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by Mike Caswell

The Ontario Securities Commission has secured $1.19-million in insider trading penalties for Ming Chao Zhao, a former BMO Nesbitt Burns analyst who learned about takeovers in advance through a shared network drive at work. Mr. Zhao, 28, agreed to the penalties to settle allegations that he used inside information to earn $416,000 in a family account. In accepting the sanctions, he admitted that he had learned about five takeovers by accessing highly confidential data.

Details of Mr. Zhao's settlement are contained in an agreed statement of facts the OSC accepted at a hearing on Friday, May 17. His $1.19-million fine includes a $750,000 administrative penalty, disgorgement of $416,719 and $30,000 in costs. He has also accepted a permanent trading ban, with exceptions for mutual-fund-type securities. In addition, the OSC has permanently banned him from serving as an officer or director of a registrant.

In settling the case, Mr. Zhao has admitted that he used undisclosed material information to buy five stocks while he worked at BMO. In each instance, the firm was an adviser on a takeover offer. Mr. Zhao had no direct role with the takeovers, but viewed "highly confidential" data about them on a network drive he had access to as part of his job.

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