A former legal assistant at law firm Davies Ward Phillips & Vineberg LLP has received a two-year trading ban after she admitted she tipped a friend about some of the firm’s takeover deals in exchange for small cash payments.
In a settlement approved on Tuesday by the Ontario Securities Commission, Donna Hutchinson admitted she passed on information about six pending deals – including the takeover of Tim Hortons Inc. in 2014 − to former boyfriend Cameron Cornish.
Mr. Cornish, who at the time was a stock trader at Brant Securities Ltd., is accused of trading on tips himself and also passing them along to two friends – Patrick Caruso and David Sidders – who are also accused of trading on the information.
The three men were not part of Tuesday’s settlement agreement and the OSC’s case against them continues.
The settlement agreement said Ms. Hutchinson was “manipulated” by Mr. Cornish, who did not reveal how much money he and his friends were earning from her tips. The agreement said he passed along only “relatively small sums” to her compared with the profits he reaped.
“He was an experienced trader who knew the value of the information to which Hutchinson was privy,” the settlement said.
“He also knew how to use that information to enable his close friends to profit and to share those profits with him, as well as trading on the information himself.”
The original statement of allegations said Ms. Hutchinson passed on tips about eight possible takeovers and the three men cumulatively earned $2.5-million in trading profits, but Tuesday’s settlement outlined six tips she provided that earned the men total trading profits of $1.84-million.
The agreement said Ms. Hutchinson had lived with Mr. Cornish for two years and they remained good friends after they separated. She began to experience financial problems, the settlement said, and agreed to give tips to Mr. Cornish.
The OSC said she first tipped Mr. Cornish that Quadra FNX Mining Ltd. was the subject of an acquisition bid in 2011. The three men all bought shares in the company before the deal was announced, the OSC said.
The OSC alleges Mr. Cornish earned a profit of $116,549 on the share purchases, while Mr. Sidders earned $220,000 and Mr. Caruso earned $23,600.
Ms. Hutchinson received “around $2,000 or $3,000 in cash” from Mr. Cornish about a week after the deal was announced, the OSC said.
Ms. Hutchinson said she received “a few thousand dollars” from Mr. Cornish for a tip about a takeover bid for Osisko Mining Corp. in 2014. Mr. Caruso earned $27,200 in trading profits from his purchase of Osisko shares, the OSC said.
She also received $7,000 in cash for a tip about the takeover bid for Tim Hortons in 2014, the settlement agreement said. It said Mr. Caruso earned more than $1.4-million from trading in Tim Hortons shares and Mr. Cornish earned $128,012.
Ms. Hutchinson was not paid for three other tips, the OSC said.
Ms. Hutchinson was reprimanded and agreed to a two-year ban on trading securities, with some exceptions for registered retirement plans, as well as a two-year ban from working as a registrant in the financial industry. She also agreed to co-operate with OSC staff and testify in future proceedings.
The settlement agreement said Ms. Hutchinson has lost her job and is unemployed, so cannot pay monetary sanctions.
When the allegations were unveiled last September, an official from Davies said Ms. Hutchinson was fired when the firm became aware of the allegations. Brant Securities said Mr. Cornish is a former employee.
Janet McFarland