Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Friday, May 17, 2013

Ex-BMO analyst agrees to $1.2 million fine for insider trading

A former investment banking analyst at BMO Nesbitt Burns will pay nearly $1.2 million to the province’s stock market watchdog to settle allegations of illegal insider trading.

Michael Zhao, 28, also faces permanent bans on stock trading and working in the investment industry, according to the terms of the settlement deal.

“I believe the range and magnitude of the sanctions ordered today speak for themselves,” OSC commissioner Edward Kerwin said as he approved the deal and then reprimanded Zhao during a brief hearing on Friday.

“Deterrence should be the message to all.”

Zhao, also known as Ming Chao Zhao, “very much regrets his conduct,” co-operated with the investigation and agreed to the sanctions, his lawyer, Paul LeVay told the hearing.

From June 2010 to December 2011, Zhao traded stocks using inside information about coming mergers and acquisitions (M&A) that he obtained on the job, according to the settlement deal.

“As a result of his position, he had access to a shared computer network drive where confidential documents respecting the relevant M&A deals were stored,” the OSC documents say.

Using a family account at TD Waterhouse, Zhao bought or directed the purchase of shares of five companies: Menu Foods Income Fund, Consolidated Thompson Iron Mines Ltd, Forzani Group Ltd, Pacific Northern Gas Ltd., and Canmarc REIT, prior to the public takeover announcements, according to OSC documents.

After the deals were announced, the stocks shot up in value and the shares were sold.

The illegal trades earned a profit of about $416,000, the OSC said.

Zhao left BMO in December 2011, but continued to direct trading in the account, OSC lawyer Matthew Britton told the hearing. The profit from the trades was eventually lost in the market.

“The conduct in this case was serious. Though Mr. Zhao is a young man, he is clearly a capable person” and his trading was “surreptitious and calculated to avoid detection,” Britton said.

The OSC lawyer urged Kerwin to approve the settlement deal, which includes a 10-year prohibition on becoming an officer or director and permanent bans on these jobs at publicly-traded firms, in the public interest and to send a message of deterrence.

“The message that must fly from the hearing room and land in the investment banks in this city …[is that] you will be detected, you will be exposed,” Britton said. “In the end, your own misconduct will cost you your career.”

Under the settlement deal, Zhao was ordered to pay $750,000 in penalties, disgorgement of ill-gotten gains of $416,000, including $350,000 payable immediately, and investigation costs of $30,000.

He is permanently banned from trading securities, with the exception of mutual funds, ETFs, and index funds in his registered retirement savings plan or Tax-Free Savings Account.

Zhao declined to speak to reporters after the hearing.

Original Article
Source: thestar.com
Author:  Madhavi Acharya-Tom Yew

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