On September 19, 2014, the Bureau de décision et de
révision (BDR) granted a request by the
Autorité des marchés financiers (AMF) for an
administrative penalty of $9,000 against Jacques Gauthier
(Gauthier), who was President and Chairman of the board of
directors of AAER Inc. (AAER) at the time of the events at
The AMF accused Gauthier of having contravened Section 187 of
the QuébecSecurities Act by carrying out
transactions when he knew that AAER had not been retained as a
bidder on the most important call for tenders relating to wind
energy by Hydro-Québec Distribution (Hydro-Québec).
In particular, s. 187 of the Québec Securities Act
provides that the insider cannot trade when he is in possession of
privileged information that is unknown to the public and likely to
influence the decision of a reasonable investor. However, s. 187
also provides that the insider may trade if he is justified in
believing that the information is generally known to the
In this case, Gauthier did not contest the fact that, at the
time of the transactions at issue, he was in possession of
privileged information (i.e., that AAER had not been retained by
Hydro-Québec as a bidder in the most important call for
tenders relating to wind energy), which would obviously have a
negative impact on the value of the shares of AAER. However,
Gauthier made sure to wait until the bidders to be retained were
publicly announced at a press conference and, of course, AAER was
not among the bidders that were retained.
A few minutes later, at the time when Hydro-Québec
published its press release announcing the identity of the retained
bidders, Gauthier instructed his broker to sell the shares he owned
in AAER. The AMF took the position that the information in question
was not generally known.
Since Gauthier admitted the facts alleged against him, the BDR
agreed with the joint submission of the parties to impose an
administrative penalty in the amount of $9,000, under the
An interesting fact of this case is that Gauthier had not
avoided a loss, since the transactions were subsequently cancelled
This decision reiterates the well-known principle that one must
allow sufficient time for the market to assimilate information, and
that a transaction carried out by an insider in possession of
material information within seconds or minutes following the
disclosure of said information will certainly be closely
scrutinized by the Canadian securities regulators.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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