OSC kicks off case against Bay Street staffer

Assistant at securities firm alleged to have provided insider tips on mining deals to friends and family

An executive assistant at a Toronto securities firm tipped friends and family to buy shares in certain mining companies that she learned were about to be bought, the Ontario Securities Commission has heard.

“This case is about deception,” said OSC lawyer Cullen Price as he began his opening statement Monday in a hearing involving Eda Marie Agueci, who is facing charges along with eight others. Agueci worked in the mining group in the investment banking arm of GMP Securities.

Others named in the OSC case include her cousin Josephine Raponi, brother-inlaw Santo Iacono, who is also known as Tino, friends Dennis Wing, who was a founding partner at First Marathon Securities, Kimberley Stephany, Henry Fiorillo, Joseph Fiorini, and John Serpa, Iacono’s business partner. Jacob Gornitzki, a business advisor who frequently used GMP’s offices, was also named.

“(It is deception) in the market where they purchased securities with an informational advantage,” he said, adding OSC staff believe they were also misled by Agueci and Wing during the investigation.

Agueci is also accused of warning others about the OSC investigation itself.

Price said Agueci also deceived GMP Securities, where she worked in the investment banking division, by not disclosing two secret trading accounts – one in her mother’s name and one in her brother-in-law Iacono’s name.

Price took the three-member panel carefully and methodically through a detailed chronology of what the OSC believes took place in the years 2007 and 2008, when Agueci had access to material information that was not yet public.

Through her job, she had access to certain information as well as access to emails of the GMP chairman and occasional access to emails of other investment bankers in the mining group at GMP.

Officials with GMP are expected to testify during the hearing. Last year, when the charges were first filed, GMP immediately suspended Agueci.

A call and email to GMP inquiring about Agueci’s current employment status were not returned Monday.

According to the OSC, Agueci’s friends and family traded in five publicly traded companies: Nu Energy Uranium Corp., Energy Metals Corp., Northern Orion, HudBay Minerals Inc., and Coalcorp Mining Inc.

The OSC alleges that they bought these shares shortly before news of an acquisition was announced and then they quickly sold them; in the NU Energy case, Agueci allegedly invested $140,000, which Price said represented twice her annual salary including bonuses.

In the case of Coalcorp, according to allegations, the investors only held the shares for three days after a third-party acquisition was announced, and quickly sold them for a profit of $55,000.

Price detailed emails, cell phone conversations and some meetings, after which her friends and family members would place trades, sometimes a few minutes later. At one point, he played a recorded telephone call where Agueci is accused of impersonating her mother to make a trade in a secret RBC account.

The OSC also alleges that Agueci purchased $5,000 in a private placement offered by Goldcorp chair Ian Telfer in a company called 222 Pizza Express Corp., but he advised her to put the investment in an account in Iacono’s name.

That $5,000 investment grew to more than $500,000.

Telfer was charged along with the others for acting contrary to the public interest, but not insider trading.

He reached a settlement with the OSC last month, agreeing to pay $200,000 toward investigation costs and is prohibited from “directly or indirectly, trading, arranging for trading by others,” any securities of issuers of which he is a promoter for one year.

However, he can continue to serve as a director or chair of a publicly traded company.

Telfer acknowledged in the deal that advised Agueci to use BlackBerry PIN messages instead of email, because in that method messages don’t go to the GMP server.

Lawyers for the eight respondents are expected to deliver their opening statements on Tuesday. The case is scheduled to run until December.