Insider trading allegations against two prominent mining industry executives involved in the 2011 takeover of Baffinland Iron Mines Corp. have been completely dismissed by the Ontario Securities Commission.
Jowdat Waheed, a former chief executive officer of Sherritt International Corp., and Bruce Walter, a veteran deal maker who played a role in the formation of Barrick Gold Corp. in the 1980s, were alleged to have used inside information when they teamed up on a joint bid with Luxembourg-based ArcelorMittal to take over Baffinland.
But a three-member panel of the Ontario Securities Commission has ruled that the pair did not use insider information to make the bid, dismissing all the allegations against them, according to a copy of the decision provided to The Globe by a spokesman for the two men.
"Mr. Walter and Mr. Waheed have been fully vindicated," Kent Thomson, a lawyer who defended Mr. Walter before the OSC, said in an e-mailed statement, calling the OSC allegations "completely without merit."
In its original statement of allegations, OSC staff alleged that Mr. Waheed had engaged in "tipping" by using confidential information that he gained while working as a consultant for Baffinland, which was sitting on a massive undeveloped iro-ore deposit on Baffin Island in Canada's Arctic.
He and Mr. Walter made a "toehold" purchase of shares in Baffinland and launched their own hostile bid for the company, which was in talks with ArcelorMittal on a joint venture to develop the mine. They and ArcelorMittal then teamed up on a joint bid, amidst an acrimonious fight with Baffinland shareholders, some of whom cried foul.
But the OSC decision, which is to be made public on Wednesday, finds that Mr. Waheed did not allow the purchase of a toehold position in Baffinland while in a "special relationship" with the company and "with knowledge of material facts" about the status of its talks with ArcelorMittal. It also concludes that Mr. Waheed did not inform Mr. Walter of any material facts about that potential joint venture.
At a hearing last year, lawyers for the men argued they are innocent of insider trading because any information Mr. Waheed had about Baffinland's talks with ArcelorMittal or the junior mining firm's plans was widely known and speculated upon publicly.
In 2010, Baffinland iron engaged in on-again off-again talks with ArcelorMittal on a potential joint venture for the site, which required at least $4-billion for a railway to carry the ore to an inlet for shipment to steel mills in Europe, a venture too big for Baffinland alone.
Mr. Waheed worked as a consultant for Baffinland from February to April, 2010. After his role as a consultant ended, Mr. Waheed formed Nunavut Iron Ore Co. with Mr. Walter in August, 2010, and acquired a "toehold" stake in Baffinland on Sept. 9 of that year. They launched their takeover bid on Sept. 22, just days before Baffinland and Arcelor were expected to finalize their joint venture, the OSC alleges. Arcelor countered Nunanvut's bid, and both would end up acquiring Baffinland in a joint bid in January 2011.