Article by Greg McArthur, Globe and Mail
A former master grower for cannabis grower WeedMD Inc. tipped off an investment adviser with inside information about a major production expansion two weeks before the deal was announced, the Ontario Securities Commission has alleged..Taylor Carr, a former production official for the Aylmer, Ont.-based company, allegedly told Trevor Rosborough some time near Nov. 10, 2017, about an impending lease deal that would increase the company’s annual production from 1,200 to 21,000 kilograms, OSC investigators claim..That same day, Mr. Rosborough bought 1,090 shares of WeedMD, which trade on the TSX Venture Exchange, and encouraged clients and associates, including Mr. Carr, to invest, the OSC alleges..One of those associates, the OSC alleges, was Dimitri Graham, a London, Ont.-based mutual fund dealer with National Bank Financial Inc. On Nov. 15, 2017, Mr. Graham bought 3,185 shares in WeedMD, and six days later, a day before the expansion was announced, bought another 1,300 shares, the OSC alleges. The three men sold all their shares on Nov. 22, 2017, the day the expansion was announced to the public..In a statement of allegations released Tuesday the OSC does not detail how much the men pocketed from this alleged scheme, except to say they made a “modest profit.”.Historical stock prices suggest, however, that the advisers likely did not strike it rich from the alleged inside information. Based on the number of shares they allegedly bought and sold, and the price of WeedMD’s stock at the end of trading on those days, Mr. Rosborough may have made around $700 and Mr. Graham about $2,500. The statement of allegations doesn’t detail how many shares were purchased by Mr. Carr..“These profitable trades were a result of insider trading and tipping, and therefore significant breaches of Ontario securities law,” the OSC said in its statement of allegations.