Decision in brief: Kitmitto, Enforcement Proceeding, Sanctions and Costs, January 20, 2023
In an earlier decision, the Tribunal decided that Majd Kitmitto, Steven Vannatta, Christopher Candusso, Donald Alexander (Sandy) Goss, and Frank Fakhry violated Ontario securities law. They broke the rules against insider trading, and against disclosing certain confidential information.
Kitmitto learned, before this became public, that Amaya Gaming Group Inc. was going to acquire another company. He told Vannatta, Candusso and Goss. Vannatta traded Amaya shares, making $54,435, and told four of his relatives. Candusso traded Amaya shares and made $30,782. Goss traded Amaya shares, making over $1.2 million, told his assistant Fakhry, and recommended that fifteen of his clients buy Amaya shares. Fakhry traded Amaya shares, making $126,546, told his cousin and a client, and recommended that five of his clients buy Amaya shares. The Ontario Securities Act says that none of this was allowed. Vannata also hid his trading from his employer, and he misled OSC staff who were investigating trading in shares of Amaya.
The Tribunal decided to restrict each of the respondents from participating in the capital markets for a period of time, during which they are only allowed to trade in their registered accounts (like an RRSP or TFSA account): 10 years for Kitmitto, 15 years for Vannatta, three years for Candusso, 15 years for Goss, and 10 years for Fakhry.
The Tribunal decided that each of the respondents should pay an administrative penalty for each violation of Ontario securities law. These penalties were adjusted for how serious their conduct was, as well as any factors that made their conduct better or worse: Kitmitto ($600,000); Vannatta ($650,000); Candusso ($100,000); Goss ($1,000,000); and Fakhry ($650,000).
Vannatta, Candusso and Fakhry agreed that they should disgorge (give up to the Commission) the money they made from insider trading. Goss said that he should only have to disgorge the money he made from trading in his account and not in his family's accounts. The Tribunal decided that all of them should disgorge all the money they made from insider trading. It does not matter whether the person got the money themselves.
Finally, the Tribunal dealt with costs. The investigation began as three separate files and resulted in two separate proceedings. Staff did not clearly prove the investigative costs connected to this proceeding alone. Taking that into account, and because OSC staff had mixed success in proving its allegations, the Tribunal decided that total costs of $735,376 should be paid, which is less than the $1,089,000 that OSC staff requested. That amount was allocated among the respondents based on their conduct: Kitmitto is responsible for 20% ($147,075), Vannatta for 25% ($183,844), Candusso for 10% ($73,538), Goss for 25% ($183,844) and Fakhry for 20% ($147,075).