Goldcorp Inc. chairman Ian Telfer has reached a settlement with the Ontario Securities Commission, agreeing to pay $200,000 in costs to settle allegations he acted contrary to the public interest in a share offering deal.
"Senior market participants like Mr. Telfer have a responsibility to protect the integrity of the capital markets," OSC lawyer Cullen Price told a settlement hearing Friday. "Mr. Telfer failed to live up to the standard expected of him."
As part of the settlement, Mr. Telfer was reprimanded by the OSC and agreed not to act as a promoter of private share offerings for one year.
He did not receive a ban from acting as a director or officer of a public company, which the OSC has the power to impose. Mr. Price said such a penalty was not warranted in the case because of the "narrow scope" of the allegations.
Mr. Telfer was named in a case involving a much larger alleged insider-trading ring that centred on a former executive assistant at brokerage firm GMP Securities. Eda Marie Agueci, who was an assistant to GMP's chairman, is accused of tipping friends and family members about takeover deals she learned about in her job.
Mr. Telfer was not accused of participating in the insider-trading activity. The OSC alleged he taught Ms. Agueci, a close friend, how to use the PIN text messaging service on her BlackBerry so she would not leave an e-mail trail that could be monitored by GMP's compliance department. The OSC said this helped her avoid her disclosure obligations at GMP.
Mr. Telfer was also accused of helping Ms. Agueci buy shares of a company he was helping launch as a private share offering to a small group of investors. Ms. Agueci asked for the shares to be put into a private brokerage account set up in the name of her brother-in-law. The OSC said Mr. Telfer should have known it was wrong to participate in a transaction "in which the beneficial owner of the shares was falsified."
Mr. Telfer did not appear in person at Friday's hearing, and was allowed to participate by video conference call for health reasons. He did not speak during the hearing.
His lawyer, Kevin Richard, said the agreement with the OSC was "a reasonable conclusion of the matter."
"At the time Mr. Telfer believed his conduct was proper, but he has acknowledged that in hindsight it fell below standards," Mr. Richard said.
He said Mr. Telfer was not aware of how Ms. Agueci used her BlackBerry with others, and he was not aware of the alleged insider trading conduct. However, he said Mr. Telfer admits he should have known there was a risk Ms. Agueci had a beneficial interest in the shares that were placed in a brokerage account in her brother-in-law's name.
"He did not know that, but he's acknowledging that he ought to have known there was a real risk of that happening," Mr. Richard said.
OSC enforcement director Tom Atkinson said the penalty in the case was appropriate because Mr. Telfer was not alleged to be a participant in the more serious insider trading allegations.
"Quite frankly I was impressed that he stepped up to the plate and accepted personal accountability for this," Mr. Atkinson said in an interview following the hearing.
"It allows my prosecution team to vigorously focus on the remaining respondents. I think him taking accountability is consistent with his reputation, and I think the sanctions were proportionate."
OSC commissioner Christopher Portner, who approved the settlement agreement, said Mr. Telfer was an "extremely sophisticated" businessman with a long track record heading public companies, and should have understood the risks of helping someone evade monitoring or disclosure of share ownership.
"As a result of your experience you are well aware of the need to maintain the integrity of the public markets," Mr. Portner told Mr. Telfer before formally reprimanding him at Friday's hearing.
Goldcorp director Peter Dey said the board of the company remains fully committed to Mr. Telfer's leadership and is pleased to see him resolve the case.
"I had trouble at the outset understand the action against Ian, speaking as a friend and a fellow director, but on reflection I think [the settlement] is in his best interests," Mr. Dey said in an interview. "And I believe it's in Goldcorp's best interests to have this matter resolved and behind us."
Ms. Agueci and others named in the case were not involved in the settlement Friday. Opening arguments in their hearing are scheduled to begin Sept. 30.