OSC claims Duic breaching terms of settlement
TORONTO - Daniel Duic, the former friend of disgraced investment banker Andrew Rankin who testified against Rankin at trial, is breaking the terms of his settlement over illegal insider trading, Ontario securities regulators alleged Thursday.
The Ontario Securities Commission said Duic breached a cease trade order by carrying out a number of stock trades through brokerage accounts in Toronto at TD Waterhouse Canada (TSX:TD).
"Duic acted contrary to Ontario securities law and contrary to the public interest by engaging in the transactions in breach of the cease trade order," the OSC said in a statement of allegations Thursday.
Duic's Toronto lawyer, Steven Sofer, said his client admits to breaching the order but didn't intend to do it and is "extremely apologetic."
"He accepts that he did and he'll go before the commission and let them decide what the appropriate consequence should be," Sofer said in a telephone interview.
The OSC settlement, he said, precluded Duic from trading in Ontario -- a ban Duic understood to mean he could purchase shares on a U.S. exchange.
But Duic didn't know he could only trade from a brokerage account outside of Ontario, and he used his Ontario account -- which is what led to the breach of the order.
Under the agreement, Duic was permanently banned from trading any securities, with the exception of mutual funds through a registered dealer for his registered retirement savings plan.
In its statement of allegation, the OSC said Duic has been using a U.S. dollar margin account and an RRSP account at TD Waterhouse Canada -- the same accounts he used "to engage in the illegal insider trading that was the subject of the settlement agreement."
A hearing on the matter has been set for next Tuesday, to determine what the consequences should be for Duic, who has been co-operating with the OSC, Sofer said.
Duic was a key witness against Rankin, a former managing director at the investment banking division of Royal Bank (TSX:RY).
Rankin was convicted in 2005 of tipping off Duic to imminent takeover deals being handled by the firm -- a conviction that was later overturned on appeal.
Rankin was cleared of all 10 insider trading charges by a judge who criticized the OSC for settling with Duic, a former classmate of Rankin at Upper Canada College, a private, elite elementary and high school in mid-town Toronto.
In a controversial $1.9 million settlement before Rankin's first trial, Duic admitted he made about $4.5 million in profit from 1999 to 2001 from trades using information he gathered through his friendship.
Ontario's stock market regulator later dropped its criminal complaint against Rankin and approved a settlement, avoiding a second trial. Rankin was barred from dealing with securities in Ontario and fined $250,000 to cover costs for the OSC.
He also admitted he provided Duic with information about upcoming takeover deals.
The OSC alleges that:
- On March 16, 2007, Duic bought 500 shares of U.S. aircraft maker The Boeing Co. (NYSE:BA) for US$45,344. He purchased another 1,000 shares Dec. 7, 2007 for US$93,029.69.
- On June 26, 2007, he bought 7,500 shares of Cerner Corp. (NASDAQ:CERN), a health-care information technology company, for US$421,570.35. He later sold 7,500 shares of Cerner Corp. for US$462,419.11 and realized a profit of US$40,848.76. He later purchased 1,800 shares of Cerner Corp. for another US$111,498.64.
- On Dec. 3, Duic purchased 1,500 shares of RCM Technologies Inc. (NASDAQ:RCMT) for US$8,865, and another 5,000 shares on Dec. 11, 2007 for US$30,009.99.
All those stocks were of publicly listed companies, not mutual funds.