On June 17, 2014, the Alberta Securities Commission released a
decision, Re Hagerty. In this case, the Staff of the ASC (Staff)
alleged that Sherry Hagerty and her spouse Gary Hagerty engaged in
illegal insider trading and tipping. These allegations centred on a
purchase by Mr. Hagerty of shares of Provident Energy Ltd.
(Provident) on December 23, 2011 while Provident was engaged in
confidential discussions with Mrs. Hagerty's employer Pembina
Pipeline Corporation (PPC) about a potential acquisition of
Provident by PPC. The acquisition proceeded and was announced in
January 2012 at which point the trade became very profitable. The
ASC Panel dismissed the allegations on the basis that the limited
information Ms. Hagerty had, both non-confidential and through her
employment, did not collectively amount to material information.
The Panel concluded that the information allowed Ms. Hagerty to
make some perspicacious speculations about the possibility of a
transaction between her employer and Provident. This case affirms a
hunch or suspicion held by an insider does not rise to the level of
"material" information upon which one is precluded from
trading. To prove insider trading the Staff must provide evidence
of something more than an impression, speculation or abstract
possibility. The law does not prevent people, even those working
with the issuer who may have more knowledge than the public does,
from trading on hunches, flashes, glimmers or feelings. Indeed many
people trade on that basis. The law only prevents trading on
undisclosed material facts or changes.
While this case may provide some comfort to employees in the oil
and gas industry who get an inkling or suspicion that a deal is in
the works, it does leave some uncertainty as to when the collective
information known to the insider will be equated by the ASC as
being material. This potential uncertainty should give potential
insiders reason to pause and we expect that they will proceed with
caution to ensure they do not cross the line of trading or tipping
based on material non-disclosed information.
John Blair, QC of BLG represented the Hagertys in this matter.
See the Panel's decision here.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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