[ by Howard Haykin ]

An investment banker in Toronto with Canadian Imperial Bank of Commerce (CIBC) agreed to settle insider trading charges leveled by the SEC, which alleged he used information obtained through his job of pitching investment ideas to the Canada Pension Plan Investment Board - or CPPIB.

Profile of Respondent.   Richard Bruce Moore, 49, lives in Toronto, Canada, and is a Canadian citizen.  During the relevant period, Moore was a Managing Director and worked as an investment banker at CIBC. In 2010, Moore's job as an investment banker included pitching possible investment ideas and transactions to CIBC's clients. One of Moore's top 3 clients was the CPPIB, where his primary contact was the CPPIB Managing Director.  Moore and the CPPIB Managing Director socialized together with some frequency.  As a result, Moore and the CPPIB Managing Director had professional and personal interactions and communications in 2010, including telephone calls, email, and in person communications. He left the firm in April 2011 to work at another investment bank, and resigned from that bank in July 2012.

Other Relevant Entities. 

Tomkins pIc was, during the relevant period, a U.K. engineering and manufacturing company HQ'd in London.  Its common shares traded on the London Stock Exchange.  During the relevant period, Tomkins' common shares were registered under Section 12(b) of the Exchange Act, and its ADRs, each of which represented four common shares, were traded on the NYSE.

The Canada Pension Plan Investment Board is an investment management organization based in Toronto, Canada. The CPPIB was incorporated as a Canadian Crown corporation in 1997 to manage the investments of Canada's national pension, the Canada Pension Plan. On 7/19/10, Tomkins announced that the CPPIB and a Canadian private equity firm had made an offer to acquire all of Tomkins' outstanding common shares.

Canadian Imperial Bank of Commerce is a Canadian financial institution whose common stock trades on the Toronto Stock Exchange and the NYSE. CIBC provides various financial services, including services in the areas of credit, capital markets, and investment banking. The CPPIB was a client of CIBC during the relevant period, and Moore was one of CIBC's principal investment bankers for the CPPIB's private equity division.
 

SEC Findings and Allegations. 

It was through Richard Moore’s interactions with the CPPIB that he learned the Board was working on a large transaction in the United Kingdom. He pieced together nonpublic information to conclude that the Board was going to make an offer to acquire Tomkins.  As Moore attempted to obtain a role in a pending acquisition, he learned facts that allowed him to conclude that U.K.-based engineering and manufacturing company Tomkins plc was the CPPIB’s target.

Moore allegedly misappropriated the information and used it to purchase ADRs of Tomkins that trade on the NYSE during the weeks leading up to the acquisition.  After the acquisition offer was announced, the price of Tomkins ADRs rose 27% - at which time Moore sold his holdings for $163K in illicit profits.  It's alleged that Moore used an account in the Channel Islands to purchase 51,350 Tomkins ADRs on the NYSE on 6/28/10, and purchased a large number of Tomkins common shares on the LSE (London).  The deal was announced on 7/19/10. 

Scott Friestad, Assoc. Director of SEC Enforcement, said:  “Moore spent approximately one-third of his total net worth on purchases of Tomkins securities based on information he learned in the course of his employment.   In today’s interconnected markets, the cooperative relationships among securities regulators mean that those who choose to engage in international insider trading should expect to face consequences across the globe.”

SEC Sanctions.   Moore has agreed to settle the SEC’s charges - paying over $340K in fines, disgorgement, and prejudgment interest.  He also is barred from the industry.  Moore is alleged to have violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

The Ontario Securities Commission announced it will conduct a related action against Moore in this case. 

SEC Staff Credits.   Investigation conducted by:  David Frohlich, Matthew Skidmore. Cooperation and assistance from Ontario Securities Commission, Jersey Financial Services Commission, and FINRA. 

For further details, go to:   [ SEC PR 13-62, 4/16/13 ]   and    [ SEC Complaint ].