The Ontario Securities Commission said Monday it has frozen the accounts of John Fraleigh as part of an investigation into trading of Placer Dome Inc. securities.
In a three-sentence release, the provincial regulator said that on Nov. 2, it "issued a direction pursuant to section 126 of the Securities Act freezing accounts held at BMO Investorline in the name of John Cameron Fraleigh." BMO Investor line is an arm of Bank of Montreal.
The OSC said it must appear before the Ontario Courts before Nov. 14 to continue to freeze, which was obtained "in relation to an OSC investigation into trading in securities" of Placer Dome.
Last week, courts granted the U.S. Securities and Exchange Commission a court order to freeze the bank account of an unknown investor who conducted "highly suspicious" trades in call options in advance of Barrick Gold Corp.'s unsolicited $9.2-billion (U.S.) takeover bid for Placer.
The U.S. regulator asked a New York federal court judge to prevent unknown defendants from selling $1.9-million worth of Placer call options they bought the previous week. A call option gives the holder the right to buy shares of a stock at a specific price within a given time.
Shares of Vancouver-based Placer jumped more than 20 per cent after Toronto-based Barrick, the world's third-biggest gold producer, made a bid on Oct. 31. The SEC said defendants who bought the options on Oct. 25 and 26 may have had secret information about the bid.
"This is an insider trading case involving highly profitable and highly suspicious purchases of call option contracts," the SEC said in its suit.
The freeze means the investor who controls the account, whose identity has not been determined, cannot exercise the options and liquidate the account before the SEC can complete its investigation.
The OSC said last week that it is also looking at trading of Placer Dome securities in Canada, but did not provide any details.
In 2001, the OSC investigated links between Mr. Fraleigh and Andrew Rankin, a former RBC investment banker who was convicted and sentenced to six months in jail for illegally passing stock tips to his friend, Daniel Duic.
In March 2004, the OSC told Mr. Fraleigh it had closed its investigation into him.
Mr. Fraleigh has since been given the green light to sue RBC for defaming him by providing false information about him to securities regulators. He alleges that the firm erroneously implicated him in the insider trading probe.
© The Globe and Mail
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