OSC demands Rankin get 3-to-5

TIPPING CONVICTION Length of jail term called ‘ excessive and unrealistic’

The Ontario Securities Commission is seeking an unprecedented three- to five-year prison term in former RBC Dominion Securities executive Andrew Rankin’s tipping conviction, court documents reveal.

In a 30-page brief filed in the Ontario Court of Justice on Sept. 8, the regulator states the 10 counts of tipping of which Rankin was convicted in July “require a custodial sentence to be served by Andrew Rankin in the total range of three to five years.”

The legal brief outlines the OSC’s damning views on tipping and the related violation of illegal insider trading ahead of a sentencing hearing set for Oct. 19.

“ These offences are about deliberate misuse of confidential information,” the OSC writes. “ They destroy the underlying premise of fair and efficient capital markets which is that all investors should have all relevant information available to them.

“One purpose in prosecuting tipping is to deter those who would create two classes of investors by leaking … information to the privileged few.…”

Rankin was convicted of tipping for providing confidential information about upcoming takeovers to his friend Daniel Duic in 2000 and 2001. He was acquitted of insider trading.

Brian Greenspan, Rankin’s lawyer, said yesterday the prison term being sought for his client is heavy-handed, given that the harshest sentence meted out for insider trading thus far has been six months in jail. That sentence — along with a $2-million fine — was handed to Glen Harper, the chairman of Golden Rule Resources Inc.

“ The suggestion that’s being made of three to five years is, in our view, a suggestion that is ... so excessive and unrealistic that it deserves only to be ignored,” Mr. Greenspan said after being told that the Financial Post had obtained the OSC’s legal brief.

He said the offences of which Rankin was convicted “ were clearly based upon a lack of intention to either profit or to personally advantage himself in any fashion.”

There was no evidence Rankin made a profit directly from the information he leaked.

Mr. Duic was the regulator’s key witness in its prosecution of Rankin. He made $4.4-million in profit from trades based on the information he received. He was made to pay back $3-million as part of a pact he struck with the OSC prior to Rankin’s trial.

The OSC’s brief also cites numerous cases in building its argument on how Rankin’s offences should be punished. However, because this is the first tipping conviction under Ontario’s securities laws, the OSC acknowledges “there are no precedents setting out the correct approach to sentencing for this offence.”

The regulator was harshly criticized by Justice Ramez Khawly for submitting its legal brief just a day prior to what was going to be Rankin’s sentencing hearing on Sept. 9.

The OSC declined comment yesterday.