Two men who launched a hostile takeover bid of Baffinland Iron Mines in 2010 now face charges of insider trading.

The Ontario Securities Commission alleges that Jowdat Waheed and Bruce Walter used privileged information to attempt the takeover.

Baffinland has plans to develop an iron mine at its Mary River site 160 km south of Pond Inlet, Nunavut.

According to the OSC, Waheed worked as a consultant for Baffinland in early 2010. He then used confidential company information to guide the takeover bid by the company he and Walter created, Nunavut Iron Ore Acquisition.

What followed was a bidding war with European steelmaker ArcelorMittal and eventually a joint offer by the two companies.

Nunavut Iron Ore acquired a 30 per cent stake in Baffinland, and Waheed and Walter are now directors of the company.

The two men are accused of having "acted contrary to the public interest" by using material facts and confidential information belonging to Baffinland to put their company in play, knowing their bid would disrupt the joint venture negotiations between Baffinland and ArcelorMittal.

"By their actions, Waheed and Walter deprived Baffinland shareholders of the opportunity and ability to benefit from future developments of the Mary River project as a joint venture partner with ArcelorMittal," the OSC said.

"Waheed and Walter knew that launching the bid for BIM would create benefits and opportunities for Nunavut [Iron Ore] at the expense of Baffinland shareholders," it added.

In response to the securities commission allegations, Nunavut Iron Ore, now WW Mines Inc., issued a statement saying it was "regrettable that OSC staff chose to commence proceedings before the commission concerning this matter."

"The company strongly believes the allegations made by staff are completely without merit and will not withstand scrutiny by a hearing panel of commissioners."

A hearing is scheduled in Toronto on Feb. 15.  

with files from Canadian Press