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On March 31, 2015, the Ontario Securities Commission (OSC) issued an Order approving a settlement agreement between OSC staff and Anand Hariharan (Hariharan) who traded in securities of a non-reporting issuer while in possession of material non-public information (MNPI).


Hariharan’s close childhood friend, Satish Talawdekar (Talawdekar) was a manager in the IT department of MacDonald, Dettwiler & Associates Inc. (MDA). Talawdekar worked in MDA’s Brampton office and both resided in Mississauga.

Talawdekar learned that MDA was acquiring a major subsidiary of Loral Space & Communications Inc. (Loral) before MDA publicly announced this acquisition. Although listed on the NASDAQ, Loral was not a reporting issuer in Ontario. The sequence of events was as follows:

  • On June 21, 2012, Talawdekar learned of the MNPI that MDA was going to be part of a major, transformative acquisition;
  • On or about June 25, 2012, Talawdekar learned further details of the acquisition, including that the target acquisition was a Loral subsidiary;
  • Beginning later that day and the following day, Talawdekar telephoned Hariharan and told him of the MNPI;
  • On June 26, 2012, Hariharan purchased 220 Loral call option contracts for a cost of $11,019.90;
  • At 9:25pm on June 26, 2012, MDA announced its acquisition of the Loral subsidiary;
  • On June 27, 2012, one day after the announcement, the closing market price of MDA shares increased 28% and Loral shares, 13.2%;
  • On June 27, 2012, Hariharan sold all 220 Loral option contracts, realizing a profit of USD$68,683.40, a 623% return in one day; and
  • On June 29, 2012, MDA issued a material change report about its acquisition.

The Settlement Agreement and Order

The settlement agreement prohibited Hariharan from trading in securities for a period of 10 years. He was, however, permitted to trade in his personal and joint registered retirement savings plan accounts. Hariharan agreed to make a voluntary payment of $35,000 to the OSC and pay costs of $5,000.

The settlement agreement indicated that although Hariharan’s conduct did not technically breach the insider trading provision in section 76(1) of the Securities Act (Ontario) (the Act) because Loral was not a reporting issuer in Ontario, his conduct impugned the integrity and fairness of the capital markets because he used MNPI to purchase securities. As a result, the OSC held that Hariharan’s conduct was contrary to the public interest under sections 127 and 127.1 of the Act and issued the Order approving the settlement agreement.


This settlement agreement is noteworthy because it shows the OSC’s willingness to extend the principles of insider trading in circumstances where there has been no direct breach of this provision in the Act. It further shows the OSC’s readiness to police any inappropriate use of MNPI, whether such misuse relates to a reporting issuer or non-reporting issuer.

This article contains general information only and is not intended to provide a legal opinion or advice. Please consult a lawyer or compliance advisor for matters related to your situation before relying on any of the statements made in this article.