Former mutual fund dealing representative, Trevor Rosborough is being sanctioned extensively by the Ontario Securities Commission (OSC) after he engaged in illegal tipping and insider trading in the shares of WeedMD Inc. The offenses reportedly occurred while Rosborough was suspended from registration over an earlier sanction levied by the Mutual Fund Dealers Association of Canada (MFDA) for obtaining and using pre-signed forms.
“Illegal insider trading and tipping are fundamental abuses of material non-public information,” the OSC writes in its settlement agreement with Rosborough. “These offenses erode public confidence in Ontario’s capital markets and cannot be tolerated.”
While suspended from registration, Rosborough learned that the cannabis company was set to announce a major expansion that would significantly increase its production. Before the expansion was generally disclosed, Rosborough communicated the information to two clients and purchased WeedMD shares for his own account. When the deal was announced, the company’s shares rose 33 per cent. Rosborough sold all of his shares for a profit of $492.32.
Originally registered as a mutual fund salesperson with Quadrus Investment Services, Rosborough was terminated following the MFDA’s decision, Rosborough enlisted the help of two individuals to help him continue to advise clients while his registration was suspended.
Engaged in stealth advising
In another settlement agreement made with the OSC in May 2020, Rosborough admitted that he engaged in stealth advising and held himself out as an advisor to prospective clients. Among other terms, Rosborough agreed to a five-year suspension of his registration, beginning in June 2020.
To settle with the OSC over his insider trading, Rosborough is barred for eight years from acquiring or trading in any securities or derivatives and must immediately resign any position he holds as a director, or officer. “Any exemptions contained in Ontario securities law do not apply to the respondent for a period of eight years,” they write.
In addition, Rosborough must pay an administrative penalty of $35,000, disgorge the $492.32 profit he earned from the insider trading, and pay costs in the amount of $5,000. After the payments are made in full, they add that Rosborough is permitted to trade only mutual funds, exchange-traded funds or index fund securities, government bonds and guaranteed investment certificates in his own registered accounts only. Before doing so, he must also provide the firm holding his accounts with a copy of the OSC’s order.
