Two things worth noting:
- Advising Agueci to use Blackberry PIN messages instead of email
- Non-disclosure of the beneficial ownership of shares
As part of the agreement "Telfer agreed to pay $200,000 toward the investigation costs.
He also cannot
“directly or indirectly, trade, arrange for trading by others,” any
securities of issuers of which he is a promoter for one year." (this is a quote from a Toronto Star article).
Below is a part of the Settlement Agreement (Click here for the entire agreement). Look in particular on the details of a couple of transactions in points 21, 23 and 27a.
I first read the description of the settlement in he Globe and Mail (their report is here). It does not provide the details mentioned above. I then read the description in the National Post, and researched the matter further.
Advising Agueci to use Blackberry PIN messages instead of email
15. In and about January 2008, Telfer advised Agueci to use Blackberry PIN messages instead of email.
16. On January 29, 2008, Telfer advised Agueci in an email as follows:
Go to the “wrench” on the homescreen and click on “status” Send me the #. On my address beside the pin: [pin number] Instead of emailing. Use pin with very close friends. Messages don’t go to the gmp server. They go straight to blkberry.
17. The use of Blackberry PIN messages is a technique which Telfer now understands that Agueci subsequently used to communicate with others in relation to trading securities.
18. Agueci on occasion asked Telfer via Blackberry PIN messages about companies in which she was invested. Agueci and Telfer also discussed via Blackberry PIN messages Agueci’s investment in a company for which he was Chairman.
19. Telfer acknowledges that irrespective of his reasoning for using Blackberry PIN messaging from time to time, it was not proper of him to advise someone working for a registrant such as Agueci to use Blackberry PIN messages where those messages would not be monitored. At the time, Telfer had no knowledge of how Agueci used her Blackberry to communicate with others and he had no knowledge of Agueci’s other conduct as alleged in the Statement of Allegations.
20. From time to time Telfer and Agueci exchanged updated PIN numbers.
Non-disclosure of the beneficial ownership of shares
21. In April 2008, Telfer provided Agueci with the opportunity to purchase 500,000 common shares in a private share transaction in 222 Pizza Express Corp. (“222 Pizza”). 222 Pizza was a shell company listed on the NEX board of the TSX Venture Exchange.
22. Telfer advised Agueci that the 222 Pizza shares should not be purchased in her name. During the discussion Telfer and Agueci agreed that Agueci’s brother in law, Santo Iacono (“Iacono”), would instead purchase the 222 Pizza shares.
23. As agreed, Iacono purchased the 222 Pizza shares in his name for $5,000. Telfer now understands that Iacono deposited the 222 Pizza shares in a brokerage account held jointly by him and his wife.
24. At the time of the transfer, Telfer knew that Agueci had disclosure obligations and trading restrictions as an employee of GMP. Telfer knew that Agueci was prohibited from engaging in undisclosed securities transactions.
25. Prior to the transfer of 222 Pizza shares to Iacono’s account, Telfer corresponded directly with Iacono and other investors, and advised them of particulars of the transfer and emphasized that they should “keep this confidential”.
26. Subsequent to the transfer of 222 Pizza shares to Iacono’s account, 222 Pizza went through a corporate reorganization, investment in gold stream royalty agreements, and the renaming of 222 Pizza to Kadywood Capital Corp. and then Gold Wheaton.
27. Telfer now understands that:
a. the 222 Pizza shares were sold in Iacono’s account and ultimately yielded a return of over $500,000;
b. Agueci used those proceeds to, among other things, direct trading in Iacono’s account in securities of other issuers that were then listed on GMP’s grey or restricted list;
c. in or about the same time as the purchase of 222 Pizza shares, Agueci purchased and sold shares of Kadywood/Gold Wheaton in her brokerage accounts at GMP and TD Waterhouse which were monitored by GMP compliance. The sale of these shares in Agueci’s GMP and TD Waterhouse accounts yielded a return of over $71,000; and
d. Iacono subsequently transferred funds from his account to Agueci or on her behalf, at her request, frequently in allotments of under $10,000, which had the effect of avoiding regulatory detection. Telfer further understands that approximately $200,000 was paid to/for Agueci in this manner.
28. Telfer acknowledges that if Agueci’s interest in or trading authority over the 222 Pizza shares in Iacono’s account had been disclosed to GMP, that GMP’s compliance department would have been able to monitor trading in that undisclosed account, just as they monitored trading in Kadywood/Gold Wheaton shares in Agueci’s GMP and TD Waterhouse accounts, to ensure that Agueci was not conducting trades inappropriately.
29. Telfer’s agreement with Agueci, a person with securities transaction reporting obligations, to have another name associated with the private share transaction of 222 Pizza shares, resulted in a transaction in which the beneficial owner of the shares was not disclosed. Telfer ought to have known there was a real risk that Agueci might have a beneficial interest in those shares that was not monitored by GMP, as required.
No comments:
Post a Comment