Fairfax Financial Holdings admitted that two senior executives and the organization at large are being investigated by Quebec’s securities regulator for alleged insider trading, reports The Globe and Mail.
The Toronto-based insurer is said to have engaged in illegal activity with Fibrek, a producer of wood fibers.
The investigation involves CEO Prem Watsa and president Paul Rivett, both of whom led the organization when Fairfax took over Resolute Forest Products, Fibrek’s parent company, in 2011.
The Fairfax executives maintain their innocence, arguing that the company has an “unblemished record for honesty and integrity” and agreeing that it will fully cooperate with Quebecer financial officials.
“Fairfax continues to be confident that in connection with the Resolute takeover offer, it had no material non-public information, that it did not engage in illegal insider trading or tipping, and that there is no reasonable basis for any proceedings in this connection,” representatives wrote in the company’s first quarter financial results. “However, if the AMF commences legal proceedings, no assurance can be given at this time by Fairfax as to the outcome.”
Resolute had issued a takeover offer to all of Fibrek’s shareholders, and Fairfax agreed “to tender its 26% stake in Fibrek at the same price as other Fibrek shareholders,” according to The Globe and Mail. Fibrek staunchly opposed the transaction, but it was completed regardless.
The AMF and a court have scrutinized the offer, but Fairfax continues to reiterate that Fibrek represents less than one percent of its invested assets.
