OSC accuses former CIBC, UBS investment banker of improper trades

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A former managing director at CIBC World Markets Inc. and later at UBS Securities Canada Inc. has been accused of improperly trading in shares of two companies using information he obtained in his work.

The Ontario Securities Commission has accused Bruce Moore of "acting contrary to the public interest" when he bought shares of global manufacturer Tomkins PLC in 2010 prior to a $5-billion (U.S.) takeover offer by the Canada Pension Plan Investment Board and Onex Corp.

He is also accused of buying shares of Toronto-based reverse mortgage company Homeq Corp. in 2012 before the company announced a takeover by Birch Hill Equity Partners.

The OSC said Mr. Moore has negotiated a settlement agreement, which will be considered by a hearing panel on April 16.

"This conduct fell markedly below the high standard of behaviour expected from someone in Moore's position and given his extensive experience in the capital markets industry," the OSC said in a statement of allegations issued Thursday.

At the time of the first purchase, Mr. Moore was managing director of investment banking (diversified) at CIBC in Toronto, and was responsible for dealing with CPPIB as one of his clients. In 2012, at the time of the Homeq purchase, he had changed jobs and was managing director of investment banking, diversified industrials, at UBS.

UBS spokeswoman Karina Byrne said Mr. Moore left the firm last year.

"The transactions identified in the Ontario Securities Commission's settlement announcement were undertaken by a former UBS employee without UBS's knowledge," she said in an e-mailed statement. "UBS was not a subject of the investigation and has fully co-operated with the OSC to address this matter."

The OSC alleges Mr. Moore bought 212,000 shares of Tomkins on the London Stock Exchange in June and July, 2010, after hearing rumours of a possible takeover bid and based on information he gleaned from a friend – identified by the OSC as "Mr. A" – who worked at CPPIB.

The OSC said his friend at CPPIB did not tell him about the takeover deal, but Mr. Moore knew CPPIB was working on a large transaction and was seeking $2-billion in financing, and he guessed the target after seeing his friend speak to the CEO of Tomkins at a charity event.

"Mr. A declined to introduce Moore to the CEO, or to reveal his identity," the OSC said in its statement. "Later that day another person volunteered the CEO's identity to Moore. The following business day, Moore took steps to initiate the purchase of a portion of the Tomkins securities."

He allegedly bought the shares using two offshore brokerage accounts in the British Channel island of Jersey, which the OSC said he had opened in 2008. The OSC alleged Mr. Moore did not disclose the offshore accounts to CIBC as required by the firm's compliance policies.

The regulator said the Tomkins purchases were the first transactions in the offshore accounts, and were the single largest equity purchases in Mr. Moore's lifetime by value.

Shares of Tomkins climbed 31.6 per cent on the day the offer by CPPIB and Onex was announced, and Mr. Moore's profit on his shares was $275,611 (Canadian), the OSC said.

The OSC alleged Mr. Moore "ought not to have made use of information obtained in part by virtue of his position of an employee" of a registered brokerage firm prior to its public disclosure.

The OSC also alleged Mr. Moore bought the Homeq shares after he inadvertently received an e-mail from a client at Birch Hill Equity Partners revealing that the Homeq board had picked Birch Hill as the winning bidder for the company with an offer price of $9.50 per share.

He received the e-mail by accident in March, 2012, after an official at Birch Hill – identified as Mr. B – used the "auto-complete" addressing function to fill in the name of the recipient of the e-mail, and accidentally selected the wrong name.

"Instead of returning the e-mail and advising Mr. B that he had received the e-mail in error, Moore took steps to purchase securities of Homeq, the OSC alleged.

Between March 23 and March 27 last year, he bought shares worth $244,524 using his Jersey brokerage account, the OSC said, earning a profit of about $43,000 after the deal was announced.

CIBC said the OSC has not alleged any misconduct by the bank, and said CIBC did not act as a financial adviser to any of the parties involved in the Tomkins deal.

"As noted by the OSC, Mr. Moore's alleged trades were done without CIBC's knowledge," spokesman Kevin Dove said. "They were done using an account outside of CIBC and he did not comply with CIBC policies requiring disclosure of accounts outside of CIBC and obtaining CIBC approval before executing trades."

He added CIBC was only invited to participate in a lending syndicate arranged by CPPIB and Onex after the Tomkins transaction was announced.