Penticton man guilty of insider trading

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A Penticton businessman has been found to have engaged in illegal insider trading, ruled the Alberta Securities Commission.

The panel found Randy Kowalchuk, who is the former president of the Penticton and Wine Country Chamber of Commerce and past-president of B.C. Liberal Penticton Riding Association, traded in shares of Eveready Inc. in April of 2009. The ASC ruling said there was “reasonable inference” that his broker who is also his brother, Richard Kowalchuk, tipped him of the non-public proposed acquisition of Eveready by Clean Harbors for $176 million.

In the 159-page decision, it was found Bert Holtby, a member of Eveready’s board of directors, illegally told his broker Richard Kowalchuk of the impending takeover before it became public knowledge, which is in contravention of the act. Holtby denies telling him that he thought the share price would increase and he should purchase shares before a proposed acquisition was publicly announced.

Randy Kowalchuk denied all of the allegations of having non-public knowledge and said he had in the years prior purchased Eveready shares and saw that they were deeply discounted in April of 2009. He admitted he had concerns about the company’s line of credit but when a resolution was reported in a press release, he believed it was time to buy again and did so. On the date of the acquisition becoming public knowledge, shares went from $3.47 to closing at $10.40.

Richard Kowalchuk admitted in his settlement agreement to informing clients of the non-public proposed acquisition with a view to benefit them financially.

“We think it equally, if not more, likely that Richard Kowalchuk’s admitted informing of his brother would have been done with the same objective,” said the ASC decision.

Other clients of Richard Kowalchuk also implicated to be tipped off include Neil Tanner, a businessman from Banff who is friends with Randy Kowalchuk and owns a summer home in Penticton. Kenneth Burdeyney, Eric Jaschke, Gayle Walton, Ken Landsiedel, Dale Holtby and John Shepert were also named in the ruling. The ASC is expected to return with a ruling on sanctions or fines later this year.