SEC Charges Canada-Based Investment Banker with Insider Trading
The Securities and Exchange Commission today charged an investment banker in Toronto with insider trading by using information that he obtained through his job of pitching investment ideas to the Canada Pension Plan Investment Board (CPPIB).
The SEC alleges that Richard Bruce Moore, who worked at the Canadian Imperial Bank of Commerce (CIBC), was attempting to obtain a role in a pending acquisition when he learned facts that allowed him to conclude that U.K.-based engineering and manufacturing company Tomkins plc was the CPPIB’s target. Moore misappropriated the information by purchasing Tomkins American Depositary Receipts (ADRs), which trade on the New York Stock Exchange, during the weeks leading up to the acquisition. After the acquisition offer was announced, the closing price of Tomkins ADRs rose 27 percent, and Moore made more than $163,000 in illicit profits.
Moore has agreed to settle the SEC’s charges by paying more than $340,000. The Ontario Securities Commission today announced a related action against Moore for insider trading in Tomkins common stock.
“Moore spent approximately one-third of his total net worth on purchases of Tomkins securities based on information he learned in the course of his employment,” said Scott W. Friestad, Associate Director of the SEC’s Division of Enforcement. “In today’s interconnected markets, the cooperative relationships among securities regulators mean that those who choose to engage in international insider trading should expect to face consequences across the globe.”
According to the SEC’s complaint filed in federal court in Manhattan, the CPPIB was one of Moore’s top clients at CIBC in 2010. His primary contact was a CPPIB managing director who was responsible for taking public companies private. Through Moore’s interactions with the CPPIB, he learned that the Board was working on a large transaction in the United Kingdom. He pieced together nonpublic information to conclude that the Board was going to make an offer to acquire Tomkins.
The SEC alleges that Moore used an account in the Channel Islands to purchase 51,350 Tomkins ADRs on the New York Stock Exchange on June 28, 2010. He also purchased a large number of Tomkins common shares on the London Stock Exchange. The CPPIB and a Canadian private equity firm announced the acquisition offer for Tomkins on July 19, 2010.
The SEC’s complaint charges Moore with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. In the settlement, which is subject to court approval, Moore agreed to pay $163,293 in disgorgement, $14,905 in prejudgment interest, and a $163,293 penalty. Moore also agreed to an SEC order that will bar him from the securities industry or participating in a penny stock offering.
The SEC’s investigation was conducted by David Frohlich and Matthew L. Skidmore. The SEC appreciates the cooperation and assistance of the Ontario Securities Commission, Jersey Financial Services Commission, and Financial Industry Regulatory Authority.