Israeli accused of financial fraud

The OSC’s statement of allegations said a lawyer, Mitchell Finkelstein, who is reported to have left the firm Davies Ward Phillips & Vineberg on Thursday, illegally leaked information ahead of four big Canadian takeover deals between 2004 and 2007 to the two stock traders.

One of the transactions involved the takeover of Placer Dome Inc. of Vancouver by Toronto-based Barrick Gold Corp. in 2005.

Another was the takeover of Canadian door manufacturer Masonite International by Kohlberg, Kravis Rogers & Co. in 2004.

The OSC’s statement of allegations estimated the two investment professionals, their friends and family would have made about $2.6 million by buying shares before deals were announced and selling them afterward at a profit.

The OSC named one trader as Paul Azeff, a friend of Finkelstein’s at the Montreal office of CIBC World Markets, and said Azeff in turn passed the tips to co-worker Korin Bobrow.

The OSC alleges Azeff and Bobrow engaged in illegal insider trading by virtue of their positions at CIBC’s investment arm and that all three men illegally tipped other people to the deals.

The regulator says the two Montreal men knew or should have known that they were prevented under securities law from making use of the inside information.

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