Goldcorp, gold council chairman Telfer implicated in insider scheme; he denies it

Section:

Ian Telfer helped 'Facilitate' Secret Trades in Insider Tipping
and Trading Scheme, Ontario Securities Commission Alleges

By Drew Hasselback
National Post / Financial Post, Toronto
Tuesday, February 7, 2012

http://business.financialpost.com/2012/02/07/ian-telfer-helped-facilitat...

Ian Telfer -- one of Canada's most prominent mining executives and chairman of Goldcorp Inc. [and chairman of the World Gold Council (http://www.gold.org/about_us/who_we_are/the_team/leadership_team/)] -- helped an old friend, the executive assistant of GMP Securities LP's chairman, disguise an illegal insider tipping and trading scheme, the Ontario Securities Commission claims in a statement of allegations released Tuesday.

The OSC alleges that in at least two cases Mr. Telfer advised Eda Marie Agueci to communicate using her BlackBerry's PIN-based messaging service to keep her activities secret from GMP. The securities regulator also alleges Mr. Telfer helped Ms. Agueci facilitate a secret trade in a company that eventually became Gold Wheaton Inc.

"His conduct was contrary to the public interest," the OSC alleges.

The allegations against Mr. Telfer are part of a larger OSC case that names Ms. Agueci, who worked at GMP Securities for about 20 years, as the "central figure" in a scheme in which she is alleged to have used her position to access non-public information on pending deals, then pass this information to eight other individuals.

... Dispatch continues below ...


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From a Company Press Release
November 22, 2011

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None of the allegations involves shares of Goldcorp, which, with a $39-billion market capitalization, is Canada's ninth most valuable company.

The OSC says Mr. Telfer wasn't a participant in the alleged insider trading and tipping scheme.

"I'm very surprised at how the OSC is reacting to this," Mr. Telfer said in an interview Tuesday.

The OSC claims that Mr. Telfer gave Ms. Agueci a chance to buy 500,000 shares in 222 Pizza Express. The OSC says Mr. Telfer and Ms. Agueci agreed that the shares should not be purchased in her name to keep the transaction secret. They therefore agreed to conduct the trade in the name of her brother-in-law, Santo Iacono.

"That's something that gets done all the time. There's nothing wrong with it," Mr. Telfer said in the interview. "That was it as far as I was concerned. What went on after that or anything else, I was totally unaware of and had nothing to do with."

The broader illegal insider tipping-trading scheme allegedly took place between April 2007 and February 2008, and generated $962,000 in profits for the participants from trades in eight mining companies.

All the allegations have yet to be proven before an OSC hearing. The OSC has set March 21 as a date for a hearing in the matter.

In addition to Ms. Agueci and Mr. Iacono, the OSC has named Dennis Wing, Josephine Raponi, Kimberley Stephany, Henry Fiorillo, Joseph Fiorini, John Serpa, and Jacob Gornitzki as participants in the scheme. All were either friends or acquaintances of Ms. Agueci.

The corporate respondent is Pollen Services Ltd., which is a company based in British Virgin Islands that holds the assets of Mr. Wing's offshore family trust, The Honey Trust.

Ms. Agueci worked in the GMP's mining group, where she regularly came in contact with details of proposed mining transactions. "She had full access to the email communications of the chairman of GMP and occasional access to the emails of other investment bankers in the mining group at GMP," the OSC alleges.

The OSC alleges she conducted her trades using two secret accounts. The regulator also alleges she communicated non-public details to others using code names. She instructed others not to include any stock names or symbols in any emails they sent to her GMP email address.

The tipping and insider trading allegations involve shares of NU Energy Uranium Corp., Energy Metals Corp., Yamana Gold Inc., Northern Orion Resources Inc., Meridian Gold Inc., HudBay Minerals Inc., Coalcorp Mining Inc., and 222 Pizza Express Corp.

222 Pizza was eventually restructured and became Gold Wheaton Gold Corp., a gold royalty firm that went public in 2008 with the help of Mr. Telfer. It was acquired by rival Franco-Nevada Corp. last year for $830-million.

In a statement sent by email late Tuesday, GMP noted that the OSC allegations do not allege any wrongdoing on the part of the investment bank or any other employee besides Ms. Agueci. "GMP takes these allegations very seriously and will cooperate fully with the investigation. Ms. Agueci has been suspended pending the outcome of this matter."

* * *

Statement on behalf of Ian Telfer
via Canada Newswire
Tuesday, February 7, 2012

http://www.newswire.ca/en/story/917647/ian-telfer-responds-to-ontario-se...

TORONTO -- Ian Telfer categorically denied the allegations made by the Ontario Securities Commission in its statement of allegations released today.

"I believe the allegations by the OSC that I have acted contrary to the public interest to be completely without merit", said Mr. Telfer. "The allegation is that I 'acted contrary to the public interest' by agreeing to include a family member of a business associate in a private financing. There is no allegation that I breached any securities law or that I was involved in any insider trading scheme. As the OSC stated, I did not participate in the alleged scheme.

"I am very disappointed that the OSC is trying to stretch its jurisdiction to suggest that there is something wrong with agreeing to include someone's relative in a private placement.

"I do not believe that there is anything wrong with my conduct. I do not believe anyone should be concerned with my conduct. It is an everyday occurrence in the Canadian business world. If the OSC is trying to send a message that it does not like this common conduct, I do not believe the OSC should be doing it this way."

Joseph Groia, of Groia & Company, counsel to Mr. Telfer, stated that "the Task Force to Modernize Securities Legislation in Canada recommended in 2006 that 'the 'contrary to the public interest' regulatory tool be used sparingly and only with the greatest of care if the behavior which is criticized has not been publicly identified in advance as unacceptable.' We very much regret that it would appear that the OSC was not mindful of those comments."

"I am prepared to vigorously defend these allegations and look forward to being fully exonerated", said Mr. Telfer.

For further information:

Joseph Groia, Groia & Co., 416-203-4472

* * *

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Prophecy Coal (TSX: PCY) Wins Positive Feasibility Study
for the 600-MW Chandgana Power Plant in Mongolia

Company Press Release
January 17, 2012

VANCOUVER, British Columbia, Canada -- Prophecy Coal Corp. (TSX: PCY, OTCQX: PRPCF, Frankfurt: 1P2) has received a positive feasibility study for the company's 600-megawatt Chandgana Mine-Mouth Power Project in central Mongolia. The report was independently prepared by Ralf Thomsen, project manager at Steag, a German firm specializing in the planning, financing, construction, and operation of highly efficient thermal power plants for fossil fuels.

The study covers technical specifications, deployment, and financial analysis of a 4x150-mw thermal power plant to be built adjacent to Prophecy's Chandgana Tal coal deposit, which contains 140 million tonnes of measured coal. Last year the power plant received a construction license and the coal deposit received a mining license. Engineering, procurement, and construction management selection and project financing discussion have begun and are expected to be concluded this year.

Construction is planned to start in April 2013, with the first 150-mw unit being commissioned in October 2015 and subsequent units to start in April 2016, October 2016, and April 2017. With proper maintenance the project will have 30 years of commercial operation.

For the complete statement from the company, including maps and charts, please visit:

http://www.prophecycoal.com/news_2011_jan17_prophecy_receives_power_plan...