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13.04.2004 Business & Finance

15-year ban for withholding results

By Canadian Press
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OSC imposes 15-year ban on Golden Rule Resources founder Harper TORONTO (CP) - The founder of Golden Rule Resources Inc. has been barred for 15 years from being an executive of a publicly traded company or engaging in securities trading except limited transactions on his own account.

The insider-trading penalty announced Monday by the Ontario Securities Commission amounts to a lifetime ban for Glen Harvey Harper. Harper, 60, was convicted in July 2000 of illegally selling $4 million worth of shares in the Calgary-based gold exploration company when he was aware of - and deliberately withheld public release of - test results that cast doubt on the value of its Stenpad gold property in Ghana.

The Ontario Court of Appeal ruled last Oct. 31 to uphold a lower-court decision halving his fine to $2 million. He also received a six-month jail sentence, half the original one-year sentence he was to receive. Harper has already served the six-month sentence.

Following a hearing in March, the securities regulator added the 15-year ban in a decision dated last Thursday and announced Monday.

"Counsel for staff underscores that when illegal insider trading is accompanied by a breach of fiduciary duty it is a particularly egregious matter," the commission stressed in its decision, noting that Harper not only engaged in illegal insider trading but actively withheld news of the disappointing mineral tests.

"As an officer and director of a public corporation, Harper owed a duty to act honestly and in good faith with a view to acting in the best interests of the corporation," the OSC added.

"This includes the duty to place the interests of the corporation ahead of any personal interests that Harper may have had."

The 15-year penalty, accepted by Harper, is intended to protect investors from him in future, the OSC said, and "will also send the message that any like-minded individuals in circumstances similar to Harper's during his five months of trading, if they conduct themselves as Harper did, may be subject to similar prophylactic consequences regarding their access to the capital markets."

Insider trading, of itself, is not illegal. However, regulations are supposed to protect investors by preventing executives and others close to a company from benefiting from trades when they have undisclosed inside information.