The long line of former lawyers and employees at large law firms implicated in various insider trading schemes continued this month, with a former staffer at Davies Ward Phillips & Vineberg accused of tipping off others about deals being handled by the leading Canadian firm.
The Ontario Securities Commission unveiled a 14-page civil complaint on Sept. 22 against Donna Hutchinson, accusing the one-time Davies Ward legal assistant with passing on “material, non-public information” that she learned about pending transactions during her time at the firm. The purloined insider information was given to Cameron Edward Cornish, a long-time friend and institutional trader, according to the OSC. Cornish then allegedly passed it on to two other friends, both of whom traded on the information.
Among the deals that Hutchinson is accused of leaking information on are Valeant Pharmaceuticals International Inc.’s $45 billion hostile bid for Allergan Inc. in 2014; Burger King Worldwide Inc.’s big $11.4 billion buy in 2014 of Canadian donut and coffee king Tim Hortons Inc.; and Canadian heavy oil producer Baytex Energy Corp.’s $2.6 billion acquisition that same year of Australia’s Aurora Oil & Gas Ltd.
Davies Ward advised William Ackman’s hedge fund Pershing Square Capital Management LP on its ultimately ill-fated partnership with Valeant to acquire Allergan, as well as Burger King and Baytex on their deals, the latter two of which were recognized by Canadian legal publication Lexpert as among the top 10 transactions up north in 2014.
In a statement from its leader, Davies Ward acknowledged that it had been informed of the allegations against Hutchinson and terminated her employment immediately upon becoming aware of the OSC’s charges. Managing partner D. Shawn McReynolds said his firm was fully cooperating with the Canadian regulator.
“We have reviewed the allegations and have concluded that they are isolated to actions allegedly taken some time ago by a legal assistant in flagrant breach of our policies on confidentiality,” McReynolds said. “[Davies Ward] demands and expects that its personnel will at all times adhere to the highest legal, professional and ethical standards. Our firm’s policies concerning our duty to keep client matters confidential are very clear, and are well understood by our people. We will tolerate no breach.”
A spokesman for Davies Ward, which is not accused by the OSC of any wrongdoing, did not immediately respond to a request for comment as to whether the firm had retained outside counsel in the matter. But the OSC’s case against Hutchinson is not the first time that Davies Ward has been caught up in an insider trading affair.
In August 2015, an OSC panel slapped a roughly $338,000 fine against former Davies Ward partner Mitchell Finkelstein, who had been found liable for tipping off a former fraternity brother about upcoming deals involving clients of the firm.
A hearing in Hutchinson’s case, which is unrelated to the Finkelstein matter, has been scheduled for Oct. 24. The OSC claims that the scheme helped generate roughly $1.6 million in illicit profits.