Commission Panel Issue Consent Orders In Bennett-Doman Insider Trading Case
Released: 10/15/99 Contact: Michael Bernard
(BC only) 1-800-373-6393
Vancouver -- A British Columbia Securities Commission panel has imposed trading sanctions against Russell James Bennett and Harbanse Singh Doman and ordered them along with former B.C. premier William Richards Bennett to pay the commission $1 million to cover the costs of an insider trading case that spanned 11 years.
In a consent order issued today, the panel also ordered Doman to resign as president and chairman of the forest company Doman Industries for eight months, starting Oct. 26, 1999. After that period, he may not hold the positions of chief executive officer and chairman at the same time until Oct. 25, 2009, and his appointment to either position must be recommended to the board of directors of Doman by an independent corporate governance committee of the board.
Doman is also prohibited for a 10 year period, effective Oct. 26, 1999, from acting as a director or officer of any other reporting issuer and is prohibited from trading securities, the panel said.
The order also specifies that Doman may participate and exercise options to purchase under Doman Industries' incentive stock option plan; may engage in investor relations activities necessary to discharging his functions as an officer or director of Doman Industries and its subsidiaries and trade in Doman Industries securities that change control of the company. However, before he does the above, he must first give the commission's executive director seven days notice as set out in the Securities Rules.
The consent order, to which the three men agreed, also prohibits Russell Bennett from acting as a director or officer of any reporting issuer and from trading in securities until August 31, 2006. The sanctions against him are the same as those the commission issued against him and Bill Bennett in its decision of Aug. 28, 1996. Bill Bennett did not appeal the original 1996 orders against him.
At the 1996 hearing, the commission found that the Bennetts sold 517,000 shares of Doman Industries on Nov. 4, 1988 at an average price of about $11.37 using insider information provided to them by Doman. Minutes after the Bennetts sold their shares, trading in the Doman shares was halted while Doman announced that a proposed takeover by U.S. lumber company Louisiana Pacific had been cancelled. Following that news, shares of Doman Industries, which were trading on the Vancouver and Toronto stock exchanges, dropped to a price of about $7 each.
During the hearing, commission investigators presented evidence from telephone records that showed a call had been made from Doman's office on Vancouver Island to the Bennett's office in Kelowna just before the Bennetts sold their shares.
The commission panel ruled that Doman violated the Securities Act by giving the Bennetts information that had not been generally disclosed to the public and that the Bennetts violated the same regulations when they acted on that information.
Russell James Bennett and Doman successfully appealed the Commission orders in the B.C. Court of Appeal on the basis that they were not given sufficient opportunity to be heard on the issue of penalties before the commission panel issued its orders. A commission hearing began Tuesday to determine whether the commission ought to make any orders in the public interest and determine the issue of costs.
A copy of the consent order is available on the B.C. Securities Commission Web site www.bcsc.bc.ca or by contacting Communications Manager Michael Bernard.
The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts in the province.