Some interesting points in Re Suman (OSC, 19 March 2012). OSC staff alleged that Suman had, in the course of his employment at MDS Sciex, communicated undisclosed material information to his wife about the proposed acquisition of Molecular Devices Corp. by MDS Sciex’s parent. Suman and his wife bought a large number of securities in the company, which they subsequently sold for just under $1 million.
First interesting point: Molecular Devices was not a reporting issuer in Ontario, so there was no breach of s 76(1) of the Securities Act, which prohibits insider trading in securities of a reporting issuer (or a TSX Venture issuer with a real and substantial connection to Ontario). The allegations were therefore that Suman’s trades were contrary to the public interest (which the Commission ultimately accepted). Second interesting point: the evidence of insider trading (and tipping) was largely circumstantial, although the Commission was prepared to infer from it that the offences had been made out. Suman had the opportunity to acquire the insider information from his job, the trades in question were completely atypical, he had googled media stories on Martha Stewart and insider trading on the day he began to make purchases, and he appeared to have used special software to erase data on his home and work computers.
Third interesting point: the Commission relied in part on Re Shevlin (FSA, 2008), where the UK regulator was willing to infer that an IT technician had obtained material non-public information in the course of his employment, which he used to trade – not in securities of the employer but in contracts for differences with the employer’s securities as the underlying instrument. (OSA s 76(6) was amended in 2010 to extend the insider trading prohibition to derivatives based on securities of a reporting issuer, in response to the Shevlin scenario.)
[Link available here].