Toronto lawyer jailed 39 months for insider trading
Stanko Grmovsek, who pleaded guilty to insider trading in Ontario last year, was sentenced Thursday to three years and three months in jail, according to the Financial Post.
The Toronto lawyer received the sentence in an Ontario court for his part in a scheme in which he earned $9 million US by trading stocks based upon illegally-obtained information.
Grmovsek pleaded guilty to the insider trading charges in Canada and the United States last October after a joint investigation by the Ontario Securities Commission, the RCMP's Integrated Enforcement Team and the U.S. Securities and Exchange Commission.
The OSC said Grmovsek and law school classmate Gil Cornblum exchanged confidential information on numerous corporate transactions between 1994 and 2008.
Cornblum, who committed suicide last October, would use his position as a lawyer to seek out confidential information on companies and give it to Grmovsek, "for sole the purpose of [trading in securities] … by Grmovsek for a profit," the OSC's statement of allegations in the matter reads.
The pair tried to disguise their activities by using numerous brokerage accounts in the Bahamas before routing their illicit profits back into Canada, the regulator said. Cornblum tipped Grmovsek to material in advance of news releases on 46 separate publicly traded companies, according to the OSC.
Cornblum was a mergers and acquisitions lawyer at a number of prestigious law firms in Toronto and New York until 2008. Grmovsek was a practising lawyer until 1997, "when he ceased practising law and engaged in the illegal insider trading scheme full-time," the OSC said.
As part of an earlier agreement with the OSC, Grmovsek was ordered to disgorge all profits obtained in the scheme, and will be permanently prohibited from buying or selling securities or acting as a director or officer at any registered firms.