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A B.C. securities lawyer who assisted a client in conducting illegal insider trading is to pay a $20,000 fine and suspend his practice for four months, according to a recent ruling from a Law Society of BC hearing panel.
Lawyer Samuel Theodore Gray Cole escaped a much harsher proposed 12-month suspension from the regulatory body after submitting to the hearing panel that he only ought to be suspended two months as he has taken steps to improve himself professionally.
While Cole had initially appealed the initial panel decision that he committed professional misconduct he subsequently agreed his actions were wrong.
“His misconduct was serious, he does not have the mitigation of an admission at the outset of this matter,” the panel wrote.
The society’s executive sought the 12-month suspension “on the basis that the public must be protected from [Cole’s] serious ethical failures and other lawyers must know that such behaviour will receive a serious sanction.”
But the panel reduced the suspension term, acknowledging Cole was a junior lawyer at the time and the illegal insider trading he helped conduct was not fraud.
Cole, the panel wrote, is “careful to restrict his practice to areas he knows well and is quick to refer clients to other lawyers in the firm for legal issues with which he is not familiar.”
Cole works for Cassels law firm with expertise in securities, cannabis and mining, according to the firm’s website.
Cole committed the misconduct by counselling his client “KR” to use his girlfriend as a nominee to indirectly buy shares of a private company KR targeted to take public in a reverse takeover.
The transactions occurred contrary to the directives of stock exchange officials, the society’s hearing panel ruled on Oct. 13, 2021.
“The purpose of the [Cole’s] advice was to circumvent the directive of the regulator that prohibited insiders such as KR from taking part,” in the sale of shares, noted the ruling, adding that “such conduct is dishonest and falls far below the standard that the Law Society expects of lawyers.”
The panel noted KR had admitted, in a settlement with the B.C. Securities Commission, to insider trading during the reverse takeover, which was announced on April 25, 2014.
