The Ontario Securities Commission is gearing up for the next round of its first-ever tipping prosecution under the Securities Act.
Provincial court Judge Ramez Khawly acquitted Andrew Rankin, a former securities executive, of 10 counts of insider trading, but convicted him of 10 counts of insider tipping and sentenced him in 2005 to six months in jail.
Ontario Superior Court Justice Ian Nordheimer set aside the conviction and granted Rankin a retrial on Nov. 9, 2006, saying the trial judge relied on flawed and inconsistent evidence from the prosecution’s key witness, Daniel Duic, and failed to consider each count individually. No specific findings were made regarding the circumstances of any individual tip.
The OSC lost its bid to appeal Nordheimer’s decision on Feb. 27, and the regulator announced plans to re-prosecute on May 3. Rankin’s first appearance for the new trial is scheduled for May 22.
Brian Greenspan represented Rankin during earlier proceedings, but another yet unnamed partner at Greenspan Humphrey Lavine will act for Rankin in the retrial because Greenspan isn’t available and the firm hopes to secure the earliest possible trial date.
Rankin is accused of 10 counts of tipping for allegedly supplying information about upcoming takeover deals to his childhood friend, Duic, while employed as a managing director in the mergers and acquisitions unit at RBC Dominion Securities.
At the first trial, credibility was a critical issue. No one disputed that Duic obtained information illegally, and used it to make millions, but the defence argued that Rankin wasn’t one of the tippers.
Duic’s settlement deal with the OSC allowed him to keep about $4 million of the profits he generated from his illegal activities, but required him to identify a tipper. Duic said he received tips from others as well, and provided conflicting evidence under oath about important details of his dealings with Rankin.
There was no evidence that Rankin participated in any of the trades, or directly profited from Duic’s illegal activities. However, the trial judge found it suspicious that Rankin accepted trips and money from his friend at the time.
When reaching his conclusions, Nordheimer wrote that it would be up to the OSC to decide whether, in light of the significant evidentiary issues, it would be in the public interest to re-prosecute.
Those are appellant code words that usually indicate there are too many frailties and weaknesses in the case, so don’t proceed, says Greenspan.
“They’ve chosen to ignore the warning and proceed and have arrived at a conclusion that somehow it can be justified,” he says. “They’ve taken their time certainly in coming to that conclusion.”
But a spokesperson for the OSC said it has concluded that proceeding with the new trial is in the public interest.
“The OSC considers the alleged misuse of confidential information to be a very serious matter.”