The Ontario Securities Commission will hold a hearing on Sept. 20 on whether to approve the settlement, the OSC said yesterday in a statement. The terms of the accord and what, if any, penalties or sanctions Telfer has agreed to weren’t disclosed.
Telfer said he would be able to continue his duties as Goldcorp chairman when asked yesterday in a telephone interview. He declined further comment. Telfer’s lawyer, Joseph Groia, didn’t immediately respond to messages seeking comment.
Telfer, 67, was included in an OSC statement of allegations in February 2012 regarding an alleged insider-trading scheme involving at least eight people. The OSC alleged he acted “contrary to the public interest. Telfer, who is also chairman of Uranium One Inc. (UUU), had previously denied any wrongdoing.
The backdrop to the OSC’s case is the financing of mining startups on Bay Street, Toronto’s financial center, where more money is raised for the industry via stock sales than in any other city in the world. Telfer is one of Canadian mining’s most prominent figures, having helped create six publicly traded companies with a market value of more than $1 billion, including Vancouver-based Goldcorp, the biggest gold producer by market capitalization, Silver Wheaton Corp. (SLW) and New Gold Inc. (NGD)
In its 2012 statement of allegations, the OSC said Eda Marie Agueci, an executive assistant to Eugene McBurney, chairman of Toronto brokerage and investment-banking firm GMP Securities LP, was the central figure in the illegal insider-tipping and trading scheme. The scheme involved at least eight other people and yielded about C$962,000 ($934,000) in profits, the OSC said.
While the OSC said Telfer didn’t participate in the scheme, it accused him of helping Agueci disguise her beneficial ownership of securities. It also alleged that Telfer advised Agueci, a close friend, on how to circumvent the monitoring of her e-mail by GMP compliance staff.
A key element of the OSC’s allegations against the Goldcorp chairman involved his practice of awarding the right to buy shares in his startup companies to friends and family through private stock placements. The so-called president’s lists would often include acquaintances at brokerage and investment banks and their relatives.
Those on the lists were able to buy shares in dormant shell companies before it became more widely known that Telfer and others planned to use those companies as publicly traded vehicles for new mining or resource ventures. Being placed on the list provided the potential, though not a guarantee, for significant investment returns.
According to the OSC allegations, Telfer placed Agueci’s brother-in-law, Santo Iacono, on a list of people eligible to buy shares in a dormant shell company called 222 Pizza Express Corp. Iacono purchased 500,000 shares of 222 Pizza Express for C$5,000 in April 2008, according to the regulator.
The OSC alleged the stock was then transfered to a ‘‘secret account,” where half of the shares were held for the benefit of Agueci. The shares yielded a return of more than C$500,000 after Pizza Express was renamed Gold Wheaton Gold Corp. and reorganized into a company that purchases and sells byproduct gold from operating mines, according to the OSC.
The OSC alleges that Telfer and Agueci “agreed that the shares shouldn’t be purchased in Agueci’s name in order to ensure the secrecy of the transaction.”
The regulator said Telfer knew or should have known that Agueci, as a GMP employee, had disclosure obligations, trading restrictions and was prohibited from engaging in undisclosed securities transactions.
Among the potential penalties Telfer faces in the case is a suspension from serving as an officer or director of a public company.
Agueci was suspended from GMP after the OSC made its allegations against her in 2012. Her lawyer, James Douglas, said by phone yesterday he didn’t have instructions to speak to the media about the case. Mark Polley, the lawyer representing Santo Iacono, declined to comment.
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