OSC accuses 3 men of leaking information

A Toronto corporate lawyer and two stock traders in Montreal are being accused of illegally leaking information about several big Canadian takeover deals.

One of the transactions involved the takeover of Placer Dome Inc. of Vancouverby Toronto-based Barrick Gold Corp.in 2005.

Another was the takeover of Canadian door manufacturer Masonite International by Kohlberg, Kravis Rogers & Co. in 2004.

In a statement of allegations, the Ontario securities watchdog estimates the two investment professionals, their friends and family would have made about $2.6 million in ill-gotten profits by buying shares before deals were announced and selling them afterward at a profit.

The Ontario Securities Commission alleges they were fed advance, secret information about a total of four corporate takeovers in 2004, 2005 and 2007 by the Toronto lawyer, whose firm had clients involved in the deals.

The OSC says Toronto lawyer Mitchell Finkelstein who is reported to have left the firm Davies Ward Phillips & Vineberg on Thursday passed the information to Paul Azeff, a friend at the Montreal office of CIBC World Markets and Azeff in turn passed it on toco-worker Korin Bobrow.

The OSC alleges Azeff and Bobrow engaged in illegal insider trading by virtue of their positions at CIBC's investment armand that all three men illegally tipped other people to the deals.

The regulator says the two Montreal men knew or should have known that they were prevented under securities law from making use of the inside information.

The allegations, announced Thursday by the regulator, have yet to be tested and haven't been proven.