ASC insider trading fine reduced by two- thirds
A Medicine Hat man ordered by the Alberta Securities Commission to pay a $ 1.75- million penalty has had that fine reduced by two- thirds to $ 600,000 after the Alberta Court of Appeal told the ASC to reconsider the amount. On Wednesday, the ASC announced the reduced administrative penalty for John ( Bert) Holtby, who also must repay $ 80,678 in gains made as a result of his illegal activities and commission costs of $ 90,000. His co- accused, Randy George Kowalchuk, who also won at the appeal court level, was ordered to pay a penalty of $ 45,000, down from $ 55,000. He was ordered to disgorge $ 54,401 and to pay costs of $ 22,500. The case concerned trading in Edmonton- based Eveready Inc. shares leading up to its announced sale to U. S.- based Clean Harbors Inc. for $ 176 million in stock and cash in 2009.
The ASC claimed Holtby, who was on the oilfield services company’s board of directors, told others that a merger was in the works and they passed on the insider information. When the merger was announced, the share price rise rendered thousands of dollars in profits. A total of 14 people were initially accused. Five of the 14 agreed to settle with the commission without a hearing and the ASC panel dismissed allegations against some others. Five people appealed their convictions by an ASC panel.
In August 2014, the Alberta Court of Appeal dismissed ASC findings and sanctions against three people it had convicted of insider trading in 2013 and set aside sanctions on two others whose appeals were denied. In a written decision, the court found that the ASC did not offer sufficient justification for the $ 1.75- million fine against Holtby or the $ 55,000 fine it imposed on co- accused Kowalchuk. “The reasons for setting this penalty are so general as to preclude any meaningful review, or to provide Holtby with any understanding of how it was set. The commission failed to explain why a lesser penalty ( such as the $ 400,000 suggested by Holtby) would not act as a meaningful and substantial general deterrent,” it stated. “The resulting penalty is very severe, and one can argue that it extends well beyond what the public interest might require.”