A West Vancouver stock promoter has agreed to pay almost $80,000 to the B.C. Securities Commission after admitting to insider trading.
As part of a settlement with the commission, Jerome John Rak agreed he flouted securities laws when he bought shares in an Alberta company based on knowledge that was not available to the general public at the time.
According to the commission, on Aug. 4, 2009, Rak met with Arthur Millholland, former president and chief executive officer of Oilexco Inc., a now-defunct oil exploration company, in West Vancouver, to discuss the possibility of Millholland merging with another company, Velo, and becoming its president and CEO.
The next day, Millholland began drafting a news release that would announce he had become the new president of Velo and sent that draft to Rak.
Between Aug. 5 and 7, before that news had become public, Rak bought 172,000 shares of Velo through a B.C. company called Belmont.
Velo issued the news release at the end of the day Friday, Aug. 7, 2009, when the company's share price was at about 20 cents. On Aug. 10, the next trading day, the share price rose to a high of 49.5 cents.
Rak did not sell the shares, but acknowledged if he had, he could have made a profit of almost $53,000, based on that insider information.
In addition to paying $79,429, Rak is also banned from buying or trading shares of any publicly-traded company that reports to the B.C. Securities Commission with whom he has a special relationship for 10 years. He is also banned from acting as a director or officer of any public company that reports to the BCSC for five years.
It isn't the first time Rak has been in trouble with the securities commission.
In 1988, he was banned from trading for eight years for what the commission described as "serious breaches of the act and other actions contrary to the public interest."
In handing down its decision at that time, the commission said Rak's activities reflected "a blatant disregard of securities law and exemplify the practices which can bring securities markets into disrepute."
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