Ming Chao Zhao, a former Bank of Montreal analyst, admitted to engaging in insider trading over an 18-month period and agreed to pay about C$1.19 million ($1.16 million) to settle the case, according to the Ontario Securities Commission.
Zhao, also known as Michael Zhao, will pay a penalty of C$750,000, costs of C$30,000 and disgorge C$416,719 in illegal profit as part of a settlement, the OSC said today in a statement. He also will be permanently barred from trading securities with certain exceptions, the agency said.
As an investment-banking analyst at BMO Nesbitt Burns, Zhao was privy to non-public information on five companies involved in merger-and-acquisition transactions, the OSC said. Between June 2010 and December 2011, he bought shares of the firms using an online discount brokerage account held by a family member, reaping about C$416,000 in profit, according to the settlement.
The trades involved shares of Consolidated Thompson Iron Mines Ltd., Forzani Group Ltd., Pacific Northern Gas Ltd., Canmarc REIT and Menu Foods Income Fund, according to the settlement. Cliffs Natural Resources Inc. (CLF) agreed to buy Thompson Iron Mines in 2011 and AltaGas Ltd. (ALA) acquired Pacific Northern that same year.
Zhao, who gained access to the information through a shared network computer drive, didn’t disclose his trades to the Toronto-based bank, the OSC said. Bank of Montreal (BMO) is Canada’s fourth-largest lender.
“BMO cooperated fully with the OSC,” Paul Deegan, a spokesman for the bank, said in an e-mailed statement. “The trades at issue were done without BMO’s knowledge and were executed through an account outside BMO.”
Paul H. Le Vay, a Toronto lawyer representing Zhao, declined to comment on the settlement. A phone number or e-mail address for Zhao couldn’t immediately be found, and calls to the five people with that name in the Toronto phone listing either went unanswered or were to the wrong party.
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