeff’s clients.
Campbell said the OSC plans to call seven witnesses in the case including Mr. Cheng’s wife.
The OSC alleges Azeff, Bobrow and their circle of friends and clients earned more than $3.4-million in profits on trading in shares based on tips from Finkelstein, which were passed along to a wide circle of people.
Prior to the Masonite deal announcement, for example, the OSC alleges Azeff, Bobrow and their friends and clients acquired $15-million of Masonite shares through 150 accounts. On one day before the deal was announced, Azeff and his group accounted for 45 per cent of all trading in Masonite shares, Campbell said.
She said members of the Azeff group earned a 54-per-cent profit from shares of MDSI Mobile Data Solutions Inc. from one day of share purchases before a takeover bid for the company was announced.
Also Monday, the OSC heard testimony from its first witness, a former colleague of Finkelstein’s from the mergers group at Davies. Lawyer Mark Connelly said Finkelstein was “a top notch lawyer” who worked on several major deals, including the Masonite transaction.
Connelly also said he became concerned about Masonite’s rising share price in the days before the deal was announced. He said he and Finkelstein contacted the Toronto Stock Exchange to discuss the unusual trading pattern, but said TSX staff were not particularly concerned.
He said Davies had an open culture between 2004 and 2007 and files on some merger deals were not hidden behind a firewall. In those cases, he said it was not hard for lawyers to access files on others’ cases, and could search the system by key words.
He said the system was changed after the OSC case came to light in 2010.
http://www.bnn.ca/News/2014/9/29/OSC-launches...awyer.aspx
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