Former WeedMD worker, two others accused of insider trading

A worker harvests cannabis at WeedMD's Strathroy farm. (Free Press file photo)

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A former employee at a Southwestern Ontario pot producer alerted a suspended mutual fund dealer about the company’s expansion plans before they were made public, the Ontario Securities Commission (OSC) alleges.

Taylor Carr, a former production worker at WeedMD’s Aylmer operation, told Trevor Rosborough, a suspended mutual fund dealer, on Nov. 10, 2017, about the cannabis company’s purchase of a massive greenhouse on a 40-hectare property in Strathroy, according to the commission’s nine-page statement of allegations released this month.

The deal, which hadn’t yet been disclosed to the public, was expected to increase WeedMD’s annual production of cannabis from 1,200 kilograms to more than 50,000 kilograms, the OSC says.

Tyler Carr, a former employee at WeedMD, is one of three Southwestern Ontario men facing allegations of insider trading by the Ontario Securities Commission. (LinkedIn photo)

Rosborough bought 1,090 shares of WeedMD, a publicly traded company listed on the TSX Venture Exchange, a stock exchange for emerging companies, and shared the expansion plan information with Dimitri Graham, a London-based mutual fund dealer, who bought 4,485 shares over the next two weeks, the OSC alleges.

Carr, a St. Thomas resident, bought his company’s shares on Nov. 14, 2017, the same day he spoke with Rosborough, whose two clients also purchased shares after hearing about the pending news, the OSC alleges. The commission didn’t say how many shares Carr bought.

WeedMD announced the expansion plan on Nov. 22, 2017 – sending its stock price up 33 per cent – when Carr, Rosborough and Graham all sold their shares for a profit, the OSC alleges.

“These profitable trades were a result of insider trading and tipping, and therefore significant breaches of Ontario securities law,” the commission contends.

Publicly traded companies and their employees are subjected to strict rules about information-sharing by securities regulators to prevent insider trading that can benefit some stockholders and affect a company’s share price.

WeedMD is co-operating fully with the OSC investigation and Carr is no longer an employee, company spokesperson Marianella delaBarrera said.

Trevor Rosborough is one of three Southwestern Ontario men facing allegations of insider trading by the Ontario Securities Commission. (LinkedIn photo)

“We take … (these) allegations very seriously and fully expect and trust our staff and insiders to conduct themselves with integrity, professionalism, and absolute discretion,” delaBarrera said in an emailed statement.

Carr worked at WeedMD from August 2016 until October this year, most recently as the master grower and horticultural manager, according to his LinkedIn profile.

Founded in 2014, WeedMD now employs more than 300 people at its operations in Aylmer, Strathroy and Bowmanville and offices in London and Toronto.

The OSC also accuses Graham of lying to and misleading its investigators about his relationship with Rosborough, a registered mutual fund dealing representative with Quadrus Investment Services in London until Oct 31, 2017, when the OSC says he was terminated for using pre-signed forms, a violation that resulted in a $10,000 fine as part of a settlement.

With his registration as mutual fund dealing representative suspended, Rosborough arranged for Graham to process securities transactions for him, according to the OSC. In return, Rosborough allowed Graham to work from his office space, drive his vehicle, and paid his registration fees, the OSC alleges.

“This misconduct was centered on Trevor Rosborough, a suspended mutual fund dealing representative who enlisted the help of associates so he could advise clients while suspended, illegally tip clients and associates and engage in illegal insider trading,” the OSC says.

Dmitri Graham is one of three Southwestern Ontario men facing allegations of insider trading and tipping by the Ontario Securities Commission. (LinkedIn photo)

The Investment Industry Regulatory Organization of Canada, a watchdog for the investment industry, lists Graham as a registered dealing representative sponsored by National Bank Financial.

But an online listing displaying Graham’s contact information at the bank’s London office was removed after The Free Press inquired about his employment status. A spokesperson for the Montreal-headquartered bank later confirmed he’s no longer an employee.

Graham’s LinkedIn page says he worked at National Bank Financial from March until November.

An enforcement proceeding for the three respondents, none of whom could be reached for comment, is scheduled for Dec. 3 by teleconference.

The commission is seeking a range of penalties, including prohibiting the three men from trading securities for a yet-to-be-determined time, imposing a fine of not more than $1 million and reimbursing the OSC for its investigation costs.

dcarruthers@postmedia.com