Sanctions imposed on Philippe Gauthier and Frédéric Racine for insider trading

Decisions and Freeze and cease trade orders Securities

Montréal – On May 24, 2024, the Tribunal administratif des marchés financiers (the “Tribunal”) rendered a decision (pdf - 810 KB)This link will open in a new windowUpdated on May 24, 2024 (in French only) finding Philippe Gauthier and Frédéric Racine guilty of engaging in “insider trading” using privileged information, in contravention of sections 187 to 189 of the Securities Act.

In November 2017, Philippe Gauthier, a member of the Ordre des comptables du Québec, learned of Oaktree Capital Management LP’s confidential plan to purchase shares of NAPEC Inc. while involved in amending a syndicated credit agreement in the course of his employment at Laurentian Bank of Canada. Mr. Gauthier disclosed this privileged information to two individuals, one of whom was Frédéric Racine, a member of the Ordre des comptables du Québec, who traded NAPEC stock prior to the public announcement of the acquisition. In addition to trading this stock, Mr. Racine disclosed this privileged information, in turn, to two other individuals.

The Tribunal imposed an administrative penalty of $350,000 on Philippe Gauthier for the failures committed by him, owing to the position he held and the duty of confidentiality he was bound by. The Tribunal also imposed an administrative penalty of $250,000 on Frédéric Racine for his failures, almost three times the profit of $88,398 he realized on the trades he made while possessing privileged information and ordered him to remit the profit realized on the trades to the AMF. The Tribunal noted that it gave considerable weight to the positions that Mr. Gauthier and Mr. Racine held and to their status and experience.

Lastly, the Tribunal prohibited both Philippe Gauthier and Frédéric Racine from trading in securities, except on their own behalf and subject to certain conditions, for a period of five years, the maximum length of time provided for under the Securities Act, and it prohibited them, for that same length of time, from acting as a director or officer of a reporting issuer, adviser or investment fund manager.

The Tribunal underlined that “[translation] a strong message must be sent that “tipping” is not permitted in the market, where everyone should be on equal footing.” The Tribunal also said that, “[translation] in a world where access to and the transmission of information is quick and easy, the protection of material confidential information concerning reporting issuers by the professionals who are the guardians of such information is a duty that is fundamental to ensuring market integrity.”

About the Autorité des marchés financiers

In its role as regulator, the Autorité des marchés financiers acts to maintain a financial sector that is dynamic, operates with integrity and warrants public confidence. It regulates, in whole or in part, activities in the following sectors: insurance, securities and derivatives, distribution of financial products and services, deposit institutions, mortgage brokerage and credit assessment.


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