(Adds details on Fairfax and tipping charge, updates stock
By Cameron French
TORONTO Aug 1 Quebec's securities regulator is
investigating Fairfax Financial Holdings Ltd, its chief
executive officer and president for possible illegal insider
trading as well as tipping, or passing along sensitive
information, Fairfax said.
Fairfax, a Canadian property and casualty insurer,
disclosed the information late Thursday in its second-quarter
"The investigation concerns the possibility of illegal
insider trading and/or tipping (not involving any personal
trading by the individuals) in connection with a Quebec
transaction," Fairfax said.
Tipping refers to the practice of passing along sensitive
information that could then be used for trading.
CEO Prem Watsa, a closely followed contrarian investor,
addressed the issue on a conference call early Friday. He denied
that he, the president, Paul Rivett, and the company had done
"We are fully cooperating with the authorities and we are
required strict confidentiality during the investigation," he
said. " ... I can say there is no personal trading involved and
we are confident that we did nothing wrong."
Sylvain Théberge, a spokesman for the Autorité des marchés
financiers (AMF), the securities regulator for Quebec, the
French-speaking Canadian province, said he could neither confirm
nor deny the existence of the investigation, citing agency
Contacted by email, Rivett said he could not provide any
additional information on the probe or the transaction in
Canadian regulators have been increasingly focusing on
tipping over the last ten years, sending a message that passing
along insider information damages capital markets, even if the
insider doesn't directly profit from the information.
Ian Telfer, chairman of miner Goldcorp, was
reprimanded last year as part of a settlement with the Ontario
Securities Commission, Canada's largest securities regulator,
over accusations he provided advice to someone who allegedly
engaged in insider trading.
While ostensibly an insurance holding company, Fairfax also
acts as an investment vehicle for Watsa, who has become an
investment authority sometimes compared to Warren Buffett, the
chairman of Berkshire Hathaway Inc.
Since taking over the company in 1985, Watsa has built a
reputation with such moves as betting against the U.S. housing
market, then reaping huge profits when the market collapsed in
His latest moves with Fairfax include taking positions in
companies in Greece and Ireland, and becoming a top shareholder
in struggling smartphone manufacturer BlackBerry Ltd.
Shares of Fairfax jumped at the open on Friday, then eased
to be up C$3.71 at C$517.06 on the Toronto Stock Exchange in
early afternoon trade.
(Editing by Lisa Von Ahn and Jeffrey Benkoe)