Two admit insider trading in WeedMD stock, third fights charges

Two men have admitted to insider trading involving the shares of a southwestern Ontario pot grower, while a third disputes charges leveled against him by the industry watchdog. provincial securities.

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Two men have admitted to insider trading involving the shares of a southwestern Ontario pot grower, while a third disputes charges leveled against him by the industry watchdog. provincial securities.

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According to the Ontario Securities Commission (OSC), the three London-area men used nonpublic information to make a “modest profit” by selling shares of WeedMD.

Trevor Rosborough, a suspended mutual fund broker, engaged in insider trading and tipping in 2017 after being alerted by WeedMD employee Tyler Carr about the purchase by the undertaking a huge greenhouse in Strathroy, a move that would significantly increase its production capacity, according to a settlement agreement with the OSC.

Rosborough told associate Dmitri Graham and also advised two clients to buy shares in the cannabis company, which he also bought. WeedMD shares jumped 33% from a day earlier after the expansion plan was announced on Nov. 22, 2017, when Rosborough, Graham and Carr all sold their shares at a profit, according to the OSC.

“Regardless of the amount of profit made, these violations erode public confidence in Ontario’s capital markets and cannot be tolerated,” the commission said of insider trading and tips.

“This is especially true when those who engage in this illegal conduct are registrants who play an important gatekeeper role in protecting the integrity of our markets.”

Publicly traded companies and their employees are subject to strict rules on information sharing by securities regulators to prevent insider trading that can benefit some shareholders and affect stock prices. ‘a society.

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Under the settlement, Rosborough paid fines totaling nearly $40,000, including the $492 gain he made selling his WeedMD shares. He is also prohibited from trading in securities or derivatives for eight years and cannot be a director or officer of a company during this period.

“In my opinion, the terms of the settlement agreement fall within a range of reasonable provisions in the circumstances and will have a significant deterrent effect on Mr. Rosborough, as well as a general deterrent effect on other persons or entities. like-minded engaging in similar misconduct,” commissioner Cecilia Williams wrote in her reasons for approving the settlement.

Rosborough, who faced prior penalties for professional misconduct, showed remorse for his conduct, accepted full responsibility for his actions and agreed to testify as a witness in related proceedings, the commission said.

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Graham, a registered mutual fund dealer, helped Rosborough advise clients and process securities transactions during his registration suspension, according to the commission.

“In return, Rosborough allowed Graham to work from his office, drive his vehicle and pay his registration fees. . .” the OSC alleges.

Graham, who has represented himself, has submitted his final submissions, and now a panel will render its decision, an OSC spokesperson said Wednesday.

The OSC first detailed the charges against the three men on November 9, 2020, in a nine-page statement of allegations that alleges the trio undermined the integrity of Ontario’s financial markets by broadcasting and trading with knowledge of non-public information for personal gain.

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Graham is also charged with two counts of professional misconduct — failure to exercise due diligence and facilitation of securities-related activities by an unregistered person — by the Mutual Fund Dealers Association, a national self-regulatory body.

The association’s allegations against Graham relate to his dealings with Rosborough between November 2017 and July 2018, according to a notice of hearing. A hearing is scheduled for February 2.

Carr admitted to engaging in insider trading and tipping, according to an agreed statement of facts.

A hearing to determine the penalties he will face will be held at a later date, an OSC spokesperson said.

Attorney Philip Millar, who represents Carr, said his client was a minor player in buying the shares.

Carr worked at WeedMD from August 2016 to October 2020, most recently as a master grower and horticultural manager, according to a now-deleted LinkedIn profile.

WeedMD changed its name to Entourage Health Corp. last year and now employs over 300 people in its operations in Aylmer, Strathroy and offices in London and Toronto.

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