Fairfax Financial Holdings Ltd. said the insider-trading probe of the company and Chief Executive Officer Prem Watsa is tied to the 2011 takeover offer by Resolute Forest Products Inc. for shares of Fibrek Inc.
Fairfax is “fully cooperating” with the Quebec securities regulator Autorite des Marches Financiers, Toronto-based Fairfax said Thursday in a report with first-quarter results.
“Fairfax continues to be confident that in connection with the Resolute takeover offer, it had no material non-public information, that it did not engage in illegal insider trading or tipping, and that there is no reasonable basis for any proceedings in this connection,” according to the document. “However, if the AMF commences legal proceedings, no assurance can be given at this time by Fairfax as to the outcome.”
Fairfax, the insurance and investment company, said in July that Watsa and President Paul Rivett were being investigated as part of a probe into possible insider trading or tipping. Thursday’s document included a reference that the review is tied to Fibrek.
Fairfax is a shareholder in Resolute, and agreed to tender its Fibrek holdings, representing about a quarter of the pulp mill owner’s shares, according to Thursday’s statement. Fibrek opposed the takeover, which was eventually completed.
Watsa’s company said that its Fibrek stake represented less than one-sixth of one percent of Fairfax’s invested assets. Sylvain Theberge, a spokesman for the Quebec securities regulator, didn’t immediately return a request for comment.