ALBERTA SECURITIES COMMISSION  
DECISION  
Citation: Holtby, Re, 2013 ABASC 45  
Date: 20130211  
John Herbert Holtby, Neil Donald Tanner, Kenneth Michael Burdeyney,  
Eric John Jaschke, Gayle Marie Walton, Ken Landsiedel,  
Randall George Kowalchuk, Dale Francis Holtby and John Jacob Shepert  
Panel:  
Glenda A. Campbell, QC  
Richard A. Shaw, QC  
Fred R.N. Snell, FCA  
Appearing:  
Andrew Wilson and Tom McCartney  
for Commission Staff  
James Eamon, QC and Karen O'Keeffe  
for John Herbert Holtby  
Anthony Friend, QC and Peter Verschoote  
for Neil Donald Tanner and  
Eric John Jaschke  
William Pieschel, QC  
for Kenneth Michael Burdeyney  
Shauna Finlay and Andrea Simmonds  
for Gayle Marie Walton  
Douglas McGillivray, QC and Andrew Sunter  
for Ken Landsiedel  
Jeremy West  
for Randall George Kowalchuk  
John Phillips  
for Dale Francis Holtby  
Robert Abells, QC  
for John Jacob Shepert  
Submissions Completed:  
Date of Decision:  
11 October 2012  
11 February 2013  
#4430245 v1  
I.  
INTRODUCTION  
[1]  
This is a hearing focused on allegations of illegal insider trading, informing, and  
recommending or encouraging concerning purchases of securities of Eveready Inc. (Eveready)  
in the period leading up to the 29 April 2009 public announcement of the acquisition of Eveready  
by Clean Harbors, Inc. (Clean Harbors). These allegations are set out in a 7 December 2011  
amended notice of hearing (the NOH) issued by staff (Staff) of the Alberta Securities  
Commission (the Commission). The period directly relevant to this proceeding (the Relevant  
Period) is from October 2008 when Clean Harbors first expressed interest in acquiring Eveready  
until 29 April 2009.  
[2]  
Staff alleged that nine individuals (the Respondents) John Herbert Holtby (Bert  
Holtby), Dale Francis Holtby (Dale Holtby), John Jacob Shepert (Shepert), Ken Landsiedel  
(Landsiedel), Kenneth Michael Burdeyney (Burdeyney), Gayle Marie Walton (Gayle Walton),  
Eric John Jaschke (Jaschke), Randall George Kowalchuk (Randy Kowalchuk) and Neil Donald  
Tanner (Tanner) illegally purchased common shares of Eveready (Eveready Shares or  
Shares), contrary to section 147(2) of the Securities Act, R.S.A. 2000, c. S-4 (the Act) and the  
public interest. Staff subsequently withdrew this allegation against Gayle Walton.  
[3]  
Staff also alleged that, contrary to sections 147(3) and (3.1) of the Act and the public  
interest:  
Bert Holtby illegally informed Richard Bruce Kowalchuk (Richard Kowalchuk).  
Allan Ross Wreggit (Wreggit), Dale Holtby, Shepert, Landsiedel and Burdeyney  
of a not-generally-disclosed (or, in these reasons, non-public) material fact or  
material change with respect to Eveready, or recommended or encouraged them to  
purchase Eveready Shares (we understand that Staff abandoned this allegation as  
it related to James Roger Douglas (Douglas));  
Dale Holtby illegally informed Shepert of a non-public material fact or material  
change with respect to Eveready, and recommended or encouraged his daughter  
Tracy Kaufman and son-in-law Arnold Kaufman (together, the Kaufmans) to  
purchase Eveready Shares;  
Burdeyney illegally informed Gayle Walton and Jaschke of a non-public material  
fact or material change with respect to Eveready, or recommended or encouraged  
them to purchase Eveready Shares; and  
Gayle Walton illegally recommended or encouraged her husband Bradley Thane  
Walton (Thane Walton) to purchase Eveready Shares.  
[4]  
Staff further alleged that Bert Holtby concealed or withheld information reasonably  
required for an investigation under the Act, or attempted to do so, contrary to section 93.4 of the  
Act and the public interest.  
[5]  
A hearing into the merits of these allegations (the Merits Hearing) began on 16 May  
2012. By then, Staff had entered into four settlement agreements and was in the process of  
entering into a fifth (collectively, the Settlement Agreements), namely:  
the Richard Kowalchuk Settlement Agreement and Undertaking dated 14 April  
2011 (the Richard Kowalchuk Settlement Agreement);  
the Dale Richard Stock (Stock) Settlement Agreement and Undertaking dated  
10 June 2011 (the Stock Settlement Agreement);  
the Wreggit Settlement Agreement and Undertaking dated 6 December 2011 (the  
Wreggit Settlement Agreement);  
the Douglas Settlement Agreement and Undertaking dated 15 March 2012 (the  
Douglas Settlement Agreement); and  
the Jeffrey Scott Bratvold (Bratvold) Settlement Agreement and Undertaking  
dated 22 May 2012 (the Bratvold Settlement Agreement).  
[6]  
All of the Respondents were represented by counsel at the Merits Hearing. We heard  
testimony from all of the Respondents and several others Richard Kowalchuk; Douglas; a Staff  
investigator; Jason Vandenberg (Vandenberg), Eveready's chief financial officer (CFO); Joseph  
Brennan (Brennan), Eveready's corporate secretary and external legal counsel; Rodney Marlin  
(Marlin), Eveready's president and chief executive officer (CEO); Kim Stewart (Stewart), who  
was qualified to give expert evidence; and RBC Dominion Securities (RBC) employees Wayne  
Keefe (Keefe) and Nicole Singh (Singh). We also received a considerable volume of  
documentary evidence, including: the Settlement Agreements; a 14 May 2012 Statement of  
Agreed Facts entered into by Staff and Bert Holtby (the Agreed Facts); securities trading  
records; and transcripts of compelled investigative interviews of each of the Respondents and  
others conducted by or in conjunction with Staff investigators and in one case by British  
Columbia Securities Commission (BCSC) staff (the Investigative Interviews). Finally, we  
received written submissions from all of the parties, supplemented by oral submissions.  
[7]  
For the reasons that follow, we find that:  
Bert Holtby, Dale Holtby, Shepert, Burdeyney and Randy Kowalchuk engaged in  
illegal insider trading contrary to section 147(2) of the Act;  
Bert Holtby, Dale Holtby and Burdeyney engaged in illegal informing contrary to  
section 147(3);  
Bert Holtby, Dale Holtby and Gayle Walton illegally recommended or  
encouraged others to purchase Eveready Shares contrary to section 147(3.1);  
Bert Holtby concealed or withheld information reasonably required for an  
investigation under the Act, or attempted to do so, contrary to section 93.4(1); and  
in so doing, Bert Holtby, Dale Holtby, Shepert, Burdeyney, Gayle Walton and  
Randy Kowalchuk (the Six Respondents) acted contrary to the public interest.  
[8]  
This proceeding will now move to a second phase for the determination of what, if any,  
orders for sanctions and costs ought to be made against the Six Respondents.  
II.  
EVIDENTIARY BACKGROUND  
[9]  
We set out, or summarize, some of the evidence we heard and received.  
A.  
Eveready  
1.  
Background Information  
[10] Eveready was an Alberta corporation and the successor of Eveready Income Fund (EIF),  
an unincorporated open-ended mutual fund trust governed by the laws of Alberta. It is not  
disputed, and we find, that throughout the Relevant Period Eveready and its predecessor EIF  
were reporting issuers under the Act. Eveready Shares and EIF trust units (the Eveready Units  
or Units) traded on the Toronto Stock Exchange (TSX) under the symbols EIS and EIS.UN  
respectively. It is not disputed, and we find, that throughout the Relevant Period Eveready  
Shares and Eveready Units were securities within the meaning of the Act. References to  
"Eveready" in this decision include "EIF" unless otherwise noted.  
[11] Eveready provided industrial and oilfield maintenance and production services to the  
energy, resource and industrial sectors. Eveready's primary focus was oil sands and industrial  
turnarounds for plant shutdowns.  
[12] At or about the end of 2008 Eveready had approximately 2900 employees, approximately  
16 portable camps and approximately six industrial lodges, and it operated a service fleet of over  
2400 truck-and-trailer units. With its logo appearing on company assets, Eveready's operations  
were generally visible in the regions in which it operated, including the Peace River, Alberta  
region.  
[13] Throughout the Relevant Period and until July 2009 Marlin was Eveready's president and  
CEO and Vandenberg was Eveready's CFO. Marlin had been involved with Eveready since  
1995, when he acquired Eveready Industrial Services (Eveready Industrial).  
[14] In 2005 Eveready Industrial completed a reverse takeover of River Valley Contracting,  
which was in the process of becoming an income trust, leading to the formation of EIF.  
[15] On or about 31 March 2005 Bert Holtby became a trustee of EIF.  
[16] Acquisitions were an important and relatively frequent part of EIF's business. EIF, as  
Marlin testified, "had a record of buying companies" it acquired more than 30 entities, virtually  
one a month in the period 2005 to 19 September 2008, many of which were operated as  
subsidiaries. Marlin acknowledged that at the end of 2008 Eveready had sales of $650 million  
and approximately $108 million in earnings before interest, taxes, depreciation and amortization  
(EBITDA), and acquisitions accounted for about 50% of EIF's business, with the other 50%  
being "organically grown".  
[17] On 11 September 2008 EIF issued a news release (the September 2008 News Release)  
stating: its intention to convert from a trust to "a growth oriented, dividend paying corporation"  
effective 1 January 2009; and its belief that "the proposed corporate structure better aligns its  
core business model of growth and capital appreciation for unitholders" and better positions it "to  
aggressively pursue identified growth opportunities while providing a cash yield to existing  
Eveready unitholders".  
[18] EIF paid quarterly distributions to its unitholders. In the September 2008 News Release,  
EIF announced that for the third quarter of 2008 it would pay a cash distribution of $0.04 per  
Unit to its unitholders, replacing EIF's "in-kind" distribution and representing a yield of 5.7%.  
EIF also announced its intention to pay its unitholders the same cash distribution for the fourth  
quarter of 2008.  
[19] Pursuant to a plan of arrangement EIF was converted from a trust to a corporation –  
Eveready effective 31 December 2008. As a result of this conversion, EIF unitholders received  
one Eveready Share for each five Eveready Units.  
[20] At the conversion of EIF to Eveready, the EIF board of trustees became the Eveready  
board of directors (the Board). Thus, on 31 December 2008, Bert Holtby became a director of  
Eveready.  
2.  
Corporate Governance Documents  
[21] On 30 December 2008 the Board was sent, for review and comment, drafts of several  
corporate governance documents (the Draft Documents), including Eveready's Code of Conduct  
and Insider Trading Policy, intended to replace those in effect for EIF.  
[22] At the 15 January 2009 meeting of the Board (the 15 January 2009 Board Meeting), the  
Board, including Bert Holtby, approved the Draft Documents, as revised (the 2009 Corporate  
Governance Documents).  
[23] At the 11 March 2009 meeting of the Board (the 11 March 2009 Board Meeting), the  
Board, including Bert Holtby, agreed with the Nominating and Governance Committee's  
recommendation of no revisions to the recently approved 2009 Corporate Governance  
Documents.  
The Board also agreed with the Nominating and Governance Committee's  
recommendation of no revisions to the committees of the Board. Bert Holtby was a member of  
Eveready's Nominating and Governance Committee, which was responsible for reviewing, and  
advising the Board on, matters pertaining to corporate values, beliefs and standards, including  
Eveready's corporate governance and its corporate governance policies.  
[24] Eveready's Code of Conduct and Insider Trading Policy applied to all Eveready directors,  
officers and employees. Both specifically prohibited illegal insider trading and the disclosure of  
non-public material information to others (referred to as "tipping"), defined material information  
and explained the policy rationale for the prohibitions.  
[25] Eveready's Code of Conduct stated that Eveready personnel were expected to:  
Comply with all laws and regulations of the jurisdiction in which Eveready operates  
including insider trading/securities laws . . .  
. . .  
Maintain the confidentiality of "non-public information"  
[26] Eveready's Insider Trading Policy provided more detailed information regarding the  
insider trading prohibition. It provided examples of potential material information, including  
"changes in corporate structure (such as changes in share ownership that may affect control)". It  
advised that trading with knowledge of non-public material information as well as "tipping"  
(which it described) not only violated the policy but also was illegal and unethical. Under the  
heading "Summary", it also advised that Eveready directors and others could not:  
buy, sell or otherwise trade in securities on the basis of undisclosed Material Information;  
pass undisclosed Material Information on to others who may buy, sell or otherwise trade  
in affected securities; . . .  
[27] Eveready's Insider Trading Policy stipulated "black out periods" prohibited the trading  
of Eveready Shares during specified periods throughout the year for "deemed insiders", defined  
to include Eveready directors and "employees who frequently had access to Material  
Information". It imposed automatic trading blackouts on these deemed insiders for periods  
commencing four weeks (28 days) prior to, and finishing two full trading days following, the  
public release of quarterly and annual financial results, and for at least two full trading days after  
the public release of other potentially material information. Eveready's Insider Trading Policy  
further stipulated additional event-specific trading blackouts for those aware of any event giving  
rise to such a blackout, cautioning: "The failure of the senior management to designate a person  
as being subject to an event-specific blackout will not relieve that person of the obligation not to  
trade while aware of non-public Material Information."  
[28] Emails were sent to Eveready directors and other affected personnel reminding them of  
the start and end dates of upcoming automatic trading blackouts pending public release of  
financial results.  
3.  
Global Economic Downturn and Share Price  
[29] In 2008 and into 2009 there was a significant global economic downturn precipitated by a  
liquidity crisis in the credit markets. The S&P/TSX Composite Index fell from 14 467 on  
30 June 2008 to 8123 on 28 February 2009, a decrease of approximately 44%. The 31 December  
2008 closing price of Eveready Units was $1.11 per Unit, equivalent to $5.55 using the 5:1  
conversion formula. Between 31 December 2008 and 16 March 2009 the S&P/TSX Composite  
Index fell 601 points, or 6.7%. In the same period the value of Eveready Shares fell $3.22 or  
58%.  
[30] At the start of 2009 Eveready was highly leveraged it had debt on its balance sheet –  
but it was in compliance with all financial covenants under its $100 million revolving credit  
facility (the Revolver).  
At the 15 January 2009 Board Meeting, Eveready management  
presented the 2009 budget review. Having regard to the economic downturn, management  
advised the Board of management's intention to "tightly monitor and limit capital spending",  
defer capital expenditures until the economy improves, and "only spend what is needed". The  
Board and management also discussed management's expectations regarding the renewal of the  
Revolver and the need to ensure continuing compliance with all financial covenants thereunder.  
[31] At the 11 March 2009 Board Meeting, the Board unanimously resolved to suspend  
Eveready's dividend payments "in order to preserve cash and limit the potential for Eveready to  
default on the financial covenants in its credit facility". On 11 March Eveready Shares closed  
trading at $1.56.  
[32] On 12 March 2009 Eveready released its audited financial statements for the year ended  
31 December 2008 (the 2008 Audited Financial Statements) and its 31 December 2008  
Management's Discussion and Analysis prepared as of 11 March 2009 (the December 2008  
MD&A). A conference call was held that day in which Marlin and Vandenberg summarized  
Eveready's financial results and answered questions from analysts and other investors.  
[33] In its 12 March 2009 news release announcing its 2008 fourth quarter and year-end  
financial results, Eveready disclosed that: it had "continued to achieve significant growth" in its  
business, including a 25% increase in revenue; it had reported a net loss of $63.4 million, caused  
by a $90.3 million impairment loss on intangible assets and goodwill; but for this impairment  
loss, it would have generated net earnings of $24.1 million, a 77% increase in net earnings; it had  
acquired for cancellation some 1.79 million Eveready Units pursuant to its normal course issuer  
bid; it was in the process of renewing the Revolver, which was maturing on 24 April 2009, and  
anticipated that all or the majority of it would be renewed; and it was suspending its quarterly  
dividend.  
According to Marlin and Vandenberg, they believed that such news about the  
Revolver would be perceived as positive or good news by the market. On 12 March Eveready  
Shares closed trading at $1.85.  
[34] It was Marlin's evidence that, despite the economic downturn, Eveready's business did  
not really slow down until March 2009.  
[35] In March 2009 there were signs that the global economy and the capital markets were  
beginning to stabilize and slowly rebound. In March, for the first time in nine months, the  
S&P/TSX Composite Index rose over the course of a month, increasing to 8720.4 on 31 March,  
an increase of 587.4 points or 7.35%. In March the Eveready Share high price was $2.80 (on  
2 March), the low price was $1.45 (on 11 March) and the month-end (31 March) closing price  
was $2.42. The low closing price of $1.89 was on 13 March, with the Shares recovering in value  
between 16 and 31 March. Although the Eveready Share prices showed more stability in March,  
the price closed 5% lower at month end.  
[36] Marlin and Vandenberg believed in March and April 2009 that the Eveready Share price  
was significantly undervalued Marlin used the words "grossly undervalued" and that  
Eveready shares would be a good investment.  
[37] It was the Staff investigator's evidence that in March and April 2009 there were many  
people purchasing Eveready Shares, and he agreed that certain people had provided him with  
various legitimate reasons for doing so.  
[38] Several analysts reports issued in mid-March 2009 predicted an increase in the price of  
Eveready Shares. On 13 March 2009 Blackmont Capital Inc. predicted a target price increase  
from $1.85 to $2.75, but downgraded its recommendation from "Spec. Buy" to "HOLD". The  
same day Cormark Securities Inc. predicted a target price increase from $1.90 to $3.00, but  
lowered its recommendation to "Market Perform" from "Buy". The same day Fraser Mackenzie  
predicted a target price increase from $1.85 to $3.25, and maintained its "Buy" recommendation.  
The same day National Bank Financial predicted a target price increase from $1.85 to $2.60, and  
upgraded its recommendation from "Underperform" to "Sector Perform". The same day  
Paradigm Capital Inc. predicted a target price decrease to $4.50 from $6.00, and upgraded its  
recommendation from "Hold" to "Speculative Buy". On 12 March 2009 CIBC World Markets  
Inc. (CIBC) Richard Kowalchuk's employer predicted a target price increase from $1.85 to  
$3.50, and maintained its "Sector Performer" recommendation.  
All these analysts voiced  
concerns about Eveready's debt but were optimistic about its long-term value given Eveready's  
efforts to reduce its debt, such as suspension of its quarterly dividend.  
[39] On 14 April 2009 Eveready issued a news release (the 14 April 2009 News Release)  
announcing that it had renewed the Revolver with a slight reduction in the total amount available  
to $95 million from $100 million. On 13 April and on the next three days, Eveready Shares  
closed trading at $2.26, $2.30, $2.31 and $2.35, respectively.  
4.  
Events Leading Up to Completion of the Proposed Acquisition  
[40] Clean Harbors was a United States (US) company headquartered in Massachusetts and its  
shares traded on the New York Stock Exchange. Clean Harbors was engaged in the business of  
providing environmental, energy and industrial services throughout North America.  
[41] In late October 2008 Clean Harbors' vice-president contacted Vandenberg indicating its  
interest in exploring a business combination with Eveready, including acquisition of a part or all  
of Eveready (the Proposed Acquisition). Marlin subsequently spoke with Alan McKim  
(McKim), chairman, president and CEO of Clean Harbors, who advised Marlin that Clean  
Harbors was interested in exploring the acquisition of all Eveready Shares at a price equal to five  
to six times EBITDA, a premium to the then Eveready Share price. This acquisition price,  
Marlin told us, was suggested by him.  
[42] The Proposed Acquisition was discussed at seven meetings of the Board on  
6 November 2008 (the 6 November 2008 Board Meeting), the 15 January 2009 Board Meeting,  
on 20 January 2009 (the 20 January 2009 Board Meeting), the 11 March 2009 Board Meeting,  
on 8 April 2009 (the 8 April 2009 Board Meeting), on 14 April 2009 (the 14 April 2009 Board  
Meeting) and on 28 April 2009 (the 28 April 2009 Board Meeting)prior to Eveready's  
29 April 2009 news release publicly announcing that Eveready "has signed a definitive  
agreement to be acquired by Clean Harbors" (the 29 April 2009 News Release). Between  
October 2008 and the issuance of the 29 April 2009 News Release, Eveready and Clean Harbors  
negotiated the Proposed Acquisition.  
[43] At the 6 November 2008 Board Meeting Marlin first advised Eveready directors,  
including Bert Holtby, that Clean Harbors had expressed "an interest in the possibility of  
acquiring Eveready at 5-6 times EBITDA". The Board discussed various strategies to deal with  
Clean Harbors' expression of interest and any other potential offers. The Board also discussed  
whether Clean Harbors' expression of interest constituted "material information", which would  
"invoke a blackout" under Eveready's Insider Trading Policy. The Board and Eveready  
management agreed that the information was not material because the discussions were "at a  
very preliminary stage (i.e. none of the essential terms of a deal have been agreed to and there is  
no indication as to whether or not it is possible, let alone likely, that an agreement will be  
reached)".  
[44] As a result, Marlin indicated to McKim that Eveready was interested in having  
discussions with Clean Harbors but made it clear that "the price would have to be -- it wasn't a  
fire sale. It was going to be sold at what the current trading was at".  
[45] Communications continued between the management of Eveready and Clean Harbors.  
No Eveready director other than the chair of the Board was apparently involved in these  
communications, or informed of them before the 15 January 2009 Board Meeting.  
[46] On 29 December 2008 Marlin and Vandenberg met with McKim to explore further the  
Proposed Acquisition. At this meeting, Marlin suggested acquisition prices in the range of 5 to 6  
times EBITDA. McKim followed up that meeting with a 9 January 2009 letter to Marlin  
advising that Clean Harbors was "willing to make a cash and common stock offer in the range of  
CDN $12.50 to 13.75 per share". Emails, focusing on acquisition price, were then exchanged.  
[47] At the 15 January 2009 Board Meeting, Eveready directors, including Bert Holtby, and  
Eveready management engaged in "significant" discussions about the strategic alternatives  
available to Eveready, including the Proposed Acquisition. The Board was updated on the  
Proposed Acquisition, including communications regarding acquisition price and manner of  
payment. The Board authorized management to explore further the Proposed Acquisition with  
Clean Harbors at an acquisition price of six times EBITDA less debt. The Board also concluded,  
following "significant" discussion, that the Proposed Acquisition "has not reached the stage of  
being 'material information'". Nevertheless, the Board determined it prudent to impose a trading  
blackout in respect of Eveready Shares on all those with knowledge of the Proposed Acquisition,  
including Eveready directors. This trading blackout remained in place until the issuance of the  
29 April 2009 News Release.  
[48] Eveready management took steps to ensure the confidentiality of the Proposed  
Acquisition, such as limiting the employees with access to information about the Proposed  
Acquisition to those who "needed to know". The Proposed Acquisition was given code names –  
"Project Clean" and "Project NHL" for use in communications about it, and a secure data room  
was established.  
Marlin, Vandenberg and Brennan were not aware of any people with  
knowledge of the Proposed Acquisition other than those later identified to the Commission.  
[49] Negotiations between management of Eveready and Clean Harbors continued. On  
16 January 2009 Marlin advised McKim that Eveready would be prepared to support an all-share  
offer equivalent to six times trailing 2008 EBITDA, which would be "a fair and defendable price  
for our shareholders". On 18 January 2009 McKim advised Marlin that his proposed acquisition  
price was "too high" and countered with an offer in the range of 5.5 times 2008 EBITDA less  
debt. McKim further advised that, if the Board approved this price range, the parties would  
proceed to a formal letter of intent and initiate a formal due diligence process. On 19 January  
2009 Marlin forwarded this Clean Harbors' offer to Eveready directors, including Bert Holtby.  
[50] The 20 January 2009 Board Meeting was held specifically to discuss the Proposed  
Acquisition, but Bert Holtby did not participate due to his mother's funeral. After receiving an  
update from Marlin, the Board discussed the merits of the Proposed Acquisition, including that  
"Eveready is highly leveraged and there are risks to Eveready's business, especially in the current  
economic environment" and that "Eveready and most of its peers are currently trading at  
multiples of 3.5X EBITDA; therefore 5.5X EBITDA is probably quite a good deal in this  
market". Brennan testified that in the course of this meeting and perhaps between 15 and  
20 January 2009, the thinking of the Board had shifted and the Board "started to think this was a  
pretty good offer". As Brennan noted, "the thought was if somebody is willing to give you two,  
two and a half times what the market is willing to give you, you should give the shareholders the  
opportunity to have that money and decide how they want to invest it". Ultimately, the Board  
authorized Eveready management to continue negotiations with Clean Harbors and to present it  
with a counterproposal an acquisition price equivalent to 5.5 times EBITDA if paying in cash  
and Clean Harbors' shares (the Clean Harbors Shares) or 6 times EBITDA less debt if paying  
in Clean Harbors Shares, or the negotiation of "a non-binding deal with Clean Harbors that  
[management] felt was in the best interest of Eveready". Any final agreement was to be subject  
to Board approval.  
[51] On 21 January 2009 Marlin emailed McKim, advising "I would like to discuss where we  
are at but think we should be all but there" and giving details of the Board's counterproposal.  
Marlin believed that at this point "[t]he negotiations were pretty much done" Eveready was  
"prepared to -- to go along with something fairly similar to what they had offered".  
[52] On 26 January 2009 Marlin emailed Eveready directors, including Bert Holtby, advising  
that Eveready was "proceeding to a CA [confidentiality agreement] and expect to receive a letter  
of intent this week". In that email, Marlin sought the Board's approval of his retention of legal  
and financial advisors to represent Eveready's interests in moving forward with the Proposed  
Acquisition.  
[53] Approximately one hour later, Bert Holtby emailed his approval "Bert's aboard". No  
Eveready director objected.  
[54] Eveready and Clean Harbors entered into a Confidentiality and Standstill Agreement  
dated 26 January 2009 (the Confidentiality Agreement). The Confidentiality Agreement  
expressed Clean Harbors' interest in "a possible purchase, merger, arrangement, combination or  
similar transaction" with Eveready. The Confidentiality Agreement provided for Clean Harbors  
and Eveready to maintain in strict confidence all oral and written information furnished from one  
to the other. For the reasons discussed below, we find that by this date, 26 January 2009, the  
Proposed Acquisition the fact that an entity (whether or not named) was proposing to acquire  
Eveready by way of take-over, merger or other business combination (whether or not priced) –  
was a material fact within the meaning of the Act.  
[55] Between 26 January and 2 March 2009, Eveready and Clean Harbors conducted  
preliminary due diligence investigations of each other and continued negotiations on acquisition  
price and manner of payment.  
[56] On 9 February 2009 an email was sent on behalf of Eveready to Eveready directors and  
senior management reminding them that an automatic trading blackout in connection with the  
release of Eveready's 2008 year-end financial results would commence on 12 February 2009 and  
end on 13 March 2009. The same day Brennan sent an email to Eveready directors and affected  
senior management reminding them that, despite the earlier email, "all who are aware" of the  
Proposed Acquisition were already subject to the earlier trading blackout imposed by the Board  
on itself and others.  
[57] In a 2 March 2009 email Vandenberg advised the Board that, due to their confidential  
nature, the attached 15 January 2009 Board Meeting minutes would not be included in the  
package of materials for the upcoming Board meeting.  
[58] On 2 March 2009 Eveready and Clean Harbors entered into a non-binding letter of intent  
(the Letter of Intent) setting out the framework for the Proposed Acquisition. The acquisition  
price set out in the Letter of Intent represented, according to Vandenberg, a "significant  
premium" on the trading price of Eveready Shares. On 2 March 2009 Eveready Shares closed  
trading at $2.56.  
[59] At the 11 March 2009 Board Meeting, Marlin advised Eveready directors, including Bert  
Holtby, that Eveready had entered into the Letter of Intent with Clean Harbors in furtherance of  
the Proposed Acquisition and that each party was "in the process of commencing its due  
diligence investigation of the other". The Board's reaction to this, according to Brennan, was:  
By this point in time, I think people are getting excited. I think they're thinking, Wow, this deal  
has a chance of happening. This is now looking like a good deal. They have turned their minds  
around to if they can get this transaction done with Clean Harbors, this would be a good deal for  
Eveready and a good deal for the shareholders, and it was a transaction that the company was  
pursuing.  
[60] At the 11 March 2009 Board Meeting, Marlin also advised Eveready directors, including  
Bert Holtby, that other parties had expressed interest "in exploring potential transactions with  
Eveready". Marlin testified that one of these parties was interested in exploring a broader deal,  
while all others expressed interest in certain Eveready assets.  
[61] On 7 April 2009 Vandenberg emailed to Eveready directors, including Bert Holtby, a  
valuation analysis prepared by Eveready's independent financial advisor. The valuation analysis  
advised that Clean Harbors' proposed acquisition price represented a 491.2% premium over  
Eveready's 30-day volume-weighted average Share price of $2.54 as at 31 March 2009.  
[62] At the 8 April 2009 Board Meeting, Marlin provided Eveready directors, including Bert  
Holtby, with an update on the Proposed Acquisition. The Board was informed that Clean  
Harbors' financial advisors estimated Eveready's 2009 EBITDA to be approximately $70 million  
and that, as a result, Clean Harbors was seeking to renegotiate the acquisition price. The Board  
was also informed that Clean Harbors was wanting "to discuss a definitive agreement without . . .  
having their financing in place", which Marlin believed would, on certain conditions, be  
satisfactory. Marlin also advised the Board that the Proposed Acquisition "still appears to be the  
best value for Eveready and its shareholders".  
[63] On 8 and 9 April 2009 Marlin and McKim met to further negotiate the Proposed  
Acquisition.  
[64] At the 14 April 2009 Board Meeting, Marlin presented Eveready directors, including Bert  
Holtby, with Clean Harbors' latest offer $11 per Eveready Share, consisting of $3.30 in cash  
per Eveready Share and the balance in Clean Harbors Shares. Prior to this meeting, Eveready  
management had emailed to the Board a copy of Clean Harbors' letter setting out this offer. The  
Board unanimously agreed that the Proposed Acquisition at the latest acquisition price proposed  
by Clean Harbors which represented "a substantial premium to the current trading price" of  
Eveready Shares "was in the best interests of Eveready and its shareholders". The Board  
authorized Eveready management to pursue completion of the Proposed Acquisition on the terms  
proposed by Clean Harbors, but with any binding agreement subject to Board approval. On  
14 April 2009 Eveready Shares closed trading at $2.30.  
[65] A 21 April 2009 email sent to Eveready directors, including Bert Holtby, advised that  
senior management wished to hold "a Board conference call" on 28 April 2009 to discuss matters  
relating to completion of the Proposed Acquisition, and that "[w]e aim to sign the Purchase  
Agreement the following day". The same day Clean Harbors' board of directors authorized its  
management to pursue completion of the Proposed Acquisition.  
[66] A 23 April 2009 email to Eveready's significant shareholders, one of whom was Bert  
Holtby, advised that the documentation to complete the Proposed Acquisition could be signed  
the following Wednesday and that one condition to closing the transaction was the execution of  
lock-up agreements by them. These shareholders were requested to verify the correctness of  
certain information relating to them Bert Holtby was to confirm that he was the owner of  
815 174 Eveready Shares and 5000 Eveready options.  
[67] In a 25 April 2009 email Vandenberg provided to Bert Holtby and others a brief  
summary of the Proposed Acquisition, including: the acquisition price of $11 per Eveready  
Share ($3.30 in cash, the remainder in Clean Harbors Shares); "Signing aiming for  
Wednesday"; and "Closing aiming for July 31st".  
[68] At the 28 April 2009 Board Meeting, Eveready directors, including Bert Holtby,  
considered an updated valuation analysis and a due diligence report. The Board noted that the  
proposed acquisition price for the Proposed Acquisition "was fair given the very substantial  
premium to the market it represents".  
The Board unanimously approved the Proposed  
Acquisition and recommended that it be approved by Eveready shareholders. On 28 April 2009  
Eveready Shares closed trading at $3.47.  
[69] In the evening of 28 April 2009 Eveready and Clean Harbors executed an Acquisition  
Agreement. That morning Vandenberg emailed to Eveready directors, including Bert Holtby, a  
draft of the 29 April 2009 News Release.  
[70] Prior to the opening of the capital markets on 29 April 2009, Eveready and Clean Harbors  
each issued a news release. Eveready's 29 April 2009 News Release stated that Clean Harbors  
would acquire all Eveready Shares for a combination of cash and Clean Harbors Shares totalling  
approximately $11 per Eveready Share, representing a 217% premium to Eveready's closing  
trading price of $3.47 on 28 April 2009. It also stated that the Proposed Acquisition was subject  
to shareholder and other approvals and was expected to be completed during the third quarter of  
2009. On 29 April 2009 Eveready Shares closed trading at $10.40.  
[71] On 15 July 2009 Eveready shareholders approved the Proposed Acquisition.  
[72] On 3 August 2009 Eveready issued a news release publicly announcing that, effective  
31 July 2009, it had completed a plan of arrangement with Clean Harbors whereby a wholly-  
owned subsidiary of Clean Harbors acquired all Eveready Shares for which Eveready  
shareholders received for each Eveready Share held $3.30 in cash and 0.1304 of a Clean Harbors  
Share.  
[73] Marlin conceded that the state of the economy in 2009 made it difficult to reach  
agreement on the Proposed Acquisition. Marlin commented: ". . . things kept deteriorating. It  
made it harder and harder for [McKim] to do the deal, and harder and harder for us to accept the  
deal, so . . . The concern was, if things kept deteriorating before we got a deal done, it wouldn't  
be an acceptable deal." Marlin also noted that by 11 March 2009 "I was pretty optimistic it  
would move forward, but the economy was still very much in the air, and a deal's not a deal until  
it's done."  
B.  
Bert Holtby  
1. Background Information  
[74] In 2009 Bert Holtby was a retired businessman resident in Medicine Hat, Alberta (since  
September 2005) and Surprise, Arizona. Bert Holtby had resided in Peace River until he retired,  
after which he moved to Medicine Hat.  
[75] At all material times Bert Holtby was a man of very significant wealth, much of which  
was generated from his very large shareholdings in Eveready.  
[76] Bert Holtby spent winter 2009 in Arizona until returning on 21 April 2009 to Medicine  
Hat, with the following exceptions:  
14-16 January in Edmonton attending the 15 January 2009 Board Meeting;  
20-22 January in Manitoba attending his mother's funeral;  
9-12 March in Edmonton attending the 11 March 2009 Board Meeting; and  
21-23 March in California visiting Dale Holtby.  
[77] There was some suggestion from Landsiedel, not confirmed by Bert Holtby, that Bert  
Holtby also spent some time the dates and duration are not clear in Mexico in winter 2009.  
Landsiedel was somewhat confident that Bert Holtby was back in Arizona sometime around the  
latter part of February or early March.  
2.  
Relationship with Eveready  
[78] As discussed above, throughout and indeed for many years prior to the Relevant Period,  
Bert Holtby was a trustee and then a director of Eveready. He was a member of Eveready's  
Nominating and Governance Committee in the Relevant Period. He remained a director of  
Eveready until the completion of the Proposed Acquisition in August 2009. It is not disputed,  
and we find, that throughout the Relevant Period Bert Holtby, as a director of Eveready, was a  
person in a special relationship with Eveready within the meaning of the Act.  
[79] Bert Holtby confirmed that he received and read the 2009 Corporate Governance  
Documents, that he knew they outlined his responsibilities as a director, and that he knew it was  
important to comply with these documents. He understood that Eveready, as a publicly traded  
company, was subject to securities laws. More specifically, Bert Holtby understood that as a  
director he was to adhere to Eveready's Code of Conduct. He was familiar with Eveready's  
Insider Trading Policy and understood that he was prohibited from trading on non-public  
material information about Eveready and from "tipping" others. Bert Holtby was aware that he  
was a "deemed insider" under Eveready's Insider Trading Policy. He understood that Eveready  
imposed routine blackout periods surrounding the release of financial results as well as event-  
driven blackout periods, and that he could not trade or "tip" during a blackout period. Bert  
Holtby confirmed his attendance at the 15 January 2009 Board Meeting at which it was  
discussed whether the Proposed Acquisition would be "material information" under securities  
laws and at which the Board decided to impose a trading blackout on all those with knowledge of  
the Proposed Acquisition.  
[80] In his evidence Bert Holtby confirmed his awareness of the pertinent information  
regarding the Proposed Acquisition. Bert Holtby confirmed that the first time he heard mention  
of Clean Harbors was at the 6 November 2008 Board Meeting. Bert Holtby confirmed that as a  
very significant Eveready shareholder he wished to be fully apprised of the progress of the  
Proposed Acquisition, and really involved in the process the Proposed Acquisition was very  
much of interest to him. Bert Holtby confirmed that he knew "Project NHL" was a code name  
for the Proposed Acquisition.  
3.  
Relationships and Contact with Others  
[81] The evidence is that Bert Holtby knows, or knows of, all of the other Respondents.  
[82] Bert Holtby first met Richard Kowalchuk when he was "a kid" growing up in Peace  
River. When at home in the summers of the years he attended college, Richard Kowalchuk  
worked for Bert Holtby's company United Services.  
[83] In the early 2000s around 2002 Richard Kowalchuk became the investment advisor  
for Bert Holtby and his wife. Bert Holtby said that from 2005 through 2009 he and Richard  
Kowalchuk spoke "a lot" about once a week about the capital market and investment choices  
and advice. Bert Holtby and Richard Kowalchuk would send each other market reports and  
other similar material.  
[84] Bert Holtby denied telling Richard Kowalchuk in March 2009 that he thought the  
Eveready Share price was going to increase and that Richard Kowalchuk should be purchasing  
Eveready Shares. Bert Holtby admitted that he had telephone conversations with Richard  
Kowalchuk in late April 2009; however, Bert Holtby explained that these calls were to learn  
what was happening in the market because at the time he was travelling back from Arizona and  
did not have access to such information while travelling. Bert Holtby denied telling Richard  
Kowalchuk about the Proposed Acquisition in these conversations. Bert Holtby denied telling  
Richard Kowalchuk anything about the Proposed Acquisition before it was publicly announced.  
[85] Bert Holtby knew of Randy Kowalchuk as Richard Kowalchuk's older brother and had  
met him. Bert Holtby confirmed attending a political fundraising event organized by Randy  
Kowalchuk in May 2008 in British Columbia (the Political Fundraiser).  
[86] Bert Holtby described Douglas as his friend of about 30 years. They met in the early  
1980s when they both lived in Peace River; they curled together then. They remained in periodic  
contact with each other after Douglas moved from Peace River. When Bert Holtby relocated to  
Medicine Hat in 2005, he and Douglas (who had moved to Medicine Hat in the late 1980s) re-  
established their friendship. Douglas looked after Bert Holtby's home while he and his wife  
were in Arizona. Bert Holtby confirmed that he and Douglas trusted each other.  
[87] Bert Holtby telephoned Douglas in late April 2009 to tell him when Bert Holtby and his  
wife would be returning to Medicine Hat and to turn up the thermostat. Bert Holtby denied  
telling Douglas anything about the Proposed Acquisition before it was publicly announced. Bert  
Holtby said that after the 29 April 2009 News Release was issued he and Douglas talked about  
the Proposed Acquisition and he told Douglas that "[w]e made some good money", the "[w]e"  
being a reference to himself and other Eveready shareholders.  
[88] Bert Holtby confirmed that Elaine Wreggit is his and Dale Holtby's sister, that she is  
married to Wreggit, and that she and Wreggit reside in Manitoba. Bert Holtby confirmed he  
knew that Wreggit was a financial planner in the mutual fund industry.  
[89] Bert Holtby confirmed that from late January to the end of April in 2009 he spoke "quite  
often" with his sister, who had cared for their mother until her death on 14 January, and spoke "a  
few times" with Wreggit, who was the executor of Bert Holtby's mother's estate. Bert Holtby  
and Dale Holtby attended their mother's funeral in Manitoba on 20 January 2009.  
[90] When Bert Holtby telephoned his sister on her birthday 10 March 2009 she asked him  
to call back because Wreggit, who was not there, wanted to speak to Bert Holtby about the  
estate. Bert Holtby telephoned Wreggit in the evening of the next day 11 March. According to  
Bert Holtby, after he and Wreggit discussed the estate matter, Wreggit asked whether something  
was "wrong" with Eveready because its Share price was "going down". Bert Holtby testified he  
told Wreggit:  
. . . Oh, well, it's -- the whole market hates everybody. Everybody's going in the tank, but we're in  
good shape, and we'll get through this like other problems in life, and if we happen to be on  
somebody's hit list for a takeout, which there was a lot of companies in that situation at the time,  
. . . it would have to be at a premium, because we don't really have any problems going on, and  
that was pretty much the end of that conversation.  
[91] Bert Holtby said that he had no further discussions about Eveready with Wreggit before  
the end of April 2009. Bert Holtby denied telling Wreggit anything about the Proposed  
Acquisition including that Eveready was in a sales process or that if things went as they should  
Eveready would be sold at a substantial premium before it was publicly announced.  
[92] Dale Holtby is Bert Holtby's brother. Bert Holtby described his relationship with his  
brother as not close "[o]nly because of distance", although in recent years there had been more  
contact such as visits to each other when Bert Holtby was in the US and via Skype. Bert Holtby  
described his brother as not a wealthy man, not an educated man and not someone with any  
experience in the securities industry or with trading securities.  
[93] Bert Holtby confirmed that he and his wife visited Dale Holtby and his wife in California  
in March 2009, arriving on 21 March and departing on 23 March. Bert Holtby confirmed that  
during this weekend visit he attended a barbeque hosted by Dale Holtby in the evening of  
Saturday 21 March (the March 2009 Barbeque). Bert Holtby denied having any discussions  
with Dale Holtby about the Proposed Acquisition at the March 2009 Barbeque, and Bert Holtby  
denied telling Dale Holtby anything about the Proposed Acquisition before it was publicly  
announced.  
[94] Bert Holtby said that Shepert is not his friend. Bert Holtby knew Shepert as he was a  
long-time friend of his brother Dale Holtby. Bert Holtby told us that Shepert and his wife  
attended the March 2009 Barbeque and recalled that it would have been years earlier before the  
early 1980s when he last saw or spoke with Shepert. Bert Holtby testified that at the March  
2009 Barbeque Shepert asked him if he had "ever sold the company", to which Bert Holtby  
responded "I wasn't at liberty to speak about it". Bert Holtby said that afterwards he thought  
Shepert had been referring to Bert Holtby's company United Services, not Eveready, which Bert  
Holtby had been trying to sell for a number of years. Bert Holtby denied telling Shepert about  
the Proposed Acquisition at the March 2009 Barbeque, and Bert Holtby denied telling Shepert  
anything about the Proposed Acquisition before it was publicly announced.  
[95] Bert Holtby met Landsiedel in Arizona in 2003 or 2004. He said that his primary  
interaction with Landsiedel was as one of a group of golfers who played usually Tuesdays,  
sometimes Thursdays, at a particular golf course in Arizona. Bert Holtby confirmed that the  
golfing foursomes changed weekly. He also confirmed that in 2009 Landsiedel and other golfers  
in the group moved to another golf course. Bert Holtby believed that, when he played golf with  
those individuals once or twice after that move, it was after the Relevant Period.  
[96] Bert Holtby denied telling Landsiedel anything about the Proposed Acquisition before it  
was publicly announced.  
[97] Burdeyney a partner in the accounting firm InVision Chartered Accountants (InVision)  
had been Bert Holtby's tax accountant since the early 1980s. Bert Holtby confirmed that  
Burdeyney performed several accounting services for him and his family, including preparing  
personal tax returns for him, his wife and his daughters and corporate tax returns for his  
companies 216928 Alberta Ltd. (216 Alberta) and Holtby Holdings Ltd. (Holtby Holdings).  
Bert Holtby said that he would typically meet with Burdeyney in the summer and around  
Christmas time when he was in Peace River visiting family. Bert Holtby's cellphone records for  
March and April 2009 showed no telephone calls made to InVision's telephone number or to  
Burdeyney's cellphone number.  
[98] Bert Holtby characterized his relationship with Burdeyney, who was "quite a bit"  
younger than he, as "strictly business" but for the occasional socializing with him on the golf  
course in Peace River. Bert Holtby said that he had never been to Burdeyney's home, that  
Burdeyney had never been to Bert Holtby's home in either Medicine Hat or Arizona, and that  
they did not vacation or celebrate holidays together. Bert Holtby did consider Burdeyney a  
friend.  
Bert Holtby denied telling Burdeyney anything about the Proposed Acquisition –  
including that there might be a deal or merger with reference to Eveready before it was  
publicly announced.  
[99] Bert Holtby confirmed that he knew Gayle Walton and Jaschke as accountants with  
InVision.  
[100] Bert Holtby recalled Tanner as an individual he met at the Political Fundraiser. Bert  
Holtby recalled flying back from Kelowna in Tanner's private plane with three others from  
Medicine Hat. Bert Holtby said that he had had no other contact with Tanner.  
4.  
The Douglas Account  
(a) Its Establishment  
[101] Bert Holtby testified that he knew Richard Kowalchuk was always looking for new  
clients and so he approached Douglas to see whether he would be interested in opening a trading  
account with Richard Kowalchuk. According to Bert Holtby, Douglas told Bert Holtby that he  
did not have the $100 000 that Richard Kowalchuk was looking for from prospective clients, to  
which Bert Holtby responded, "Well, I could help you out if if you want to do it." Bert Holtby  
acknowledged that Douglas had no real experience in investing.  
[102] Around Labour Day 2005 Bert Holtby, Richard Kowalchuk and Douglas met for lunch  
(the September 2005 Meeting) to discuss the possibility of Douglas becoming a client of, and  
opening a trading account with, Richard Kowalchuk. Asked whether up to this point Richard  
Kowalchuk and Douglas knew each other, Bert Holtby said: "Not very well, if they did." And  
asked whether he had introduced Richard Kowalchuk and Douglas at this meeting, Bert Holtby  
said: "Could possibly be right, yeah."  
[103] According to Bert Holtby, at the September 2005 Meeting it was discussed that neither  
Bert Holtby nor Richard Kowalchuk could be involved in the trading account. Bert Holtby  
acknowledged that there was discussion about ownership of the trading account but denied that  
there was any agreement about a 40/40/20 ownership split, explaining:  
. . . there was conversation in the original thing, and when it ended, I said, There's no way I can  
participate in something like this. It's just detrimental to everyone's health and there's no way. I'll  
give you a loan, but that's -- after that, it's up to you. Paddle your own canoe.  
[104] Bert Holtby testified that, after Douglas discussed the matter with his wife, Douglas  
decided to open a trading account with Richard Kowalchuk as his investment advisor. Such a  
trading account was opened on 21 September 2005 through Richard Kowalchuk at CIBC (the  
Douglas Account). Bert Holtby confirmed he knew that Douglas had opened the Douglas  
Account in September 2005 it was to the Douglas Account that Bert Holtby authorized the  
deposit of a 22 September 2005 cheque for $90 000 drawn on the CIBC trading account of  
Holtby and his wife (the Holtby Account).  
[105] Bert Holtby testified that Richard Kowalchuk wanted to contribute $40 000 to the  
Douglas Account; however, because it "wouldn't look good . . . to [his] superiors", Richard  
Kowalchuk asked if he could give the money to Bert Holtby, who in turn would give the money  
to Douglas to deposit to the Douglas Account. Bert Holtby said that he saw nothing wrong with  
doing that and agreed to do so. On 22 September 2005 Richard Kowalchuk provided a bank  
draft for $40 000 payable to Bert Holtby, which Bert Holtby then deposited to the Holtby  
Account (this became part of the $90 000 sourced from Bert Holtby).  
[106] Bert Holtby testified that the $50 000 he deposited to the Douglas Account was a loan to  
Douglas, made without any written agreement or terms. Bert Holtby recounted numerous other  
loans he had made to other individuals "without paper", including a $5000 loan to Douglas in the  
early 1980s.  
(b)  
Douglas Account Activities  
[107] Bert Holtby denied any involvement in or knowledge of Richard Kowalchuk's deposits to  
the Douglas Account of $10 000 in February 2006 and of $11 200 in July 2008 notwithstanding  
Richard Kowalchuk's evidence to the contrary.  
[108] On 4 May 2006 Bert Holtby had his wife write a cheque for $50 000 drawn on their bank  
account and payable to Douglas. Bert Holtby explained that shortly after he and his wife had  
returned to Medicine Hat from Arizona Douglas had contacted him to ask whether Bert Holtby  
would lend him another $50 000 to cover a margin call in the Douglas Account Douglas did  
not want to sell some stock in that Account. Bert Holtby testified that he viewed this $50 000 as  
another loan to Douglas, "just like the first 50".  
[109] Bert Holtby was shown the Douglas Account statement for May 2006, reflecting the  
deposit of $50 000 on 5 May followed by a series of buy orders for a total of 13 000 Eveready  
Units with settlement dates of 9, 10, 11 and 12 May (the purchase dates being three business  
days prior). Bert Holtby testified that Douglas did not advise him about these purchases, which  
he acknowledged took place during an automatic trading blackout imposed in relation to the  
release of Eveready's first quarter financial results. Eveready issued a 9 May 2006 news release  
with the title "[Eveready] Announces an Outstanding Quarter". Bert Holtby denied telling  
Douglas that this news release would be issued.  
[110] On 12 October 2007 Douglas authorized the issuance of a cheque for $50 000 from the  
Douglas Account and payable to Bert Holtby's wife's nephew. Concerning this, Bert Holtby  
testified that in October 2007 he asked Douglas for $50 000 back because he wanted it to build a  
shop on his nephew-in-law's property and he thought it was a "good test for Douglas".  
[111] On 12 March 2009 Bert Holtby had his wife write a cheque for $50 000 drawn on their  
bank account and payable to Douglas. Bert Holtby testified that, when he was in Edmonton to  
attend the 11 March 2009 Board Meeting, Richard Kowalchuk telephoned him, as he had after  
every Board meeting following Eveready's release of financial results, to discuss Eveready's  
financial results and the market's response to the results. Bert Holtby said that this time Richard  
Kowalchuk telephoned him twice and during the second call said "[y]our buddy Douglas could  
use another 50,000". Bert Holtby testified that he then telephoned Douglas, told him what  
Richard Kowalchuk said, and asked Douglas, "Is this on the up and up? Can you handle this?"  
When Douglas said that he could, Bert Holtby told him he would "put a cheque in the mail".  
Bert Holtby testified that this was just another loan, "another 50,000 loan".  
[112] Bert Holtby testified that he had no involvement in the Douglas Account, that he never  
provided instructions to Richard Kowalchuk or Douglas to trade Eveready or any other securities  
in that account, and that he did not give any advice to Richard Kowalchuk about when to trade in  
Eveready securities.  
[113] Bert Holtby also testified that he never received paper copies of account statements for  
the Douglas Account. However, he said that on one occasion Douglas gave him electronic  
access Douglas's online user name and password to the Douglas Account because Douglas  
was excited about some money he had made on a trade "or something to that effect" and he  
wanted Bert Holtby to "[h]ave a look at it". Bert Holtby told us he did look at it but could not  
recall "what it was -- what was in it".  
[114] Bert Holtby also recalled recommending that Douglas be put on Eveready's president's  
list for an issuance of Eveready securities. According to Bert Holtby, he had asked Douglas  
whether he wanted this to happen but did not know whether it had and, if so, whether he had  
participated or not.  
[115] Bert Holtby denied having any conversations with Richard Kowalchuk about whether or  
not to sell securities in or take money out of the Douglas Account following the issuance of the  
29 April 2009 News Release.  
[116] Bert Holtby told us that he has never requested that Douglas repay the $100 000 sourced  
from Bert Holtby and remaining in the Douglas Account.  
5.  
Bert Holtby's Investigative Interview  
[117] On 13 May 2010 Bert Holtby, unrepresented by counsel, was interviewed under oath by  
Staff pursuant to a summons issued under section 41 of the Act. Bert Holtby testified that he  
was told by a lawyer that he did not require legal representation, he was not briefed as to the  
types of questions he could expect and he did not review any documentation in preparation for  
being interviewed.  
[118] In his Investigative Interview, Bert Holtby gave the following evidence:  
He did not ask Douglas to set up the Douglas Account. Bert Holtby surmised that  
Douglas opened the Douglas Account on his own.  
He was not aware that the Douglas Account was the product of a meeting he had  
with Richard Kowalchuk and Douglas.  
He did not know the source of the initial $100 000 deposited to the Douglas  
Account other than the $50 000 he lent to Douglas. Bert Holtby did not know, but  
imagined, that the other $50 000 came from Douglas.  
There was no agreement concerning this $50 000 lent to Douglas. Douglas was  
wanting to invest in the market to learn how to play the market so Bert Holtby  
helped him out.  
He did not know whether Richard Kowalchuk contributed money to the Douglas  
Account, but he may have.  
He was not aware that Richard Kowalchuk contributed $40 000 to the Douglas  
Account. And, later, he did not recall Richard Kowalchuk giving him a cheque  
for $40 000 that was to be deposited to the Douglas Account.  
He did not know if he recommended that Douglas use Richard Kowalchuk as his  
broker.  
He recalled lending Douglas another $50 000 sometime later, also for the purpose  
of investing.  
He did not provide Richard Kowalchuk or Douglas with any direction with  
respect to the Douglas Account.  
In October 2007 Douglas repaid Bert Holtby $50 000 by issuing a cheque from  
the Douglas Account to Bert Holtby's nephew-in-law.  
He was not the beneficial owner of the Douglas Account.  
He knew four "Kens" two of whom were Burdeyney and Landsiedel.  
[119] Bert Holtby testified that when he was interviewed by Staff he had not remembered the  
third $50 000 payment to Douglas or that Richard Kowalchuk and Douglas were the sources of  
the other $50 000 that made up the $100 000 initial deposit to the Douglas Account. Bert Holtby  
also testified that when he was interviewed he had not recalled Richard Kowalchuk asking for  
Bert Holtby's assistance in making Richard Kowalchuk's $40 000 contribution to the Douglas  
Account.  
C.  
Richard Kowalchuk  
1. Background Information  
[120] Richard Kowalchuk, a Medicine Hat resident, was licensed as an investment advisor in  
December 1996 and employed as such by CIBC (and its predecessors) until his employment was  
terminated in November or December 2010. While an investment advisor, he developed and  
managed a portfolio of over $120 million.  
2.  
Relationships and Contact with Others  
[121] There is no evidence that Richard Kowalchuk knows, or knows of, any of the  
Respondents other than Bert Holtby, Burdeyney, Randy Kowalchuk and Tanner.  
[122] In the period 2005-2010, Richard Kowalchuk had approximately 150 families as clients.  
Among his clients were Bert Holtby, his brother Randy Kowalchuk, Douglas, Tanner, Bratvold  
and Stock.  
[123] Bert Holtby became Richard Kowalchuk's client in approximately 2002. Richard  
Kowalchuk has known Bert Holtby "for most of my life" they had lived in the same  
neighbourhood, and, from age 17 or 18, Richard Kowalchuk had done work for Bert Holtby,  
including work at his company United Services. Richard Kowalchuk said that his relationship  
with Bert Holtby was "a fairly good" one and that Bert Holtby was someone Richard Kowalchuk  
"looked up to because he was self-made and did very, very well with building his businesses".  
According to Richard Kowalchuk, Randy Kowalchuk has known Bert Holtby "from . . . his  
[Randy Kowalchuk's] school days", and Randy Kowalchuk knew that Richard Kowalchuk knew  
Bert Holtby.  
[124] Richard Kowalchuk understood that, when United Services and Eveready merged, Bert  
Holtby had retired but remained a director and one of the largest shareholders of Eveready.  
Richard Kowalchuk told us that: Bert Holtby was interested in monetizing his significant  
Eveready holdings for the benefit of his children and told Richard Kowalchuk that at some point;  
and he and Bert Holtby talked a few times toward the time Eveready was finally purchased about  
Bert Holtby's exit strategy or hope that an acquisition would result in these holdings being  
monetized. Asked in cross-examination by Bert Holtby's counsel whether it was possible that all  
Bert Holtby said before 29 April 2009 was that he would like to see his holdings monetized  
through an acquisition, Richard Kowalchuk responded: "No, I don't think that's how it went."  
[125] There are in evidence May 2008 emails between Richard Kowalchuk and Tanner  
concerning their attendance at the Political Fundraiser. Richard Kowalchuk did not believe that  
Tanner and Bert Holtby have ever met other than at this event. There is also in evidence a  
22 May 2008 email from Richard Kowalchuk to Tanner, Bert Holtby, Randy Kowalchuk and  
others to which (Richard Kowalchuk recalled) was attached a document identifying Bert Holtby  
as "Trustee and Director of Eveready Income Fund". Richard Kowalchuk told us that he  
obtained this information about Bert Holtby from Eveready's website or other research.  
According to the Richard Kowalchuk Settlement Agreement:  
. . . As far as [Richard] Kowalchuk is aware, [Bert] Holtby became a Trustee of EIF in or about  
March 2005. Holtby then became a Director of Eveready when EIF converted from a trust to a  
corporation in December, 2008. Holtby remained a Director of Eveready until January, 2010.  
[126] Tanner has been a client of Richard Kowalchuk since 2002, perhaps earlier. Tanner, who  
owned property in Penticton, British Columbia, was a referral from Randy Kowalchuk.  
[127] Bratvold was not only a client but also a friend of Richard Kowalchuk.  
3.  
Recommending Securities Generally  
[128] Richard Kowalchuk acknowledged that one important criterion in deciding whether to  
recommend a stock to a client was whether he considered the stock to be undervalued. Other  
criteria were whether a stock was safe enough for a client, whether it paid a dividend and  
whether the security had the ability to increase in value.  
4.  
Knowledge of the Proposed Acquisition  
[129] Richard Kowalchuk agreed that he was in the habit of watching and analyzing the  
market. He said that he had followed Eveready since its original public offering in 2005,  
including acquiring and analyzing research reports on the company (some of which were  
provided by Bert Holtby) and following newspaper reports and Eveready news releases and  
public disclosure. He also agreed that in or about 2008 Eveready had been one of the fastest  
growing companies in Alberta. He believed that in January through April 2009 Eveready was  
"in desperate need of cash injection"; that in March and April 2009 Eveready's stock, subject to  
its line of credit issue being resolved, was undervalued; that the biggest issue concerning the  
viability of Eveready was whether its line of credit would be renewed; and that, once the renewal  
of Eveready's line of credit was announced on 14 April 2009, there was good upside for his  
clients in Eveready's stock.  
[130] In evidence is a 25 February 2009 email from Richard Kowalchuk to Bert Holtby  
concerning Clean Harbors' announced acquisition of a privately held company EnviroSORT  
Inc. providing "specialized container management, vacuum, waste management and recycling  
services in several Western Canadian provinces". Richard Kowalchuk testified that he emailed  
this news story, "copied and pasted . . . from Reuters", after Bert Holtby contacted him on 24 or  
25 February 2009 looking for information about either Clean Harbors or EnviroSORT. Bert  
Holtby's 25 February 2009 emailed response was "Interesting". In cross-examination by Bert  
Holtby's counsel, Richard Kowalchuk acknowledged that he would offer to get clients  
information or advice about business matters if it were available to him; recalled Bert Holtby  
approaching him from time to time to discuss and to seek his views about public financial  
statements; and recalled Bert Holtby sometimes asking him if he could get some information  
about Eveready (hence the 25 February 2009 email). Richard Kowalchuk agreed that this email  
caught his attention and that he put Clean Harbors on "a watch list". At this point, however, he  
said, he had not received any information that acquisition negotiations were taking place.  
[131] According to the Richard Kowalchuk Settlement Agreement: on or about 19 March 2009  
Bert Holtby advised Richard Kowalchuk that Eveready was going to be acquired, at a premium  
to its current Share price, by Clean Harbors; on 23 April 2009 Bert Holtby advised Richard  
Kowalchuk that Clean Harbors' purchase of Eveready would be publicly announced on 29 April  
2009; and on or about 27 April 2009 Bert Holtby advised Richard Kowalchuk that, in purchasing  
Eveready, Clean Harbors' purchase price for Eveready Shares would be approximately $10 per  
Share. In his two Investigative Interviews (on 22 March and 3 May 2010), occurring one year or  
so after the impugned purchases of Eveready Shares took place, Richard Kowalchuk (under oath  
and represented by counsel) admitted that Bert Holtby told him in March 2009 that Eveready  
would be purchased at a premium and might have identified Clean Harbors as the acquirer, and  
that in a second conversation, which he believed occurred sometime between mid to late April,  
Bert Holtby identified Clean Harbors as the acquirer (if he had not earlier done so) and stated a  
purchase price of approximately $10 per Share.  
[132] However, Richard Kowalchuk testified in direct examination that sometime in April 2009  
Bert Holtby told him that Eveready was "going to be purchased by someone", and then that  
"Clean Harbors would be purchasing Eveready". Richard Kowalchuk further told us that, other  
than this information from Bert Holtby, he had not heard any other information about this.  
[133] In cross-examination by Bert Holtby's counsel, Richard Kowalchuk confirmed that, in  
light of his testimony in direct examination, he was not trading on any insider information in the  
month of March 2009, and he could not explain why his recollection had changed. Richard  
Kowalchuk conceded that he had no recollection of Bert Holtby advising on 23 April 2009 that  
Clean Harbors' purchase of Eveready would be publicly announced on 29 April; said that (as was  
the case when he was interviewed by Staff) he could not be sure of the date when Holtby advised  
that the purchase price pursuant to the Proposed Acquisition would be approximately $10 per  
Share; agreed that for the trades occurring on or before 27 April 2009 "[i]t's possible" he still did  
not have any insider information; and agreed it is possible that his trades in Randy Kowalchuk's  
wife's registered retirement savings plan (RRSP) account and in the Douglas Account on 14, 15,  
23 and 27 April 2009 and his trades in the same period in trading accounts for other clients that  
he has not admitted to "tipping" were prompted by the 14 April announcement of the resolution  
of Eveready's line of credit issue, which he agreed was a very significant event for him. He also  
acknowledged being ill, unstable and under medication when he was interviewed by Staff in  
March and May 2010. Richard Kowalchuk further testified, however, that in late April 2009 –  
with specific reference to his purchases in his tax-free savings account (TFSA) and his wife's on  
27 April he believed that Eveready Shares were "probably worth at least $5, if not more,  
because I think, at that point in time, I knew it was going to be taken over". He elaborated: "I  
can't be -- I'm unsure of the exact dates, but I do remember that I did purchase the stock with  
knowledge of it. I would not have given up my career if I didn't." And he disagreed that the  
14 April 2009 announcement of the resolution of Eveready's line of credit issue was the only  
reason he would have purchased Eveready Shares before 29 April.  
[134] Questioned by the panel, Richard Kowalchuk said that he knew before 29 April 2009 but  
did not know before the beginning of April that Eveready was going to be sold it was sometime  
in April that he became aware of this and from Bert Holtby.  
[135] Richard Kowalchuk stated in the Richard Kowalchuk Settlement Agreement that he, at  
all material times, was aware that during Holtby's tenure as a trustee of EIF or director of  
Eveready, Holtby was a person in a special relationship with EIF or Eveready, a reporting issuer,  
as defined in the Act. Richard Kowalchuk admitted, in the Richard Kowalchuk Settlement  
Agreement, that, on learning from Bert Holtby that Clean Harbors would be purchasing  
Eveready, Richard Kowalchuk became a person in a special relationship with Eveready, as  
defined in the Act.  
[136] According to the Richard Kowalchuk Settlement Agreement, Douglas indicated to  
Richard Kowalchuk, prior to 29 April 2009, that he (Douglas) was aware of Clean Harbors'  
acquisition of Eveready, the acquisition date and the acquisition price.  
[137] Asked if Bert Holtby ever advised whether he told anyone else the information he  
provided to Richard Kowalchuk regarding Clean Harbors, Richard Kowalchuk said: "One point  
after the fact, he talked about a gentleman named Ken, but I don't know who that was and in  
what regard." Richard Kowalchuk elaborated on this conversation with Bert Holtby:  
I just remember a conversation, and it was, when I went over my testimony, reminded me of that  
conversation, and it was just the fact that he had talked about that Ken was very happy with the  
announcement, at some -- went something like that. I don't remember who that was or have no  
indication of who that was, just that it was a Ken.  
[138] In cross-examination by Burdeyney's counsel, Richard Kowalchuk said that he did not  
believe the referenced "Ken" was Burdeyney. In cross-examination by Landsiedel's counsel,  
Richard Kowalchuk said that Landsiedel was not a person referred to in discussions Richard  
Kowalchuk had with any of his clients, including Bert Holtby.  
5.  
Purchase and Sale of Eveready Securities  
(a) The Douglas Account  
[139] According to Richard Kowalchuk, Bert Holtby, who wished to open a trading account  
"through another person", introduced Richard Kowalchuk to Douglas at the September 2005  
Meeting, and Douglas and Bert Holtby have known each other for approximately 30 years. This  
account, Bert Holtby explained to Richard Kowalchuk and Douglas, would permit Bert Holtby to  
purchase "Eveready and other stock" during trading blackouts. Bert Holtby also explained to  
Richard Kowalchuk and Douglas that "this is something that's always happening out there and is  
very common". Richard Kowalchuk also testified that this account would be used "for a lot of  
different reasons, if we saw opportunities", and it was effectively to trade in Eveready stock  
during blackout periods and "to make money".  
[140] Richard Kowalchuk told us that, at and perhaps following the September 2005 Meeting,  
he, Bert Holtby and Douglas discussed:  
opening a trading account in Douglas's name, and the information needed to open  
the account;  
their respective contributions to the account Bert Holtby, 50%; Richard  
Kowalchuk, 40%; and Douglas, 10%;  
their respective entitlement to profits from the account Bert Holtby, 40%;  
Richard Kowalchuk, 40%; and Douglas, 20%; and  
their respective roles in relation to the account Bert Holtby, principally directing  
trading in the account; Richard Kowalchuk, facilitating trades in the account as  
well as directing some trading in the account; and Douglas, ostensibly owning the  
account with responsibility for paying taxes on account earnings with money from  
the account. Concerning payment of taxes, there are in evidence an 8 September  
2009 cheque and a 28 April 2010 cheque payable to Douglas and drawn on the  
Douglas Account. The Douglas Account statements went to Douglas, and Richard  
Kowalchuk was not aware that any of the statements were ever sent to Bert  
Holtby.  
[141] Richard Kowalchuk assisted Douglas in completing the forms required to open such a  
trading account. The "Know Your Client Form" was completed using information provided by  
Richard Kowalchuk, including the "no" answers to the following questions:  
Does any other person/entity, including the Investment Advisor: . . .  
1.  
2.  
Have authority over this account?  
Have a financial interest in this account?  
[142] Richard Kowalchuk knew these "no" answers to be false, but explained: "We didn't want  
to show any connection to Bert Holtby or myself." Richard Kowalchuk acknowledged that,  
concerning the Douglas Account, he lied to Revenue Canada and to his employer.  
[143] Two cheques funded the initial $100 000 deposited to the Douglas Account. The first  
cheque, for $10 000 and deposited on 21 September 2005, was drawn on a bank account of  
Douglas and his wife. The second cheque, for $90 000 and deposited on 22 September 2005,  
was payable to Douglas and drawn on the Holtby Account. On 22 September 2005 a bank draft  
for $40 000 payable to Bert Holtby was purchased by Richard Kowalchuk, and Richard  
Kowalchuk gave this, representing his 40% contribution to the Douglas Account, to Bert Holtby.  
Richard Kowalchuk testified that the bank draft was made payable to Bert Holtby, not Douglas,  
because, "if I made it payable to [Douglas], it would be pretty obvious, and it would have been  
caught by our office", and, as Bert Holtby, Richard Kowalchuk and Douglas had discussed, "we  
could not show any contact with me to those funds".  
[144] The initial purchases in the Douglas Account, made (according to Richard Kowalchuk)  
by him in consultation with Bert Holtby or at his direction, were purchases of Eveready Units.  
The first and second such purchases were made in late September 2005 and settled on 4 October  
(at $5.58 per Unit) and 5 October (at $5.80 per Unit), with another such purchase settling on  
28 October (at $5.40 per Unit). Concerning the third purchase, Richard Kowalchuk said that he  
and Bert Holtby:  
. . . would have discussions about what to purchase, and our thought was to continue purchasing  
Eveready. His only thought to me was not to move the share price up was what he kept saying, so  
to ensure that we weren't moving the stock price up.  
. . .  
It -- you would have went in just with a market order, and if the stock was thinly traded, it would  
move the stock price up -- could possibly move the stock up dramatically. And so normally, we  
would do limit orders and slowly get filled on the account as people, other traders, would take our  
bid.  
. . .  
He just didn't want to have any of the stock to start to shoot up because they were doing other  
transactions possibly on -- with the company [Eveready].  
[145] In February 2006, when Richard Kowalchuk told us his familiarity with the Douglas  
Account was "[f]airly good" he did not receive account statements but he could view the  
Douglas Account "through our company system" he obtained a bank draft for $10 000 and had  
Douglas deposit it to the Douglas Account because "we were undermargin with . . . the  
president's list purchase of 20,000 shares at $7". Richard Kowalchuk explained that "I had a  
conversation with [Bert] Holtby that we needed to get some money in there" and also that "Bert  
Holtby put [Douglas] on the president's list, and there was a subsequent issue of Eveready  
Income Fund that [the Douglas Account] participated in". In cross-examination by Bert Holtby's  
counsel, Richard Kowalchuk conceded it is possible that he did not have such a conversation  
with Bert Holtby. Earlier in that month (on 2 February) two sales of Eveready Units (9100 at  
$7.834 per Unit and 2700 at $7.75 per Unit) settled these trades were entered by Richard  
Kowalchuk, as were all trades in the Douglas Account and (on 14 February) a purchase of  
Eveready Units (14 000 at $6.929 per Unit) settled, but Richard Kowalchuk could not recall the  
conversations as to "why we did" these. In March 2006 a cheque for $10 000 was drawn on the  
Douglas Account to repay Richard Kowalchuk the $10 000 he had deposited in February 2006.  
Richard Kowalchuk told us that he would have had a discussion with Douglas to facilitate this  
cheque request, Bert Holtby would have had knowledge of this cheque request, and the $10 000  
would not have been left in the Douglas Account because "[w]e wanted to keep it simple for  
accounting purposes to keep the 40 percent ownership by Bert [Holtby], myself, and the  
20 percent ownership by [Douglas]".  
[146] In May 2006 Douglas made a $50 000 deposit to the Douglas Account. Richard  
Kowalchuk learned of this deposit after it occurred and was told by Douglas that Bert Holtby  
"had sent a cheque for $50,000 to [Douglas] to be used to purchase shares". Four purchases of  
Eveready Units (2000 at $7.30 per Unit, 3000 at $7.30 per Unit, 5000 at $7.15 per Unit and 3000  
at $7.35 per Unit) subsequently settled in May 2006. Richard Kowalchuk put the orders in for  
these purchases but had no information about them. In October 2007 a cheque for $50 000  
payable to Bert Holtby's nephew-in-law was drawn on the Douglas Account. About this cheque,  
Richard Kowalchuk testified:  
In conversations with Bert Holtby, he had built a garage on his . . . nephew-in-law['s property] . . .  
and he was using these funds to pay himfor that building, and that was also to get his money back  
out of that account to bring it back down to the 100,000.  
[147] In July 2006 a sale of Eveready Units (5000 at $7.40 per Unit) settled, but Richard  
Kowalchuk could not recall the reason for it.  
[148] In August 2006 Richard Kowalchuk purchased Destiny Resources Services Corp.  
(Destiny) securities (5000 at $9.968 per security) in the Douglas Account. He explained: "This  
was a company that Bert had phoned me on to purchase in that account, and he thought that they  
would be going up in value." In September 2006 2600 of those securities (1000 at $9.85 and  
1600 at $9.80) were sold at, according to Richard Kowalchuk, Bert Holtby's direction.  
[149] In July 2008 Richard Kowalchuk made an $11 200 deposit to the Douglas Account  
"because we ended up having a margin call on that account". Asked whether he had any  
conversations with Douglas or Bert Holtby prior to making this deposit, Richard Kowalchuk  
testified: "Just the fact that we had to cover it up quickly, and I told Mr. Holtby that I would  
make -- I would come up with the funds." Richard Kowalchuk also told us that, at the time:  
. . . the [Eveready] stock was in a lot of trouble, and . . . [Bert] Holtby had a substantial amount of  
the stock in his own personal portfolio, . . . and a big chunk of my summer and months following  
was trying to help him facilitate means to reduce that margin.  
[150] There is in evidence a 14 October 2008 email from Bert Holtby to Richard Kowalchuk  
with the subject line "black out", in which Bert Holtby stated that "we passed a resolution on the  
week end to the 20th before we go into a black out". It was Richard Kowalchuk's testimony that  
at the time CIBC "was selling off portions of [Bert Holtby's] holdings to cover his margin" and  
Bert Holtby "had sent this to me to pass on to our credit department and ensure that everybody  
knew that he shouldn't be selling at this point in time because he was blacked out". Richard  
Kowalchuk told us that he discussed blackouts with Bert Holtby "There was periods of time  
when he wasn't allowed to trade in Eveready due to information that he may be with or there  
could be announcement or release of annual or quarterly reports."  
[151] In January 2009 Eveready had moved from a unit structure to a share structure, with a 5:1  
share consolidation. Richard Kowalchuk told us that, in advising his clients about Eveready at  
the time, "I was being very careful and cautious due to the fact that we had a credit crunch, and  
even some of the companies that were lending were in trouble".  
[152] Directed to a 12 March 2009 cheque for $50 000 payable to Douglas and drawn on the  
Holtby Account and an 18 March 2009 cheque for $50 000 payable to CIBC and drawn on the  
bank account of Douglas and his wife, Richard Kowalchuk testified that he had not seen these  
documents other than through Staff's investigation. According to the Richard Kowalchuk  
Settlement Agreement, and consistent with the March 2009 Douglas Account statement, on  
19 March 2009 Douglas deposited to the Douglas Account $50 000, which money (Richard  
Kowalchuk understood) originated with Bert Holtby. Richard Kowalchuk recalled not knowing  
about this deposit "until I had seen it in there after the fact", and had also spoken with Douglas.  
After seeing it, Richard Kowalchuk told us, he began purchasing Eveready Shares because, in  
conversations with Bert Holtby, Bert Holtby "explained to me that I should be buying Eveready"  
"he thought that it was going to be going up, and . . . I can't recall the entire conversation,  
whether we discussed who was buying the company or why it was going up".  
[153] Directed to a 28 April 2009 bank draft for $30 000 payable to Douglas, Richard  
Kowalchuk testified that this was a draft he gave to Douglas for deposit to the Douglas Account  
"to equal me up to what Bert Holtby had purchased" "we bought more shares, and there would  
be a margin position, and I wanted to ensure that we were covered on it". Also in evidence is a  
28 April 2009 cheque for $30 000 payable to CIBC and drawn on the bank account of Douglas  
and his wife. According to Richard Kowalchuk, he explained to Douglas that "the only way he  
could put the cheque in is by going through his bank account" because otherwise "it would put a  
connection to me to that account". Richard Kowalchuk did not recall having conversations to  
that effect with Bert Holtby. The April 2009 Douglas Account statement shows a $30 000  
deposit on 29 April.  
[154] According to Richard Kowalchuk, he, in consultation with Bert Holtby or at his direction,  
used the Douglas Account to trade in Eveready Units (until 12 January 2009) and Eveready  
Shares (from 12 January 2009) both during and outside trading blackouts and other securities  
through April 2009, including the following trades:  
on 19 (settling on 24) March 2009 the purchase of 5000 Eveready Shares at a cost  
of $2.474 per Share plus commission. Richard Kowalchuk, who could not recall  
any discussions with either Douglas or Bert Holtby prior to making this purchase,  
told us that, after making this purchase, "I would have had a conversation with -- I  
had a conversation with [Bert] Holtby explaining what I had purchased." Richard  
Kowalchuk elaborated:  
I would have just explained to him that we got 5,000 shares at an average cost  
base of 2.47. I only would say that I would have put a limit order in because  
that's what I normally would have done with this stock, so we would have got a  
fill on the order of around 5,000 shares at that point.  
In cross-examination by Bert Holtby's counsel, Richard Kowalchuk agreed that,  
after a 12 March 2009 conference call with Eveready management which gave  
him a little bit of comfort about the line of credit issue, he was prepared to buy  
some Eveready Shares. There are in evidence trade tickets for unfilled orders for  
Eveready Shares for the Douglas Account on 12 and 16 March 2009.  
on 1 (settling on 6) April 2009 the purchase of 2000 Eveready Shares at a cost of  
$2.35 per Share plus commission.  
on 9 (settling on 15) April 2009 the purchase of 5000 Eveready Shares at a cost of  
$2.298 per Share plus commission.  
on 15 (settling on 20) April 2009 the purchase of 5500 Eveready Shares at a cost  
of $2.35 per Share plus commission.  
on 23 (settling on 28) April 2009 the purchase of 2500 Eveready Shares at a cost  
of $3.70 per Share plus commission.  
on 27 (settling on 30) April 2009 the purchase of 5000 Eveready Shares at a cost  
of $3.70 per Share plus commission. Richard Kowalchuk told us that this and the  
other Eveready Share purchases settling in April 2009 were "done in conjunction  
with conversations with Bert Holtby". Richard Kowalchuk continued that, at  
some point "I believe it was somewhere in between these trades" Bert Holtby  
"notified me that it was being taken out by a company called Clean Harbors".  
Richard Kowalchuk could not remember whether these conversations were via  
telephone or in person. Questioned by the panel, Richard Kowalchuk said that all  
of the purchases in April 2009 were instructed by Bert Holtby "it was just kind  
of a standing order to buy shares and try not to move the market".  
on 28 April (settling on 1 May) 2009 the purchase of 3000 Eveready Shares at a  
cost of $3.45 per Share plus commission. Richard Kowalchuk said that this  
purchase was made prior to the announcement of the Proposed Acquisition.  
on 29 April (settling on 4 May) 2009 the sale of 10 000 Eveready Shares at a  
price of $10.10 per Share less commission. Richard Kowalchuk testified to  
having conversations with Bert Holtby about this sale; he did not recall the details  
"other than that we were wanting to take some profit off". Richard Kowalchuk  
also decided to sell all Peak Energy Services Ltd. (Peak) securities held in order  
to reduce the capital gains generated by this sale, with which decision Bert Holtby  
agreed.  
[155] In May 2009 no money was withdrawn from the Douglas Account and no purchases of  
other securities were made. Richard Kowalchuk testified that he and Bert Holtby had  
discussions about this, about which he was not sure Douglas was advised:  
. . . We didn't want to raise any alarms that we were taking money out of the account.  
. . .  
We just thought it was best to kind of leave everything there, and at some point in time, we would  
look at purchasing other stocks in that account.  
. . .  
It was his [Bert Holtby's] idea that, that way, there would be no alarms brought to the account that  
we're taking a bunch of money out of it right away and especially so quickly after the purchase of  
Eveready by Clean Harbors.  
[156] On 7 August 2009 the Eveready Shares remaining in the Douglas Account were  
exchanged for cash and Clean Harbors Shares, pursuant to the Proposed Acquisition. According  
to the Richard Kowalchuk Settlement Agreement, the total net profit realized on the purchase of  
the 28 000 Eveready Shares in the Douglas Account between 19 March and 28 April 2009 was  
$202 065.  
[157] In October 2009, after a conversation Richard Kowalchuk had "with [Bert] Holtby that he  
was somewhat concerned that . . . I wasn't making any trades in the account", Richard  
Kowalchuk purchased Vermilion Energy Trust securities in the Douglas Account (900 at  
$30.90). In November 2009 Richard Kowalchuk purchased Crescent Point Energy Corp.  
(Crescent Point) securities in the Douglas Account (1400 at $37.25), and he recalled telling Bert  
Holtby that he was going to do so.  
[158] Richard Kowalchuk did not recall having any discussions with Bert Holtby or Douglas  
about the Douglas Account being frozen by the Commission. After being contacted by the  
Commission about this matter, Richard Kowalchuk recalled conversations with Bert Holtby in  
which "he was trying to explain to me that really what we were doing was lending money . . . to  
[Douglas], we weren't really involved".  
[159] Richard Kowalchuk testified that "I knew my involvement in that account [the Douglas  
Account] was wrong". When asked why he, familiar with CIBC's policies regarding insider  
trading and with Alberta securities laws, became involved in the Douglas Account, Richard  
Kowalchuk stated (among other things):  
It's a question that I ask myself all the time. Even when I'd opened it, I always asked myself what  
was I doing. . . . [O]ne thing I think I've figured out that I worry more about pleasing other people  
than myself, and I think I was enamoured even with the money.  
I also worried about losing Bert as a client; he was my biggest client at the start of that . . . . I  
think I looked up to him . . . .  
. . .  
. . . I let myself go down the wrong path. And I'm the only one to blame, because I could have  
said no from the beginning, and I didn't have the fortitude or the guts to do that, and that's where  
my error began.  
(b)  
Accounts of Richard Kowalchuk and His Wife  
[160] Consistent with the Richard Kowalchuk Settlement Agreement, Richard Kowalchuk  
testified to purchasing, on 27 April 2009, 1400 Eveready Shares (at $3.54 per Share) in his  
TFSA and another 1400 Eveready Shares (also at $3.54 per Share) in his wife's TFSA. He told  
us that, when he did so, he knew through his discussions with Bert Holtby that "it was going to  
go up due to the purchase of Eveready by Clean Harbors". At that point in time, he said, "I knew  
that they were going to be purchased by a U.S. company at a substantial premium", information  
he heard from Bert Holtby, not anywhere else.  
[161] In the Richard Kowalchuk Settlement Agreement, Richard Kowalchuk admitted that, in  
trading Eveready Shares between 19 March and 7 August 2009 in the Douglas Account and in  
his and his wife's TFSAs, he realized a profit of approximately $100 000.  
6.  
Informing Others  
(a) Randy Kowalchuk  
[162] In cross-examination by Randy Kowalchuk's counsel, Richard Kowalchuk agreed that  
Randy Kowalchuk and his wife had owned Eveready securities prior to April 2009.  
[163] Concerning an 11 (settling on 16) March 2009 purchase of 2000 Eveready Shares (at  
$1.56) in Randy Kowalchuk's TFSA made through Richard Kowalchuk, Richard Kowalchuk  
testified: "I can't recollect the exact conversation, but I believe that we [he and his brother]  
would have discussed Eveready and discussions of that nature with the company".  
[164] Concerning a 13 (settling on 16) April 2009 purchase of 2000 Eveready Shares (at $2.35)  
in Laura Kowalchuk's TFSA made through Richard Kowalchuk, Richard Kowalchuk testified  
that his brother directed this purchase after they had a discussion: "I can't recall the entire  
conversation on this one. I believe this was in discussions with the company's [Eveready's] line  
of credit, but I'm unsure of that at this time." In cross-examination by Randy Kowalchuk's  
counsel, Richard Kowalchuk agreed that he and Randy Kowalchuk had discussed the line of  
credit issue on a number of occasions and that Randy Kowalchuk had advised he was concerned  
about this.  
[165] Concerning two April 2009 purchases of 5000 Eveready Shares in total in Laura  
Kowalchuk's RRSP account 2200 at $2.12 on 14 (settling on 17) April and 2800 at $2.35 on 15  
(settling on 20) April made through Richard Kowalchuk, Richard Kowalchuk testified that he  
had discussions with his brother before making these purchases but that he could not recall any  
aspects of those discussions. In cross-examination by Randy Kowalchuk's counsel, Richard  
Kowalchuk agreed that the resolution of Eveready's line of credit issue was news-released and  
that he also spoke to Randy Kowalchuk about it indeed, that was the extent of their discussion  
after which Randy Kowalchuk decided to purchase more Eveready Shares. Richard  
Kowalchuk continued that he could not recall telling Randy Kowalchuk about an acquisition,  
buyout or anything of that nature when receiving these instructions to purchase.  
[166] There is in evidence a 15 April 2009 email from Randy Kowalchuk to Richard  
Kowalchuk with the subject line "thanks for the call last night" and the message "Big velocity  
with eis today". About this, Richard Kowalchuk recalled making a phone call to wish his niece a  
happy birthday and his brother and sister-in-law a happy anniversary, both occasions celebrated  
on 14 April.  
[167] There is in evidence a 21 April 2009 email chain between Randy Kowalchuk and Richard  
Kowalchuk: a 12:19 p.m. email from Randy Kowalchuk to Richard Kowalchuk with the subject  
line "good day so far" and the message "Eis good up day and good volume"; and Richard  
Kowalchuk's 12:52 p.m. response: "The whole service sector is having a good day. Helps with  
oil up and BOC lowering rates." Concerning this email chain, Richard Kowalchuk ultimately  
testified in cross-examination that he responded as he did in an effort to obscure that he and  
Randy Kowalchuk knew about the Proposed Acquisition by 21 April 2009:  
Okay. I recall why I wrote that to my brother. At that point in time, he already knew that he was  
going to be bought out and couldn't -- he e-mailed me and I was just basically trying to ensure it  
didn't show that he knew at that point in time.  
[168] Pointed to a 30 April 2009 email from Randy Kowalchuk with the subject line "move sell  
price on EIS", Richard Kowalchuk said that "it looks like he wanted his price adjusted to sell the  
Clean Harbors to 10.85, and he's basically saying the deal's worth around 11.35".  
[169] Richard Kowalchuk admitted, in the Richard Kowalchuk Settlement Agreement, that in  
the latter part of April 2009 but prior to 29 April 2009 he advised Randy Kowalchuk of the  
Proposed Acquisition, although he did not specify that Clean Harbors was the company  
acquiring Eveready.  
(b)  
Tanner  
[170] Richard Kowalchuk testified that, for all of Tanner's trading accounts, he found some of  
the investments and Tanner found others. Richard Kowalchuk told us that he "picked" the  
Eveready investment. In cross-examination by Tanner's counsel, Richard Kowalchuk confirmed  
that: he would be the one providing Eveready-related information and recommendations to  
Tanner; when he discussed Eveready with Tanner over the years, Tanner would generally accept  
his recommendations; he would recommend a purchase when he believed there was a prospect of  
the stock increasing in value for any number of reasons; and he would recommend a sale when it  
was a good time to get out of the stock for some reason.  
[171] Concerning a 23 (settling on 28) April 2009 purchase of 10 000 Eveready Shares in  
Tanner's RRSP account made through Richard Kowalchuk, Richard Kowalchuk testified:  
. . . I talked to him [Tanner] about that I think this -- the company was going to go up in value, and  
I can't remember the whole conversation.  
. . .  
He had cash in his account, and we just talked about ideas for it. I think around the same time, I  
believe we were trading in some other stocks in his margin account, selling some, I believe, I'm  
not positive, but I think that came in that discussion.  
. . .  
. . . it's a stock that he had owned before, and I explained that to him, and he had remembered it.  
[172] Tanner replied, according to Richard Kowalchuk, that "[i]f I really liked it to buy it".  
However, Richard Kowalchuk admitted, in the Richard Kowalchuk Settlement Agreement, that  
on 23 April 2009 he telephoned Tanner and advised him of the Proposed Acquisition, saying  
either that Clean Harbors or an "American company" was going to acquire Eveready, following  
which on the same day Tanner placed an order through Richard Kowalchuk for 10 000 Eveready  
Shares.  
Further, according to the Richard Kowalchuk Settlement Agreement, Richard  
Kowalchuk understood as at 23 April 2009 that Tanner was aware Richard Kowalchuk and Bert  
Holtby knew each other and Richard Kowalchuk assumed as at that date that Tanner knew Bert  
Holtby was a director of Eveready.  
[173] Richard Kowalchuk subsequently placed two sell orders for Tanner's RRSP account for  
2700 Eveready Shares on 8 May 2009 and 7300 Eveready Shares on 24 June 2009 because  
Tanner "wanted to sell while the stock was up".  
[174] Concerning two 27 (settling on 30) April 2009 purchases totalling 11 200 Eveready  
Shares (4000 at $3.45 and 7200 at $3.514) in Tanner's margin account made through Richard  
Kowalchuk, Richard Kowalchuk testified:  
A
Through conversation with Neil Tanner that I had on I believe it was a Sunday in April,  
the end of April. We talked about different companies and different things that are  
happening in the world, and we discussed somewhat on this position, saying that it's a  
good time to be buying this stock, and I really think it's going to go.  
Q
A
Q
A
Q
A
When you say, "This stock", what do you mean?  
That Eveready Inc. was I thought would be bought out.  
What exactly did you tell Mr. Tanner, as best you can recall?  
The best I can recall that I thought it would be bought out.  
In response to that, what did Mr. Tanner say to you?  
Well, maybe we could buy a few more, so he gave me enough money to buy I believe it  
was 10,000 shares.  
Q
A
Did he ask you anything about your information?  
I can't recall that. I remember the discussion that we talked a lot about a lot of depressed  
real estate in the area of Canmore. We talked about some specific properties there. I  
remember that part of the conversation.  
[175] Richard Kowalchuk admitted, in the Richard Kowalchuk Settlement Agreement that, at a  
breakfast meeting with Tanner in Canmore, Alberta on 26 April 2009 (the Canmore Breakfast  
Meeting), he again advised Tanner of the Proposed Acquisition, saying either that Clean Harbors  
or an "American company" was going to acquire Eveready, and stated that on 27 April 2009  
Tanner placed an order through Richard Kowalchuk for an additional 11 200 Eveready Shares.  
[176] Richard Kowalchuk subsequently placed a sell order for Tanner's margin account for  
1200 Eveready Shares at $10.21 on 1 (settling on 6) May 2009 but he could not recall who had  
initiated this sale.  
[177] According to the Richard Kowalchuk Settlement Agreement, as at 30 April 2009, using  
an Eveready Share price of $10.10 per Share, the total value of the Shares purchased by Tanner  
between 23 and 27 April 2009 was $214 120, representing a profit of $138 696.  
(c)  
Bratvold  
[178] In the Richard Kowalchuk Settlement Agreement, Richard Kowalchuk admitted that:  
On April 18, 2009, [Richard] Kowalchuk advised Bratvold of the Material Facts. [Richard]  
Kowalchuk further advised Bratvold that [Bert] Holtby was the source of [Richard] Kowalchuk's  
knowledge of the Material Facts.  
In response to being told of the Material Facts and their source, Bratvold advised [Richard]  
Kowalchuk that he, Bratvold, would purchase shares in Eveready.  
Based upon the Material Facts supplied to him by [Richard] Kowalchuk, Bratvold instructed  
[Richard] Kowalchuk:  
a.  
b.  
c.  
on April 20, 2009, to purchase 5,300 Eveready [S]hares through a trading  
account jointly owned by Bratvold and his wife (the Bratvold Account);  
on April 21, 2009, to purchase an additional 5,000 Eveready [S]hares through  
the Bratvold Account; and  
on April 23, 2009, to purchase an additional 6,000 Eveready [S]hares through  
the Bratvold Account.  
Shortly after April 23, 2009, [Richard] Kowalchuk advised Bratvold that Bratvold had "bought  
enough" Eveready [S]hares. [Richard] Kowalchuk admits he did this because he was concerned  
Bratvold's trading in Eveready would draw the attention of [CIBC] or one or more regulatory  
bodies to Bratvold and to [Richard] Kowalchuk.  
Between April 29 and May 1, 2009, Bratvold sold 16,300 Eveready [S]hares. Bratvold realized a  
profit of $120,023 from these transactions.  
(d)  
Stock  
[179] In the Richard Kowalchuk Settlement Agreement, Richard Kowalchuk admitted that:  
[Richard] Kowalchuk admits he advised Stock of the Material Facts on or about April 20, 2009,  
although he is unsure whether or not he specified that Clean Harbors was the company acquiring  
Eveready.  
On April 20, 2009, with knowledge of the Material Facts, Stock purchased, through his wife's  
account, 5,000 Eveready [S]hares.  
On April 29, 2009, Stock sold 5,000 Eveready [S]hares, for a realized profit of $38,535.  
7.  
Recommending or Encouraging Others  
[180] In the Richard Kowalchuk Settlement Agreement, Richard Kowalchuk admitted that:  
[Richard] Kowalchuk admits he recommended and encouraged no less than five additional clients  
to purchase Eveready [S]hares while [Richard] Kowalchuk had knowledge of the Material Facts,  
and prior to the Material Facts having been publicly disclosed. As far as [Richard] Kowalchuk is  
aware, all of his clients duly acted upon his recommendation and purchased Eveready [S]hares  
prior to April 29, 2009.  
[Richard] Kowalchuk admits these various clients collectively purchased 19,800 Eveready  
[S]hares, at a total price of $63,661. [Richard] Kowalchuk further admits that as at April 30,  
2009, using an Eveready [S]hare price of $10.10 per [S]hare, the total value of these [S]hares was  
$199,980, representing a profit of $136,319.  
8.  
Profits Made from Informing and Encouraging Others  
[181] In the Richard Kowalchuk Settlement Agreement, Richard Kowalchuk admitted that:  
[Richard] Kowalchuk admits that the total profit made from the trades in the Eveready [S]hares of  
those persons he advised of the Material Facts, and of those persons he encouraged to purchase  
Eveready [S]hares, prior to the Material Facts having been generally disclosed, was not less than  
$440,000.  
9.  
Breaches Admitted  
[182] In the Richard Kowalchuk Settlement Agreement, Richard Kowalchuk voluntarily and  
with independent legal advice admitted to:  
breaching section 147(2) of the Act by purchasing Eveready Shares in the  
Douglas Account prior to 29 April 2009, with knowledge of the Proposed  
Acquisition;  
breaching section 147(3) by disclosing the Proposed Acquisition to Randy  
Kowalchuk, Tanner, Bratvold and Stock;  
breaching section 147(3.1) by recommending and encouraging his clients to  
purchase Eveready Shares; and  
in so doing, acting contrary to the public interest.  
[183] In consequence, Richard Kowalchuk agreed and undertook to the Executive Director of  
the Commission to pay $200 000 plus $10 000 for investigation costs; to cease trading in  
securities and exchange contracts for 10 years, with carve-outs; and to cease acting as a registrant  
and to cease advising in securities or exchange contracts for 10 years.  
D.  
Randy Kowalchuk  
1. Background Information  
[184] Randy Kowalchuk, a resident of Penticton, is a self-employed property developer.  
2.  
Relationships and Contact with Others  
[185] Randy Kowalchuk's investment broker was his brother Richard Kowalchuk. It was  
Randy Kowalchuk's testimony that in 2008 and 2009 he and Richard Kowalchuk "had a good  
relationship", and that in March and April 2009 their relationship was a "close" one.  
[186] According to Randy Kowalchuk, around March and April 2009 he and Richard  
Kowalchuk would be in contact with each other "minimum once a week", typically by telephone  
(from the office or from home) and from time to time via email.  
[187] Randy Kowalchuk told us that he "had limited knowledge of who he [Bert Holtby] was".  
Randy Kowalchuk explained that his father worked at the same company as Bert Holtby, that  
Richard Kowalchuk "worked for . . . one of the companies that was a part of Eveready" and that  
in 2008 and 2009 Bert Holtby and Richard Kowalchuk had a "client/broker relationship", and  
Randy Kowalchuk considered hiring "one of the companies in Eveready" for a property-  
development project. Randy Kowalchuk also recollected meeting Bert Holtby (in the company  
of Richard Kowalchuk) twice, once when they golfed together and once at the Political  
Fundraiser organized by Randy Kowalchuk.  
[188] It was Randy Kowalchuk's testimony that he knows Tanner "[h]e's a friend, a mentor"  
and "[a] golf buddy", and Tanner too attended the Political Fundraiser. Randy Kowalchuk  
believed that, following that event, Bert Holtby, Richard Kowalchuk and Tanner were on the  
same return flight to Alberta.  
[189] Randy Kowalchuk told us that he does not know any of the other Respondents or that  
they owned Eveready Shares, and does not recall ever discussing Eveready with any of them.  
3.  
Trading History and Strategies  
[190] Between them, Randy Kowalchuk and his wife had five trading accounts with CIBC  
through Richard Kowalchuk (collectively, the Kowalchuk Accounts) each had an RRSP  
account (the Randy Kowalchuk RRSP Account and the Laura Kowalchuk RRSP Account,  
respectively); each had a TFSA, opened on 22 January 2009, with the maximum $5000 annual  
contribution deposited on 10 February 2009 (the Randy Kowalchuk TFSA and the Laura  
Kowalchuk TFSA, respectively); and there was one RESP account. Randy Kowalchuk told us  
that he is generally responsible for family finances and financial planning and for decisions  
relating thereto, including the giving of trading directions. He explained that, in determining in  
which of the Kowalchuk Accounts transactions or trades would occur, "[i]t totally had to do with  
which accounts had funds available". He further explained that, as between the Randy  
Kowalchuk RRSP Account and the Laura Kowalchuk RRSP Account, "the lion's share of  
available funds" went into the latter for taxation purposes, emphatically denying that he tried to  
conceal trades by making them in the Laura Kowalchuk RRSP Account. As to why he did not  
buy anything in the Randy Kowalchuk TFSA until March 2009, Randy Kowalchuk explained  
that he had been away for six weeks and thus was focused on other things.  
[191] Randy Kowalchuk described himself as "a medium/high risk investor". The "Know Your  
Client Form" completed for each of the Randy Kowalchuk RRSP Account and the Randy  
Kowalchuk TFSA indicated his investment knowledge as "fair" and his risk tolerances as 10%  
low risk, 10% medium risk and 80% high risk. The "Know Your Client Form" completed for  
each of the Laura Kowalchuk RRSP Account and the Laura Kowalchuk TFSA indicated her  
investment knowledge as "fair" and her risk tolerances as 20% low risk, 20% medium risk and  
60% high risk. Randy Kowalchuk confirmed that he or his wife provided the information  
included in these forms.  
[192] Randy Kowalchuk told us that he primarily invested in his own companies or  
developments and used the proceeds to diversify and engage in retirement and education  
planning. He told us that, when he purchases securities, he typically investigates companies  
about, or companies in industries about, which he has some knowledge "I certainly review  
financials, look at their corporate website, follow them for a period of time in advance of  
buying."  
[193] According to Randy Kowalchuk, his trading (how and when) in particular, his trading  
in groups can be explained in part by what he calls "puppy syndrome". He elaborated:  
When I buy something new, a stock, I watch it. I follow it. I see what it's doing throughout the  
day. I wake up in the morning, first thing I look at. Usually check it four, five times during the  
day just to see what the trading volume is. Is the volume going up? Is the value going up? Value  
going down? I pay . . . a lot of attention to new items.  
[194] Randy Kowalchuk testified that his purchases of securities were "[o]n some occasions"  
unsolicited ("I contacted my brother, the broker, and informed him to place a buy order" or "on  
occasion I would speak to one of his assistants") and "[o]n some occasions" solicited (Richard  
Kowalchuk "would phone me and tell me of a new offering"). According to Randy Kowalchuk:  
he talked generally with Richard Kowalchuk about investment; sometimes Richard Kowalchuk  
would confirm Randy Kowalchuk's "thought process" or "provide additional thought process";  
Richard Kowalchuk "as a rule . . . was much more conservative than I was"; and it was Richard  
Kowalchuk's job "annually to make sure that my portfolio wasn't too heavily weighted in one  
direction or another".  
4.  
Purchase and Sale of Eveready and Other Securities  
[195] It is not disputed that Randy Kowalchuk first purchased Eveready Units in May 2008 (in  
the Randy Kowalchuk RRSP Account), and twice again in November 2008 (in the Laura  
Kowalchuk RRSP Account). It is also not disputed that, from 11 March through 15 April 2009,  
Randy Kowalchuk purchased a total of 9000 Eveready Shares in the Randy Kowalchuk TFSA,  
the Laura Kowalchuk RRSP Account and the Laura Kowalchuk TFSA. From May 2008 until  
the end of the Relevant Period, Randy Kowalchuk directed purchases and sales in the  
Kowalchuk Trading Accounts, including:  
on 12 (settling on 15) May 2008, a purchase of 1000 Boston Pizza Royalties  
Income Fund Trust Units in the Randy Kowalchuk RRSP Account for $11 727.  
Randy Kowalchuk told us that he made this and subsequent purchases of these  
trust units primarily because they were paying "a very good dividend" and he and  
two of the company's principals were partners in a development. He elaborated  
that knowing the people involved with a company knowing people involved  
with Boston Pizza, Eveready (Bert Holtby) and Suncor Energy Inc. influenced  
his security-purchasing decisions.  
on 12 (settling on 15) May 2008, a purchase of 2500 Eveready Units in the Randy  
Kowalchuk RRSP Account for $10 625. This was Randy Kowalchuk's first  
purchase of Eveready securities. Randy Kowalchuk told us that this purchase  
"had a lot to do" with his involvement in the project for which he had considered  
hiring one of the Eveready companies, which led him to understand that Eveready  
"would be making good money". When he made this purchase, he was sure that  
he talked about Eveready with Richard Kowalchuk (but nothing stood out about  
the discussions), and he was certainly aware that Bert Holtby was "a director or a  
trustee of that company". There is in evidence a 21 May 2008 email from  
Richard Kowalchuk to Randy Kowalchuk providing the names of attendees at the  
Political Fundraiser, including "Bert Holtby, Director, Eveready Income Fund".  
An attachment to a 22 May 2008 email from Richard Kowalchuk to Randy  
Kowalchuk and others, also in evidence, similarly described Bert Holtby as  
"Trustee and Director of Eveready Income Fund". These Eveready Units were  
converted to 523 Eveready Shares in January 2009.  
on 3 (settling on 8) October 2008, a purchase of 1000 Boston Pizza Royalties  
Income Fund Trust Units in the Laura Kowalchuk RRSP Account for $10 150.  
on 7 (settling on 10) October 2008, a purchase of 1000 Suncor Energy Inc. shares  
in the Laura Kowalchuk RRSP Account for $28 750. Randy Kowalchuk believed  
that this "was a good company", knew an individual involved with the company,  
and did not specifically recall discussing this purchase with Richard Kowalchuk.  
on 5 (settling on 10) November 2008, a purchase of 5000 Eveready Units in the  
Laura Kowalchuk RRSP Account for $6650. Randy Kowalchuk told us that his  
primary reason for making this purchase was the Eveready Units' price "75%  
cheaper than when I purchased it four or five months earlier". He also told us  
that, before making this purchase, he would have looked at "the last quarter  
financials", "trade volume" and "previous day's or two days' value"; and that he  
believed "it was a good company", "the market was upside down" and "it was  
great value". It was Randy Kowalchuk's testimony that, although he did not recall  
the conversation he had with Richard Kowalchuk about this purchase, he "would  
have floated the idea to him".  
on 6 (settling on 12) November 2008, a purchase of 5000 Eveready Units in the  
Laura Kowalchuk RRSP Account for $6250. When asked why he purchased  
Eveready Units on two consecutive days, Randy Kowalchuk said: "Probably I  
would have been testing the waters, looking at buying something, but not . . . fully  
committed." These Eveready Units and the 5000 Eveready Units purchased on  
5 (settling on 10) November 2008 in the Laura Kowalchuk RRSP Account were  
converted to 2000 Eveready Shares in January 2009.  
on 12 (settling on 17) December 2008, a purchase of 2000 Boston Pizza Royalties  
Income Fund Trust Units in the Laura Kowalchuk RRSP Account for $14 080.  
on 11 (settling on 16) March 2009, a purchase of 2000 Eveready Shares (at $1.56)  
in the Randy Kowalchuk TFSA for $3120 plus commission ($125). According to  
Randy Kowalchuk, he was aware that, at the end of 2008, Eveready "went from  
an income trust to a corporation, and they did a share swap of five units to one  
share". Randy Kowalchuk told us that this purchase "goes back to value. . . .  
[A]fter the conversion I purchased shares at over $21, and now they're on sale for  
$1.56. And so to have the ability to reduce the cost base and access to some  
funds." He also told us that, although there was additional money $1755 in  
the Randy Kowalchuk TFSA, he did not purchase more Eveready Shares because  
"it was still a . . . very tough market". There was also money available in the  
Laura Kowalchuk RRSP Account and the Laura Kowalchuk TFSA. When asked  
whether he had any discussions with Richard Kowalchuk at the time, Randy  
Kowalchuk stated: "I don't specifically -- the details of it, other than certainly he  
was very concerned about the market, more concerned about the market than I  
was." Randy Kowalchuk emphatically denied that he made this purchase based  
on insider information. He knew in March and April 2009 that Bert Holtby was a  
director of Eveready.  
settling on 18 March 2009, a purchase of 2572.384 units of Fidelity Canadian  
Short Term Bond Fund in the Laura Kowalchuk RRSP Account for $27 000.  
on 18 (settling on 24) March 2009, a purchase of 500 Crescent Point securities in  
the Laura Kowalchuk RRSP Account for $10 625. A contribution of $20 000 had  
been deposited to the Laura Kowalchuk RRSP Account on 5 March 2009, and the  
balance remaining as at 31 March was $1123.58.  
on 13 (settling on 16) April 2009, a sale of 500 Crescent Point securities from the  
Laura Kowalchuk RRSP Account for $13 635.60. Randy Kowalchuk explained  
that he made this sale because "they got a 30% increase in a three-week period"  
and "they paid . . . a small dividend" $115. Randy Kowalchuk could not recall  
discussing this sale with Richard Kowalchuk, explaining: "I just . . . thought take  
the win and see what the market's going to do." Asked if he made this sale  
because he "needed money to bid on the sure winner" about which Richard  
Kowalchuk had told him, Randy Kowalchuk responded: "Absolutely not." Much  
of the money generated by this sale was used to purchase Eveready Shares on  
14 and 15 April 2009.  
on 13 (settling on 16) April 2009, a purchase of 2000 Eveready Shares (at $2.35)  
the first transaction in the Laura Kowalchuk TFSA for $4700 plus  
commission ($125), leaving a balance of $175. Asked about the lack of earlier  
transactions in the Laura Kowalchuk TFSA, Randy Kowalchuk explained that he  
was "[b]eing somewhat cautious with the market and . . . focused on other things".  
Randy Kowalchuk emphatically denied that, at the time he made this purchase,  
Richard Kowalchuk had told him about the Proposed Acquisition. Randy  
Kowalchuk told us that he made this purchase because "there were funds  
available in the account" "I want the money to be working and growing and  
building."  
on 14 (settling on 17) April 2009, a purchase of 2200 Eveready Shares (at $2.12)  
in the Laura Kowalchuk RRSP Account for $4644 plus commission ($125).  
Randy Kowalchuk explained that he had two reasons for making this purchase:  
first, "my puppy syndrome of buying something yesterday, looking at it very  
frequently"; and, second, "on the 14th Eveready made an announcement that they  
had reestablished a credit facility". Concerning the latter, he elaborated that:  
"credit was a big issue" for many companies at the time; he knew from Eveready's  
quarterly statements and from discussions with Richard Kowalchuk that Eveready  
was in the process of renewing its credit; and he learned "sometime" on 14 April  
of the resolution of Eveready's credit issue from the website he follows "for  
volume and dollars". Randy Kowalchuk spoke with Richard Kowalchuk to place  
this order but did not "recall specifically the details". In his 21 September 2010  
Investigative Interview conducted by BCSC staff, Randy Kowalchuk (affirmed  
and represented by counsel) did not mention having learned on 14 April of the  
resolution of Eveready's credit issue, but he did mention talking with Richard  
Kowalchuk about Eveready's line of credit coming up for renewal.  
on 15 (settling on 20) April 2009, a purchase of 2800 Eveready Shares (at $2.35)  
in the Laura Kowalchuk RRSP Account for $6580 plus commission ($125).  
Randy Kowalchuk, who spoke with Richard Kowalchuk to place this order,  
explained that he had two reasons for making this purchase: he believed that the  
resolution of Eveready's credit issue should have resulted in a greater increase in  
the Eveready Share price; and the Share price relative to the price he paid in May  
2008 was discounted 85-90%. The balance remaining in the Laura Kowalchuk  
RRSP Account as at 30 April was $3664.49.  
[196] As a result of the Proposed Acquisition, all Eveready Shares held in the Kowalchuk  
Trading Accounts (those acquired before and in the Relevant Period) were, in August 2009  
(subsequent to the Relevant Period), converted to Clean Harbors Shares. Randy Kowalchuk told  
us that he sold some of these Clean Harbors Shares in October 2009 and some in spring 2011.  
5.  
Knowledge of the Proposed Acquisition  
[197] Randy Kowalchuk told us that, when he purchased the 9000 Eveready Shares in March  
and April 2009, "I had no knowledge that Clean Harbors was going to purchase Eveready" –  
there were, Randy Kowalchuk said, no words to that effect or words like "takeover" or "deal"  
used. Randy Kowalchuk emphatically denied that Richard Kowalchuk had informed him at the  
times of these purchases of any information concerning the Proposed Acquisition.  
[198] Randy Kowalchuk was asked about his 15 April 2009 9:55 a.m. email to Richard  
Kowalchuk with the subject line "thanks for the call last night" and the message "Big velocity  
with eis today". Specifically, when asked about his knowledge concerning the referenced "call  
last night", Randy Kowalchuk told us that 14 April is his daughter's birthday and his and his  
wife's anniversary, and he assumed that there was some sort of "telephone correspondence" from  
Richard Kowalchuk; in cross-examination, Randy Kowalchuk clarified that Richard Kowalchuk  
"left a message". Randy Kowalchuk did not recall whether this email was sent before or after his  
purchase of Eveready Shares on 15 April. He emphatically denied that there was, at any time on  
14 April 2009, a call from Richard Kowalchuk informing that Eveready was going to be acquired  
or purchased, or anything about the Proposed Acquisition. Randy Kowalchuk attributed this  
email to "my puppy syndrome" and being "very good at followup":  
I would have got in in the morning, done my morning check, . . . looked at the volume, the sales  
price, . . . and then I would have sent a note thanking him for his call the night before. I'mvery --  
in my profession I'm very good at followup. If I meet you, had dinner with you, I send notes. I  
send text. And it's partly a way that I -- we've been successful in doing our land deals, is getting  
people to return to calls. And so I respond like that very, very frequently.  
[199] Randy Kowalchuk was also asked about the 21 April 2009 email chain between Randy  
Kowalchuk and Richard Kowalchuk with the subject line "good day so far". Randy Kowalchuk  
did not recall sending this email or receiving Richard Kowalchuk's response. Pointed to  
testimony of Richard Kowalchuk concerning this email chain to the effect that he and Randy  
Kowalchuk knew about the Proposed Acquisition by 21 April 2009 and Richard Kowalchuk was  
attempting to obscure that, Randy Kowalchuk emphatically denied that at that date he knew  
anything about the Proposed Acquisition and further denied that he ever had any discussions  
with Richard Kowalchuk about "coverup e-mails or subterfuge".  
[200] There is also in evidence a 30 April 2009 9:48 a.m. email from Randy Kowalchuk to  
Richard Kowalchuk with the subject line "move sell price on EIS" and the message:  
If we are still alive please adjust price to $10.85  
When I calculated the cash, conversion and exchange rate last night - deal is worth $11.35  
The market seems to like the purchase, Coal harbour [sic] continues to move higher....  
[201] Randy Kowalchuk told us that he first learned about the Proposed Acquisition when  
Richard Kowalchuk, "quite excited", called him "bright and early" "6:30, 7:00" one morning,  
saying "Eveready this morning announced an arrangement and the stock is now trading I think in  
the 10, 15 range". Randy Kowalchuk further said that "being woken up, . . . I didn't really have  
. . . my wits about me. So I took some of the information and got up and went on with my day",  
eventually confirming the information for himself sometime that day. While he could not  
specifically recall sending the 30 April 2009 email, he explained that it would have been written  
in response to Richard Kowalchuk's call the previous morning during which he assumed that  
Richard Kowalchuk had suggested the sale of Randy Kowalchuk's Eveready Shares.  
E.  
Douglas  
1. Background Information  
[202] Douglas, a Medicine Hat resident, was at the time of the Merits Hearing employed as an  
insurance agent with Co-operators Insurance Company. In 1997 he took the mutual funds  
licensing course, but he has never acted as a broker or been a registrant under the Act.  
2.  
Relationships and Contact with Others  
[203] There is no evidence that Douglas knows, or knows of, any of the Respondents other than  
Bert Holtby and perhaps Landsiedel.  
[204] Douglas met Bert Holtby in September 1981.  
They developed "a fairly strong  
friendship", with Douglas considering Bert Holtby and his wife at one point "to be like second  
parents". Douglas also assisted Bert Holtby in obtaining financing to expand his business on two  
occasions.  
[205] Douglas knew that, in fall 2005, the name of Bert Holtby's company was "Eveready  
Energy Services" and that Bert Holtby was "a major shareholder". According to the Douglas  
Settlement Agreement, Douglas understood that Bert Holtby became a trustee of EIF in or about  
March 2005 and then became a director of Eveready when EIF converted from a trust to a  
corporation in December 2008, and therefore knew or ought to have known that Bert Holtby was  
a person in a special relationship with Eveready, as defined in the Act. In cross-examination by  
Bert Holtby's counsel, however, Douglas told us that he did not recall when he learned that Bert  
Holtby was a director of Eveready.  
[206] Douglas told us he had never met Richard Kowalchuk until Bert Holtby requested that  
the three of them have a luncheon meeting in late August or very early September 2005 the  
September 2005 Meeting. According to the Douglas Settlement Agreement, Douglas understood  
that Richard Kowalchuk was employed as an investment advisor with CIBC in Medicine Hat  
since late 2001.  
[207] Douglas testified in direct examination that he met Landsiedel for two minutes or less on  
one of the "numerous occasions" on which Douglas visited Bert Holtby in Arizona. On that  
occasion Christmas Eve 2006 Douglas did not have golf clubs so borrowed Landsiedel's  
clubs to play golf with Bert Holtby. In cross-examination, Landsiedel's counsel challenged  
Douglas's recollection, pointing out that Landsiedel would testify that he had not been in Arizona  
in the Christmas season between 2002 and 2010 and implying that Landsiedel had left-handed  
golf clubs that Douglas could not have used. Douglas acknowledged that it was possible he was  
mistaken about meeting Landsiedel.  
3.  
The Douglas Account  
[208] Douglas testified that at the September 2005 Meeting Bert Holtby "introduced the idea of  
setting up a joint investment account" and asked Douglas if he would like to contribute. Douglas  
told Bert Holtby that "the very most I could put in was $10,000", and Bert Holtby responded that  
"he'd match that 10 for me, and there would be another $80,000 to go into the account". Douglas  
elaborated:  
The account would be in my name only, and his reasoning for this was I would be in the lowest  
tax bracket. . . . He then went on to say that, of the other 80,000 that was coming in, 40 would  
come from [Richard] Kowalchuk and 40 from [Bert] Holtby.  
. . .  
[Bert] Holtby directed that any profits in the account would be shared on a 20 percent basis to me,  
. . . 40 percent to [Bert] Holtby and 40 percent to [Richard] Kowalchuk.  
. . .  
. . . the initial buy was to be shares in Eveready.  
. . .  
That was, I believe, just a joint decision.  
[209] According to Douglas, "[t]he original agreement . . . was that any taxes accrued from  
gains on the account in my name would be paid out of the account" and "I would be also eligible  
to claim the losses".  
[210] In cross-examination by Bert Holtby's counsel concerning the Douglas Account, Douglas  
acknowledged that perhaps Bert Holtby "was trying to help me improve my net worth" and the  
possibility that, if Bert Holtby had died, everything sourced from Bert Holtby could easily have  
stayed with Douglas. However, Douglas also stated: "Bert Holtby was an investor in the  
account, although not named"; and "[t]here would be a benefit to me, most definitely, as there  
would be benefit to both the other individuals". Douglas acknowledged that, when he was  
interviewed under oath by Staff on 11 May 2010, he mentioned that Bert Holtby "was trying to  
set up a fund where the main benefit would flow to me", but explained that doubling his  
investment by matching his $10 000 was "a large benefit".  
[211] In cross-examination by Bert Holtby's counsel, Douglas agreed that there was no  
discussion about his purchasing of stock in the Douglas Account at times when Bert Holtby  
could not buy Eveready and other stocks, and Douglas did not recall any comment to the effect  
that running an account in such a way is very common. Also, Douglas did not recall Richard  
Kowalchuk specifically saying it was important that nobody know of Richard Kowalchuk's  
connection with the Douglas Account, or specifically saying that there could never be a  
connection shown between the account and Bert Holtby. Douglas initially thought that, while  
Bert Holtby and Richard Kowalchuk would recommend or make the investments, they would  
flow through Douglas. Douglas also said that, to the best of his recollection, the 40/40/20 profit-  
sharing was agreed to at the end of the September 2005 Meeting. Douglas emphatically denied  
that Bert Holtby said he would lend Douglas $50 000, or that Bert Holtby observed he could not  
be involved in a joint account because he was on the Board.  
[212] Douglas told us that he attended at Richard Kowalchuk's office to sign the required  
forms, which had already been completed (but for a necessary change of address) although  
Douglas had not provided any information to Richard Kowalchuk. In completing the "Know  
Your Client Form" for the account, Richard Kowalchuk answered "no" to the following  
questions:  
Does any other person/entity, including the Investment Advisor: . . .  
1.  
2.  
Have authority over this account?  
Have a financial interest in this account?  
[213] When asked whether these "no" answers were correct, Douglas responded: "I guess not."  
[214] The Douglas Account, a trading account in Douglas's name, was opened on 21 September  
2005. Two cheques funded the initial $100 000 deposited to the Douglas Account. The first  
cheque, for $10 000, was drawn on a bank account of Douglas and his wife and was given by  
Douglas to Kowalchuk; it was deposited on 21 September 2005. Douglas told us that he did not  
have any discussions with Bert Holtby as to why Douglas would receive 20% of the profits for a  
10% contribution, but said: "I took it that he was trying to help me out and help me build an  
extra nest egg for retirement." The second cheque, for $90 000, was payable to Douglas and  
drawn on the Holtby Account; it was deposited on 22 September 2005. Douglas understood that,  
as Bert Holtby "indicated in the original meeting", $40 000 of that $90 000 would come from  
Richard Kowalchuk.  
[215] Douglas testified that all of the Douglas Account statements were sent to him, he did not  
believe that they were also sent to Bert Holtby or Richard Kowalchuk, and Richard Kowalchuk  
set it up so that these statements were Internet-accessible to Douglas. Douglas told us that Bert  
Holtby requested "he be provided with the password and data to access the account also", which  
Douglas provided. A few years later, when Bert Holtby requested that Douglas change the  
password which, Bert Holtby said, would not work for some reason Douglas changed the  
password and provided it to Bert Holtby. Douglas told us that he reviewed the Douglas Account  
statements within a couple of weeks or sometimes a month after receiving them.  
[216] The initial two purchases in the Douglas Account were purchases of Eveready Units, as  
"agreed on at the outset", but Douglas confirmed that he had no specific conversations with  
Richard Kowalchuk about these purchases. Douglas told us that he had no information about,  
and did not direct or have conversations with Richard Kowalchuk or Bert Holtby about, the third  
purchase a purchase of Eveready Units settling on 28 October 2005. Indeed, Douglas was not  
even aware of this purchase "until well after the fact when I had received [the] statement". Nor,  
according to Douglas, did he have any input into or active involvement with any subsequent  
trades, learning about them only when he received the associated statements.  
[217] According to Douglas, it was at times the same with deposits to and withdrawals from the  
Douglas Account. However, in respect of the 5 May 2006 deposit to the Douglas Account,  
Douglas testified that Bert Holtby and his wife gave him a cheque for $50 000 money that Bert  
Holtby had set aside to build a shop on his nephew-in-law's property and that he would not need  
for several months, money that "might as well go in the account". Douglas deposited this cheque  
to his bank account and then wrote a cheque to CIBC for the same amount, and he did not have  
any discussions with Bert Holtby as to the use to which the money would be put. Douglas  
subsequently authorized a $50 000 cheque payable to Bert Holtby's nephew-in-law and drawn on  
the Douglas Account, when requested to do so by Bert Holtby. Douglas also received cheques  
drawn on the Douglas Account to pay any taxes accrued from gains on the account. Concerning  
a 12 March 2009 cheque for $50 000 payable to Douglas and drawn on the Holtby Account,  
Douglas said that Bert Holtby sent it to him, with instructions to deposit the $50 000 to the  
Douglas Account. He could not recall whether Bert Holtby's instructions were to deposit this  
cheque directly, but Douglas deposited it to his bank account, wrote a cheque to CIBC for the  
same amount and then deposited that cheque to the Douglas Account. Concerning a 28 April  
2009 bank draft for $30 000 payable to Douglas, which money ultimately made its way into the  
Douglas Account, Douglas told us that Richard Kowalchuk asked that Douglas deposit it to his  
bank account and write a cheque to CIBC for the same amount, which Douglas then gave to  
Richard Kowalchuk.  
[218] Asked to describe his role in relation to the Douglas Account, Douglas stated: "Basically  
none. The account was in my name. I had a minimal -- I had minimal money in it. I guess I,  
basically, trusted those two to look after the account and hopefully make money." [Douglas  
admitted in the Douglas Settlement Agreement that he did not take sufficient steps to ensure that  
trades made through the Douglas Account were in compliance with Alberta securities laws.  
[219] According to Douglas, Bert Holtby, Richard Kowalchuk or both after testifying in  
direct examination that the "initial buy" in the Douglas Account was "a joint decision", Douglas  
testified in cross-examination that he did not know who whether Bert Holtby, Richard  
Kowalchuk or both directed the purchases and sales of securities in the account used the  
Douglas Account to trade in Eveready Units or Eveready Shares and securities of other issuers  
until April 2009, including:  
on 19 (settling on 24) March 2009 the purchase of 5000 Eveready Shares at a cost  
of $2.474 per Share plus commission.  
on 1 (settling on 6) April 2009 the purchase of 2000 Eveready Shares at a cost of  
$2.35 per Share plus commission.  
on 9 (settling on 15) April 2009 the purchase of 5000 Eveready Shares at a cost of  
$2.298 per Share plus commission.  
on 15 (settling on 20) April 2009 the purchase of 5500 Eveready Shares at a cost  
of $2.35 per Share plus commission.  
on 23 (settling on 28) April 2009 the purchase of 2500 Eveready Shares at a cost  
of $3.70 per Share plus commission.  
on 27 (settling on 30) April 2009 the purchase of 5000 Eveready Shares at a cost  
of $3.70 per Share plus commission.  
on 28 April (settling on 1 May) 2009 the purchase of 3000 Eveready Shares at a  
cost of $3.45 per Share plus commission.  
on 29 April (settling on 4 May) 2009 the sale of 10 000 Eveready Shares at a  
price of $10.10 per Share less commission.  
[220] Douglas did not direct any of these March and April 2009 trades in Eveready Shares,  
learning about them only after they occurred. Douglas learned online in May or June 2009 that  
Clean Harbors had purchased Eveready. He told us that, prior to that, he did not have any  
information about that transaction and had no discussions with Bert Holtby or Richard  
Kowalchuk about it. According to the Douglas Settlement Agreement, after learning about the  
March and April 2009 trades in Eveready Shares in the Douglas Account, Douglas did not take  
any steps to determine whether these trades were in compliance with Alberta securities laws.  
[221] Douglas admitted, in the Douglas Settlement Agreement, that the total net profit realized  
on the purchase of 28 000 Eveready Shares in the Douglas Account between 19 March and  
28 April 2009 was approximately $200 000, and that his total profit from these purchases was  
approximately $40 000.  
[222] Asked about his income tax returns from 2005 to 2009, Douglas stated that he did not  
make reference to Bert Holtby or Richard Kowalchuk and did not advise that he was a beneficial  
owner of only 20%. He told us that he believed he should have but did not because Bert Holtby  
told him not to do so. In cross-examination by Bert Holtby's counsel, Douglas said: "The way  
he [Bert Holtby] worded it, and I probably should have worded it this morning, was that he  
instructed me that all the gains would be claimed under my tax return." This was said, Douglas  
clarified, in the September 2005 Meeting. Douglas said that he did not tell his accountant for the  
same reason Bert Holtby "said the income was to be totally reported in my name".  
[223] According to the Douglas Settlement Agreement: in or about April 2009 Bert Holtby  
advised Douglas that Bert Holtby was under a blackout and could not purchase Eveready  
securities; shortly after 29 April 2009 Douglas had a conversation with Bert Holtby during which  
Bert Holtby discussed the March and April 2009 Eveready trades made through the Douglas  
Account and advised Douglas that he, Bert Holtby and Richard Kowalchuk would "make some  
good money", or words to that effect, as a result of the Proposed Acquisition; and, to his  
knowledge, each of the March and April 2009 Eveready Share purchases made through the  
Douglas Account by Bert Holtby or Richard Kowalchuk or both were made by them with  
knowledge of the Proposed Acquisition. Concerning the reference to making good money,  
Douglas conceded in cross-examination that he was assuming Bert Holtby was referring to doing  
so in the Douglas Account.  
4.  
Douglas's Personal Purchases  
[224] Douglas told us that he made two personal purchases of Eveready Shares, each for $5000,  
and that prior to doing so he did not discuss these purchases with either Bert Holtby or Richard  
Kowalchuk. One of these purchases was probably in January 2009, with the other in March  
2009 or thereabouts. He made these purchases, he said, because the Share price had dropped to  
just over $1.00 from $7.00, he knew some of the company's background, he believes that the oil  
business always rebounds and "they were an excellent buy".  
5.  
Settlement  
[225] Douglas admitted in the Douglas Settlement Agreement to acting contrary to the public  
interest. In consequence, Douglas agreed and undertook to the Executive Director of the  
Commission to pay $60 000 plus $10 000 for investigation costs, and to cease trading in  
securities and exchange contracts for five years, with carve-outs.  
[226] As to the impact that this has had on him, Douglas testified:  
Well, I guess it's had a negative impact on, basically, every aspect of my life. My business has  
suffered because of it. The Alberta Insurance Council are currently reviewing my licence, and  
whether I can remain licensed or not, I don't know.  
F.  
Wreggit  
[227] Wreggit did not testify at the Merits Hearing. However, on 18 August 2011 Wreggit,  
represented by counsel, was interviewed under oath by Staff pursuant to a summons issued under  
section 41 of the Act. In his Investigative Interview, Wreggit gave the following evidence:  
He was a mutual funds financial planner employed by Investors Group Financial  
Services (Investors Group) in Manitoba and was registered to sell mutual fund  
and insurance products in Manitoba and Alberta.  
Bert Holtby is his wife's brother and consequently his brother-in-law.  
He and his wife communicated frequently with Bert Holtby and Dale Holtby, at  
least a couple of times a month.  
He had a good relationship with Bert Holtby and they did "all kinds of family  
things together".  
He believed that, in 2008 and 2009, Bert Holtby was on the Board and that  
Eveready had changed its name a few times.  
On 19, 20 and 23 March 2009 (as acknowledged by Wreggit, probably settlement  
dates three business days after purchase) and thus on 16, 17 and 18 March –  
he purchased a total of 9867 Eveready Shares at a total cost of $24 699.83 in a  
joint trading account he and his wife had with Investors Group (the Wreggit  
Account). Wreggit had also purchased Eveready Shares in January and February  
2009.  
When he purchased the Eveready Shares in March 2009 he was required to  
change his risk profile associated with the Wreggit Account from 50% to 100%  
speculative because Eveready Shares, with a per-Share price of less than $5, were  
considered a speculative investment.  
On 30 March 2009 he transferred $25 000 to the Wreggit Account to pay for the  
March Eveready Share purchases.  
He had a conversation with Bert Holtby prior to 19 March 2009, indeed prior to  
entering the orders to purchase Eveready Shares in March, regarding Eveready.  
Wreggit said he advised Bert Holtby that he had purchased a number of Eveready  
Shares "and they are going down, is there something bad happening with the  
company?" Wreggit said that Bert Holtby responded: "[N]o, there wasn't  
anything bad happening with the company. . . . [H]e assured me it was, the  
company wasn't in trouble." Asked whether Bert Holtby told him that "the  
company was in a sales process", Wreggit said "Yes" and that was the first time  
he knew about Eveready being sold.  
He could not remember the exact words Bert Holtby used but "the intent of the  
words was I didn't need to worry, because, if things went as they should, the  
company should be sold. And at a better price than what I was paying." Wreggit  
continued: "In fairness, I think I got what I wanted that I knew I wasn't going to  
lose money in [it] if I bought more shares."  
He confirmed that this conversation initiated his March Eveready Share  
purchases, which began "[s]hortly after" "[i]f not the next day, then within a  
couple of days" of his conversation with Bert Holtby, although another reason  
was to average down his cost per Share.  
He candidly admitted, however, that "[i]f the call had not happened . . . [the  
March Eveready Share purchases] probably wouldn't have taken place".  
He also purchased 4600 Eveready Shares on 20 April 2009 and 3770 Eveready  
Shares on 21 April these too presumably settlement dates, with purchase dates  
being 15 and 16 April for a total cost of $24 813.50 in the Wreggit Account.  
He had no conversations about Eveready with Bert Holtby after the March 2009  
telephone call and before his April 2009 Eveready Share purchases. In a  
subsequent telephone conversation, Bert Holtby advised Wreggit that Eveready  
had been sold at a price of $10 per Eveready Share. Wreggit did not see the 29  
April 2009 News Release until sometime later.  
He and his wife had visited Bert Holtby in Phoenix, but he did not know the name  
"Ken Landsiedel".  
When asked whether he understood Bert Holtby telling him that Eveready was  
going to be sold was giving him insider information, Wreggit said: "Not, maybe  
when the conversation started. But at the end of the conversation, I was, I knew it  
was something, I had to make a decision on, whether it was or not." He also said  
that, although he did not know whether the information Bert Holtby had told him  
regarding the sale of Eveready had been in a news release, he "did hope I wasn't  
doing anything wrong, but I wasn't real sure".  
[228] The Wreggit Settlement Agreement (made jointly with the Commission and the Manitoba  
Securities Commission (the MSC)) included:  
Introduction  
1
[Staff] conducted an investigation into allegations that individuals, including [Wreggit]  
breached the Alberta securities laws regarding illegal insider trading, and acted contrary to the  
public interest.  
2
The investigation confirmed and Wreggit admits that he breached those sections of the  
Act and Alberta securities laws referred to in this Settlement Agreement and Undertaking  
(Agreement), and that he acted contrary to the public interest.  
. . .  
Parties  
5
Wreggit is a . . . resident of Ashville, Manitoba. At all material times, Wreggit was a  
financial planner employed in the mutual funds industry, registered in both Manitoba and Alberta  
to sell mutual funds. He was also licensed to sell insurance products.  
6
[Bert Holtby] is Wreggit's brother-in-law. . . . [Bert] Holtby was also, at all material  
times, a Director of [Eveready].  
Circumstances  
7
In mid-March 2009, Wreggit and [Bert] Holtby had a discussion on the telephone  
(March Call). Wreggit had previously purchased shares of Eveready, an Alberta-based company  
whose securities were listed for trading on the Toronto Stock Exchange. During the March Call,  
Wreggit asked [Bert] Holtby what was happening with Eveready, as the [S]hare price had dropped  
to less than $3.00. [Bert] Holtby responded with words to the effect that Wreggit need not worry,  
Eveready was in a sales process and that it should be sold at a better price than it was then trading  
at (Material Information).  
8
Within a day or two of learning of the Material Information as a result of the March Call,  
Wreggit began purchasing Eveready [S]hares. He made the following purchases of [S]hares:  
March 19 4600 [S]hares, March 20 3000 [S]hares, March 23 2267 [S]hares, April 20 4600  
[S]hares and April 21 3770 [S]hares. Prices paid for the [S]hares by Wreggit ranged from a low  
of $2.42 on March 19 to a high of $3.35 on April 21.  
9
On April 29, 2009, Eveready [publicly] announced that it had signed a definitive  
agreement with [Clean Harbors]. Under the terms of the agreement, Clean Harbors would acquire  
100% of Eveready's outstanding common shares through a combination of cash and stock totalling  
approximately $11.00 for each Eveready [S]hare.  
10  
Wreggit never saw the announcement and learned of the sale of Eveready from a  
discussion with [Bert] Holtby. Following receipt of that information, from April 30 - May 7,  
2009, Wreggit sold his entire holdings in Eveready for prices ranging from $10.36 to $10.45,  
earning a profit of at least $106,000.  
11  
Wreggit admits that, upon learning of the Material Information from [Bert] Holtby, he  
became a person in a special relationship with Eveready, as that phrase is defined in the Act.  
Wreggit further admits that he purchased the Eveready [S]hares when he knew or ought to have  
known the Material Information had not been generally disclosed.  
Breaches  
12  
As a result, Wreggit admits he breached subsection 147(2) of the Act by purchasing  
securities of a reporting issuer, while in a special relationship with the reporting issuer, with  
knowledge of a material fact or a material change with respect to the reporting issuer that had not  
been generally disclosed.  
13  
Wreggit further admits that purchasing shares of a reporting issuer while in possession of  
material undisclosed information, with a view to profiting from that trading, was contrary to the  
public interest.  
. . .  
Settlement Payments and Undertakings  
17  
Based on these facts and admissions, Wreggit undertakes to the Executive Director upon  
execution of this Agreement:  
17.1  
17.2  
to pay to the Commission the amount of $159,000 in settlement;  
to pay to the Commission the amount of $6,000 towards investigation and legal  
costs;  
17.3  
to cease trading in any and all securities and any and all exchange contracts for a  
period of three years from the execution of this Agreement [with certain carve-outs].  
17.4  
to permanently withdraw his registration as a mutual funds salesperson on or  
before December 31, 2011.  
G.  
Dale Holtby  
1. Background Information  
[229] Dale Holtby, formerly a Canadian resident, is a California resident and a retired  
handyman.  
[230] Dale Holtby left school after grade seven. He described himself as "dyslexic and unable  
to learn". Dale Holtby worked as a farmer, handyman and labourer throughout his working life.  
He is a man of limited means. Since retirement, he has received virtually no income and does  
not have any significant assets but has no debt. Dale Holtby has no experience in the securities  
market and is not a seasoned investor. Prior to investing in Eveready in spring 2009 he had  
never purchased any securities.  
[231] Although resident in California, Dale Holtby maintained a bank account with a Canadian  
bank in British Columbia (the BC Bank Account). He was able to access the BC Bank Account  
online from his home in California and it was into this account that Dale Holtby deposited his  
inheritance money as well as his Canada Pension Plan and Old Age Security payments.  
[232] In 2010 Dale Holtby opened a trading account with TD Ameritrade which provides  
online discount brokerage services to self-directed investors to enable him to trade stocks  
online. Dale Holtby acknowledged that TD Ameritrade was related to the bank at which he had  
the BC Bank Account. He agreed that opening the TD Ameritrade securities trading account was  
not that difficult.  
2.  
Relationships and Contact with Others  
[233] There is no evidence that Dale Holtby knows, or knows of, any of the other Respondents  
other than Bert Holtby and Shepert.  
[234] Dale Holtby is the younger brother of Bert Holtby. Dale Holtby testified that his  
relationship with Bert Holtby was not that close. Dale Holtby did not believe that Bert Holtby  
had forgiven him for the loss of the family farm to foreclosure this, Dale Holtby told us, would  
be an issue between them "forever". He said it has only been in the last six or seven years that  
they resumed contact and then it was not often. Dale Holtby confirmed that it would not be  
difficult to determine that he and Bert Holtby were related.  
[235] Shepert was a long-time more than 50 years friend of Dale Holtby. Dale Holtby and  
his wife socialized with Shepert and his wife over the years.  
[236] Wreggit is married to Dale Holtby's sister. Wreggit was the executor of Dale Holtby's  
mother's estate following her death in January 2009. Dale Holtby agreed that Wreggit is a "good  
guy, honest guy".  
3.  
Eveready Share Purchases  
[237] Dale Holtby knew that Bert Holtby was involved with Eveready and on the Board. He  
knew that Bert Holtby's company United Services had been sold to Eveready. Dale Holtby said  
that he had been following his brother's company Eveready since it went public, to see how  
successful it was. He said that once or twice a year he would go on the Internet and see what the  
Eveready trading price was. He had watched the price of Eveready securities fall from a price of  
$15 to $20 per Unit to around $3.00 to $3.50 per Unit in the latter part of 2008. He thought it  
might be a good investment at that time but because he had no money to invest he had not  
purchased any Eveready securities. He did not follow any other companies because Eveready,  
being his brother's company, was the only one he knew.  
[238] In approximately mid-February 2009 Dale Holtby first discussed buying Eveready Shares  
with Shepert, who was in California for the winter months. By this time, Dale Holtby knew that  
he would be receiving money from his mother's estate and thought that Eveready might be a  
good investment for the money. Knowing Shepert to be an experienced investor, Dale Holtby  
asked Shepert what he thought about Eveready as a possible investment. Shepert agreed to  
conduct some research into Eveready and let Dale Holtby know what he thought once Shepert  
got back to Canada.  
[239] Around 18 March 2009 Dale Holtby received a $57 000 inheritance from his mother's  
estate. He said the money earned no interest while it was in the BC Bank Account.  
[240] Dale Holtby confirmed that he and his wife hosted the March 2009 Barbeque at their  
home in California. Among the attendees were Bert Holtby and his wife, who were visiting Dale  
Holtby and his wife for the weekend, and Shepert and his wife. Dale Holtby testified that there  
was no discussion with Bert Holtby whatsoever regarding Eveready or Dale Holtby's interest in  
Eveready at the March 2009 Barbeque or at all during Bert Holtby's visit. Dale Holtby said that  
his brother would never have given him "tips" and explained that Bert Holtby would not have  
provided him with information about the Proposed Acquisition because: "He would never. He  
had never helped me out in a way like that. He would -- it was not a close relationship." Dale  
Holtby denied receiving any information about the Proposed Acquisition from his brother Bert  
Holtby before instructing Shepert to purchase Eveready Shares for him.  
[241] Dale Holtby testified that Shepert returned to Canada near the end of March 2009. Dale  
Holtby asked Shepert, prior to his return to Canada, whether he could buy Eveready Shares for  
him (Dale Holtby). Shepert told Dale Holtby that he saw no reason why he could not as he had  
previously purchased securities on behalf of his adult children. Dale Holtby said that he asked  
Shepert to buy the Eveready Shares for him because he "never had an account and I didn't know  
how to go about -- about it or had no knowledge". Dale Holtby and Shepert discussed the  
mechanics of how Dale Holtby could send Shepert money to buy Eveready Shares for Dale  
Holtby.  
[242] Dale Holtby said that, after Shepert had returned to Canada and conducted some research,  
Shepert telephoned and told him that he thought Eveready would be a good long-term investment  
for Dale Holtby. Dale Holtby said that Shepert also told him about other companies in which  
Shepert was interested in investing. Dale Holtby said he told Shepert: "Well, fine. If -- if  
you've got better companies to invest in, go ahead. You know, use those. But when it all came  
down to it, he said he liked Eveready the best."  
[243] On 29 March 2009 Shepert emailed Dale Holtby his (Shepert's) bank account  
information. The next day 30 March Dale Holtby transferred $9800 from the BC Bank  
Account to Shepert's bank account, which Dale Holtby accessed through the Internet from his  
California home. This money was transferred to Shepert so that he could buy Eveready Shares  
for Dale Holtby. Dale Holtby testified that because it was his first investment he was hesitant to  
invest any more money. Further, he said that he had initially decided to send $9500 because he  
had calculated that was the amount that would give him an even number of Shares but then  
decided to send an extra $300 to cover costs and any Share price increases.  
[244] On 16 April 2009 Dale Holtby transferred $5000 into Shepert's bank account because "I  
just got more nerve and I thought maybe I'd invest a little bit more". The next day Dale Holtby  
transferred a further $4500 into Shepert's bank account because he thought "What the hell? I  
might as well do it again". Dale Holtby said that he and Shepert had no further discussions other  
than that Shepert was to use the money sent to him to buy Eveready Shares for Dale Holtby.  
[245] Dale Holtby considered his purchases of Eveready Shares as a "long-term investment".  
Dale Holtby said that he learned Shepert had sold his (Dale Holtby's) Eveready Shares after they  
had been sold. Dale Holtby testified that he did not believe he gave Shepert any instructions to  
do so and Shepert did not consult with him before doing so.  
[246] Dale Holtby transferred a total of $19 300 to Shepert to purchase Eveready Shares after  
30 March 2009. He received back a total of $65 000, for a total pre-tax profit of $45 700.  
Shepert told Dale Holtby that Shepert was going to hold back some of the sale proceeds to pay  
the income taxes that would be owing from the sale of Dale Holtby's Eveready Shares.  
[247] Dale Holtby denied that he made the Eveready Share purchases through Shepert because  
he did not want anyone to know that he, Dale Holtby, was purchasing Eveready Shares in March  
and April 2009.  
4.  
Money Transfers  
[248] Dale Holtby testified that Shepert did not tell him how much money was received from  
the sale of Dale Holtby's Eveready Shares. Dale Holtby said that he gave no instructions as to  
how the sale proceeds from the Eveready Shares were to be returned to him; the decisions as to  
when and how much money was transferred back to the BC Bank Account were made by  
Shepert alone.  
[249] Between May and September 2009 Shepert transferred $65 000 to the BC Bank Account.  
The payments which came from Shepert's sale of Dale Holtby's Eveready Shares were:  
on 5 May $9800;  
on 20 May $9800;  
on 1 June $9800;  
on 19 June $9800;  
on 7 July $8600;  
on 12 August $8600; and  
on 4 September $8600.  
[250] Dale Holtby confirmed that every payment he transferred to Shepert's bank account was  
under $10 000 and every payment that Shepert transferred back to him was also under $10 000.  
He said he did not know why the amounts $9800 and $8600 were chosen by Shepert. When  
questioned as to whether he and Shepert made all the money transfers under $10 000 to avoid  
detection, Dale Holtby replied that he was unaware of any law prohibiting the sending of more  
than $10 000 in one payment he said he did not have "any idea that there was any rules and  
regulations about amounts". Dale Holtby acknowledged that in May 2009 he sent a cheque for  
$25 500 from the BC Bank Account to his American bank and experienced no issues in doing so.  
5.  
Communication with Tracy Kaufman and Arnold Kaufman  
[251] After the March 2009 Barbeque, Dale Holtby had a conversation about Eveready with his  
daughter Tracy Kaufman and her husband Arnold Kaufman. During this conversation, Dale  
Holtby told them that he intended to invest in Eveready and suggested that it was a stock they  
"should look at". This was the first time that Dale Holtby had ever discussed investing in stocks  
with either of the Kaufmans. Dale Holtby testified that the reason he talked to them about  
Eveready was because he thought it might be something "they could make some money at". He  
also said he thought it might be a good investment because the "price was so low and . . . Shepert  
had recommended it".  
[252] Dale Holtby confirmed that Tracy Kaufman knew he had no experience investing in the  
stock market and was not a wealthy or educated man.  
[253] Dale Holtby said that Tracy Kaufman called him approximately one week or so later and  
told him that she and her husband had bought some Eveready Shares. He did not know whether  
the Kaufmans had used borrowed money to purchase the Eveready Shares.  
H.  
The Kaufmans  
[254] Neither Tracy Kaufman nor Arnold Kaufman testified at the Merits Hearing. On  
6 October 2011 each of the Kaufmans, neither represented by counsel, was interviewed under  
affirmation by Staff pursuant to a summons issued under section 41 of the Act.  
[255] In her Investigative Interview, Tracy Kaufman gave the following evidence:  
Before being interviewed she spoke to her father (Dale Holtby) and her mother.  
On 26 March 2009 she and her husband opened a joint trading account with TD  
Waterhouse Discount Brokerage (the Kaufman Trading Account) for the  
purpose of buying Eveready Shares.  
She and her husband purchased 2000 Eveready Shares on 30 March 2009 with a  
settlement date of 2 April 2009 (the March Eveready Shares) and 900 Eveready  
Shares on 20 April 2009 with a settlement date of 23 April 2009 (the April  
Eveready Shares) in the Kaufman Trading Account.  
The purchase of the March Eveready Shares was the very first share purchase she  
had ever made and her very first investment in Eveready.  
She and her husband had borrowed money from their line of credit to fund their  
Eveready Share purchases.  
She purchased the most Eveready Shares she could from the money available to  
her.  
She described her investment knowledge as "[n]ot very good" and in reference to  
making investment decisions said she does not "understand any of this".  
She bought the March Eveready Shares after speaking to Dale Holtby who told  
her "to take a look at this stock and see what we thought", then her husband spoke  
with Dale Holtby, then "we looked into it and thought we would try a little bit".  
She said Dale Holtby said nothing more about Eveready.  
She denied being told that Eveready was in a sales process or being sold.  
She had never before discussed buying securities with Dale Holtby, and Dale  
Holtby had never before volunteered that type of information to her.  
She and her husband sold all 2900 Eveready Shares in the Kaufman Trading  
Account on 29 April 2009 (the same day as the 29 April 2009 News Release)  
because she said they checked the price of Eveready Shares periodically and saw  
the price had increased.  
She said that before their purchases of Eveready Shares her husband had  
consulted with a friend, Dr. Ling, to get his views on Eveready as a possible  
investment because her husband "didn't know anything about it" and Dr. Ling  
"knew a bit about stocks". Dr. Ling apparently told Arnold Kaufman that "it  
looked pretty good".  
She knew her uncle Bert Holtby but rarely saw him. She described Dale Holtby  
and Bert Holtby as not having a close relationship.  
[256] In his Investigative Interview, Arnold Kaufman gave the following evidence:  
He said that he and his wife opened the Kaufman Trading Account "to maybe do  
a little bit of investing", although they had no specific investment in mind at the  
time.  
He and his wife had purchased the March Eveready Shares after speaking with  
Dale Holtby, who told them it was "a stock that might be something to look into",  
and "just a little while after that it took a little jump, so we bought" the April  
Eveready Shares.  
Dale Holtby only told them the name of Eveready and to look into it, nothing  
more.  
After his conversation with Dale Holtby Arnold Kaufman "looked around a little  
bit" on the Internet. He also asked his friend Dr. Ling, who he understood did a  
lot of investing, if he could look into Eveready for him and give his opinion on  
Eveready as a possible investment. Dr. Ling told him that Eveready "looked like  
a good company to invest in".  
He and Dale Holtby had "maybe" discussed buying stocks or their investments  
once or twice before.  
He had never owned Eveready securities before the purchase of the March  
Eveready Shares.  
He described his investing knowledge as "slim".  
He and Tracy Kaufman sold all their Eveready Shares on 29 April 2009 because  
"[w]e happened to look at [it] that morning and it took a big jump, so we decided  
to sell."  
He had never met Bert Holtby, but knew that he was his wife's uncle. He did not  
know what Bert Holtby did for a living.  
I.  
Shepert  
1. Background Information  
[257] Shepert, a resident of Edmonton, is a retired air traffic controller.  
2.  
Relationships and Contact with Others  
[258] There is no evidence that Shepert knows, or knows of, any of the other Respondents other  
than Bert Holtby and Dale Holtby.  
[259] Shepert is a long-time friend some 50 years of Dale Holtby. From 2008 Shepert and  
his wife began to spend the winter months in California. Dale Holtby and his wife lived an  
approximately 40-minute drive from where Shepert and his wife stayed in California. They  
began to see each other about once a month when Shepert and his wife were in California.  
Shepert said that he and Dale Holtby over the years had never discussed their investment  
activities, but Shepert believed that Dale Holtby was aware that Shepert invested on his own  
through online trading.  
[260] Shepert knew that Dale Holtby and Bert Holtby were brothers, but until the March 2009  
Barbeque Shepert had not seen Bert Holtby or had any communication with him in over 45  
years. Shepert said that he had no contact with Bert Holtby after the March 2009 Barbeque.  
[261] Prior to 2009 Shepert knew that Bert Holtby worked for an oil and gas services company  
in Fort St. John that approximately 15 years earlier had converted from a corporation to a trust.  
He identified that company as Eveready. Shepert testified that he did not know what Bert  
Holtby's role in Eveready was "other than the fact that he was working for that company".  
Shepert said that he had looked into Eveready but never bought any of its securities before 2009.  
He denied being aware that Bert Holtby was either an owner or shareholder of Eveready. In his  
first (28 July 2010) Investigative Interview, Shepert (under oath and represented by counsel) said  
he knew that Bert Holtby "worked for [Eveready] or was a shareholder or owner". When pointed  
to this discrepancy, Shepert agreed his recollection of events when he was first interviewed was  
probably better than it was at the Merits Hearing.  
3.  
Investment History  
[262] Shepert has been trading securities for approximately 30 years, and for the last 20 years  
he has been trading online on his own, without a broker. He told us he spent a fair amount of his  
time trading securities, with a focus on purchasing "oil and gas, junior speculative type stocks".  
He traded securities on his own behalf and on behalf of his wife and adult children in their  
securities trading accounts over which he has trading authority.  
[263] Shepert described his trading strategies. He has for many years subscribed to several  
investment newsletters and magazines, reviewing their information and recommendations. He  
also researched companies by visiting their websites, reviewing their public documents on  
SEDAR and reviewing online chat lines. He also watched the Business News Network.  
[264] When deciding what company to buy, Shepert's criteria included share structure,  
businesses and projects involved in, cash on hand, and "[w]ho might be on the board" "Names  
that I've been familiar with that have formed one company and built it up, sold it, started another  
junior company, built it up, sold it." Shepert described his approach when deciding to sell a  
stock as "pretty much gut feeling". He does not use or create financial models.  
[265] Shepert had trading authority over six different trading accounts at TD Waterhouse in  
which Eveready Shares were purchased and sold in March and April 2009. He was the only  
person who traded securities in these accounts. The six trading accounts (collectively, the Six  
Shepert Accounts; and, all but the first enumerated account, the Shepert Family Accounts)  
were:  
an account in Shepert's name (the Shepert Account);  
an account in the names of Shepert and his wife (the Shepert Joint Account);  
a TFSA in the name of Shepert's wife (the Shepert TFSA);  
an RRSP account in the name of Shepert's wife (the Shepert RRSP Account);  
an account in the name of Shepert's daughter (the Shepert Daughter Account);  
and  
an account in the name of Shepert's son (the Shepert Son Account).  
[266] Shepert confirmed that the March 2009 statement for the Shepert Joint Account reflected  
his typical investments and were all likely recommended in one of the newsletters he received.  
His holdings were primarily of oil and gas or mining junior issuers, with one holding of 20 000  
shares, the remainder ranging from 5000 shares to 15 000 shares. His holdings at the time in that  
account showed eight stocks with a book value under $10 000, three with a book value between  
$10 000 and $15 000, and two with a book value of approximately $20 000.  
[267] When questioned about the situation in the Six Shepert Accounts as at March 2009 all  
six accounts had market values significantly less than, and two accounts had less than half of,  
their book values Shepert referred to what he called the market "downdraft" and how  
"[m]ining, oil and gas, mortgage, everything just suffered".  
4.  
Circumstances Surrounding Purchases and Sales of Eveready Shares  
[268] Shepert attended the March 2009 Barbeque. At the March 2009 Barbeque Shepert  
recalled asking Bert Holtby what was happening with his company and Bert Holtby responding  
that he could not talk about it because they were in a blackout. Shepert said that was the extent  
of their discussion about Eveready. Shepert said that his question was part of a general  
conversation that was focused on getting caught up with what was happening in Bert Holtby's  
life, an individual he had not seen in years. Shepert understood a blackout meant that, when a  
company was being taken over, there was a restriction on public information "it was not to be  
talked about".  
[269] According to Shepert, shortly after the March 2009 Barbeque, Dale Holtby telephoned  
Shepert in Edmonton and asked him to purchase Eveready Shares for him. Shepert asked Dale  
Holtby why he did not buy the Eveready Shares himself, and said that Dale Holtby told him he  
was an American citizen and did not have a Canadian trading account. Shepert agreed to buy the  
Eveready Shares for Dale Holtby, and they discussed how Dale Holtby would forward the  
money to Shepert. Shepert said that, while they may have talked about other oil and gas  
companies, Dale Holtby's instructions to Shepert were to buy Eveready Shares. Shepert said  
Dale Holtby gave him no specific instructions regarding the price to pay for the Eveready Shares  
but said to "buy me what you can buy me at the best possible price based on what I send you".  
[270] Shepert said that Dale Holtby wanting to buy Eveready Shares seemed somewhat "odd"  
and that Dale Holtby's wanting to buy shares in his brother's company "piqued" Shepert's  
interest. He assumed that Dale Holtby might know "something about" Eveready that he did not.  
Shepert said that Dale Holtby did not tell him why he wanted to purchase Eveready Shares and  
Shepert did not ask Dale Holtby why he wanted to purchase Eveready Shares. Shepert said that  
Dale Holtby did not mention Bert Holtby "at that time".  
[271] Shepert said that he did a bit of research on Eveready. He may have gone to Eveready's  
website and looked at it on SEDAR but was not certain. He conceded that he did not know much  
about Eveready other than it was in the oil and gas business, and said that he had checked the  
Eveready Share price, saw it was trading at approximately $23 per Share a year previous, had  
gone down to $1.00 per Share and was then trading in the $2.00 range. Shepert then made the  
decision that he would also buy Eveready Shares.  
[272] Almost immediately following his discussion with Dale Holtby, Shepert purchased  
Eveready Shares for himself, his wife and daughter as follows:  
25 March 2009  
2500 Eveready Shares at $2.42 per Share in the Shepert Joint Account for a total  
cost of $6125;  
400 Eveready Shares at $2.42 per Share in the Shepert RRSP Account for a total  
cost of $997;  
2500 Eveready Shares at $2.42 per Share in the Shepert Daughter Account for a  
total cost of $6125;  
26 March 2009  
1900 Eveready Shares at $2.45 per Share in the Shepert RRSP Account for a total  
cost of $4712;  
27 March 2009  
2500 Eveready Shares at $2.43 per Share in the Shepert Joint Account for a total  
cost of $6150.  
[273] In these three days Shepert (for himself and family) spent almost $25 000 to purchase  
Eveready Shares. Shepert admitted that this was somewhat unusual for him, but there had been  
times when he had invested more money. His further explanation was that he thought Eveready  
was a "good speculative stock" and, with the market "down in the dumps", Eveready was  
actively trading and he thought he might make "a couple of bucks".  
[274] Shepert denied that either Bert Holtby or Dale Holtby told him anything about the  
Proposed Acquisition. He said that he would have "bet the farm on it" if he "had known that this  
was insider information".  
[275] On 29 March 2009 Shepert emailed his bank account information to Dale Holtby. The  
next day, 30 March 2009, Dale Holtby transferred $9800 from the BC Bank Account to Shepert's  
bank account.  
[276] After receipt of Dale Holtby's money, on 31 March 2009, Shepert purchased Eveready  
Shares for Dale Holtby and for two of the Shepert Family Accounts. He said that he purchased  
these Eveready Shares for his family because he thought "it was a good buy". The purchases that  
day were:  
2500 Eveready Shares for Dale Holtby at $2.30 per Share in the Shepert Account  
for a total cost of $5825;  
1500 Eveready Shares for Dale Holtby at $2.33 per Share in the Shepert Account  
for a total cost of $3540;  
2500 Eveready Shares at $2.35 per Share in the Shepert Joint Account for a total  
cost of $5946.25;  
3500 Eveready Shares at $2.33 per Share in the Shepert Son Account for a total  
cost of $8260.  
[277] Shepert said that three weeks later Dale Holtby telephoned to tell him he was sending  
more money to buy more Eveready Shares. Shepert could not recall why Dale Holtby wanted to  
buy more Eveready Shares. Shepert thought it was "interesting -- more interesting when he  
wanted me to buy him some more shares, and that's why I was buying shares accordingly".  
Shepert said that he did not know what Dale Holtby knew but decided to buy Eveready Shares  
because Dale Holtby was buying and "it might be worth a shot". Shepert said that he might have  
brought up the subject of a take-over with Dale Holtby because it would have been "my normal  
conversations with anyone when we talk about stocks or whatever that's starting to move", but  
assuming he did he could not recall specifically he was left with the impression that Dale  
Holtby knew nothing.  
[278] Shepert purchased more Eveready Shares in April 2009 as follows:  
20 April  
3500 Eveready Shares for Dale Holtby at $2.77 per Share in the Shepert Account  
for a total cost of $9704.99;  
1000 Eveready Shares for at $2.81 per Share in the Shepert Joint Account for a  
total cost of $2819.99;  
21 April  
1000 Eveready Shares $2.88 per Share in the Shepert TFSA for a total cost of  
$2889.99;  
27 April  
600 Eveready Shares at $3.41 per Share in the Shepert TFSA for a total cost of  
$2055.99.  
[279] Shepert said that he purchased the number of Eveready Shares he did on 20 and 21 April  
2009 2000 Eveready Shares for him and his wife because "I guess that was all the money I  
had maybe in that specific account at the time." Shepert said that he bought the Eveready Shares  
in the Shepert TFSA on 27 April because "the stock was going up and it was already up a buck  
from my initial purchase and I thought it had compelling reasons to stick with it and maybe buy  
some more". Shepert said that he probably did not purchase any more than 600 Eveready Shares  
in the Shepert TFSA because there was probably no more money in the account.  
[280] Between 25 March and 27 April 2009 Shepert purchased a total of 25 900 Eveready  
Shares in the Six Shepert Accounts. Of these Shepert purchased 18 400 Eveready Shares for the  
Shepert Family Accounts at a total cost $46 081.22 (commissions included). The remaining  
7500 were purchased by Shepert on behalf of Dale Holtby at a total cost of $19 069.99  
(commissions included).  
[281] Shepert acknowledged that he used most of the money in the Shepert Joint Account and  
in the Shepert Son Account, and sold shares therein to generate money used, to purchase the  
Eveready Shares in those accounts. He also acknowledged that he used most of the money in the  
Shepert TFSA, the Shepert RRSP Account and the Shepert Daughter Account to purchase the  
Eveready Shares in those accounts.  
[282] On the day of the 29 April 2009 News Release, Shepert sold all 25 900 Eveready Shares  
he had purchased in March and April 2009, with net proceeds of $75 985 realized in the Shepert  
Account for the benefit of Dale Holtby and net proceeds of $185 925 realized in the Shepert  
Family Accounts for the benefit of Shepert and his family.  
[283] Shepert agreed that:  
Dale Holtby had limited investment knowledge;  
to the best of his knowledge Dale Holtby had never traded in stocks before 2009;  
he did not look to Dale Holtby for investment advice;  
prior to the Eveready investment, he and Dale Holtby had not discussed investing  
in securities and Dale Holtby had never discussed any specific investment he was  
making with Shepert;  
before March 2009 Shepert had never purchased any securities for Dale Holtby;  
and  
before March 2009 Shepert had never received any money from Dale Holtby to  
purchase any securities on behalf of Dale Holtby.  
5.  
Transfer of Money  
[284] Dale Holtby transferred a total of $19 300 to Shepert's bank account using online banking  
services. Shepert was set up as a personal payee on the BC Bank Account. The $19 300 was not  
transferred at once but in three separate transfers, each under $10 000 as follows:  
30 March $9800;  
16 April $5000;  
17 April $4500.  
[285] Shepert used this money to purchase Eveready Shares on behalf of Dale Holtby in March  
and April 2009.  
[286] After Shepert sold the Eveready Shares in April 2009, he transferred back $65 000 to  
Dale Holtby. Shepert told Dale Holtby that he would transfer the money to the BC Bank  
Account. After consulting with an accountant and Dale Holtby, Shepert held back money to pay  
the income tax on the capital gains from the sale of Dale Holtby's Eveready Shares. The $65 000  
was not transferred as one lump sum but was transferred through seven transactions, each under  
$10 000 as follows:  
5 May $9800;  
20 May $9800;  
1 June $9800;  
19 June $9800;  
7 July $8600;  
12 August $8600;  
4 September $8600.  
[287] Shepert agreed that he could have transferred all the sales proceeds in one instalment to  
Dale Holtby but chose not to do so. Shepert said that he and Dale Holtby probably had a  
conversation about keeping the money transfers under $10 000 because they thought there might  
be a law that prohibited transfers of money over $10 000 or a form that had to be completed for  
transfers of money over $10 000. Shepert was not certain whether the idea of keeping transfers  
of money under $10 000 was his idea or Dale Holtby's; Shepert said "I can't think of it as being  
my idea because it was of no value to me". While he was not certain about the requirement, he  
admitted that he made the transfers under $10 000 "to avoid any involvement in the banks".  
Shepert said that he transferred $9800 because that was the amount he had received from Dale  
Holtby.  
[288] Shepert denied that he sent the money back to Dale Holtby in amounts under $10 000 to  
avoid the authorities detecting his transfers of money to Dale Holtby.  
J.  
Landsiedel  
1. Background Information  
[289] Landsiedel is a retired businessman and a resident of St. Albert, Alberta and Surprise,  
Arizona. He had spent almost all of his career in the oil and gas industry. He had developed two  
successful businesses, each of which was sold years ago for several million dollars.  
[290] In 2009 Landsiedel had a significant net worth, much of which was held in liquid assets.  
2.  
Relationships and Contact with Others  
[291] Landsiedel told us that he does not know and has never met any of the other Respondents  
other than Bert Holtby.  
[292] Landsiedel first met Bert Holtby in approximately 2002 in Surprise, Arizona, where they  
both have winter residences. They lived approximately one kilometre from each other.  
[293] Landsiedel testified that he and Bert Holtby are not, and have never been, close friends.  
He described his relationship with Bert Holtby in the years leading up to the Relevant Period as a  
cordial, casual acquaintance.  
[294] Landsiedel explained that he and Bert Holtby were not regular golf partners. Landsiedel  
occasionally played golf with Bert Holtby as both were members of a group of approximately 30  
or 40 couples who played golf in the winter months when they resided in Arizona. Landsiedel  
and Bert Holtby only played golf together approximately three to five times each year. The golf  
group would generally get together after their games for refreshments. Around 2009 Landsiedel  
was one of the group of golfers that moved to a new golf course; Bert Holtby was not one of the  
golfers who changed golf courses. Landsiedel said that there was a good chance he played golf  
with Bert Holtby in the same foursome sometime between November 2008 and March 2009,  
although for them to golf together during that time would have been a very rare occurrence.  
[295] Landsiedel and Bert Holtby occasionally socialized together in group settings when they  
were in Arizona. Bert Holtby and his wife attended an annual Grey Cup party hosted by  
Landsiedel for approximately 40 to 60 people in the community. They had also been to each  
other's houses in Arizona for group dinners with ten or twelve others a handful of times over the  
years. They did not see each other when they were back in Canada in the spring, summer and  
fall months, and they lived in different cities.  
[296] Landsiedel first heard of Eveready from Bert Holtby in 2005. By approximately 2008  
Landsiedel was aware that Bert Holtby was a director of Eveready. Landsiedel also knew that  
Bert Holtby had a brother in California, but did not know his name and had never met him.  
3.  
Trading History and Strategies  
[297] Landsiedel had a lot of experience trading securities. He first started investing in the  
stock market in the mid-1970s, but lost what was then a considerable amount of money for him.  
After that, Landsiedel said that he began researching investment strategies. From that research,  
Landsiedel said that he adopted an investment strategy that adhered to two principles: first, "be  
knowledgeable about and understand the product you're investing in"; and, second, "buy at the  
right price and be prepared to hold". Landsiedel adopted one further investment strategy to  
"preferably know someone involved with and knowledgeable about the company who could --  
when they said something, you could rely on [it] to some degree".  
[298] Landsiedel said he generally followed those investment strategies in making his  
subsequent investment decisions. For example, he tended to purchase stocks based on his  
knowledge of the industry and so his portfolio was heavily weighted with securities of oil and  
gas companies. He also gave examples of purchases of securities of companies about which he  
knew something or whose personnel he knew. Landsiedel in keeping with a buy-and-hold  
strategy also typically held his investments for 10 to 15 years. For example, Landsiedel initially  
purchased Wireless Matrix Corporation (formerly Interprovincial Satellite Services Ltd.)  
(Wireless) in December 1996 and Drilcorp Energy Ltd. (Drilcorp) (and its successor, Twin  
Butte Energy Ltd. (Twin Butte)) in 1998, which companies were still in his portfolio in  
November 2009.  
[299] Marc Roy (Roy) of ScotiaCapital Link (ScotiaCapital) was Landsiedel's long-time  
investment advisor. Over the course of their relationship Roy and Landsiedel typically would  
speak once a month (and more often in periods when Landsiedel was actively buying securities)  
and usually by telephone. Landsiedel does not own a computer, generally relying on price  
quotes from Roy and his team and his ScotiaCapital account statements received in the mail.  
[300] Roy in his 21 July 2010 Investigative Interview described Landsiedel as someone who  
had "a history of making big bets" in the stock market and gave the following examples: "He  
had a large position in Wireless Matrix in the late '90s, large position in [Petrobank], I'm thinking  
early 2000s. As well as a large position in Canadian Crude Separators of a similar size."  
[301] In or around 1998 Landsiedel placed approximately $600 000 with Roy to invest. On  
Roy's advice, this money was used to purchase mutual funds.  
[302] By the late 1990s Landsiedel's portfolio contained significant investments in several  
publicly traded entities, some of which demonstrated an investment pattern of averaging down,  
buying and holding, and investments in small cap companies. Notable among these investments  
were 260 000 shares and 50 000 warrants of Wireless acquired between 1996 and 2004 for a  
total cost of approximately $650 000 (including commissions) as follows:  
in December 1996 initial purchase of 20 000 Wireless shares at a price of $1.00  
per share at a cost of $20 000.  
in March 1997 3600 Wireless shares purchased at $1.18 per share at a cost  
(commissions included) of $4323.  
over an eight-day period 4000 Wireless shares purchased at a cost of $13 985:  
on 29 December 1998 2300 Wireless shares purchased at $3.50 per share  
at a cost of $8200;  
on 30 December 1998 700 Wireless shares purchased at $3.50 per share at  
a cost of $2450;  
on 4 January 1999 200 Wireless shares purchased at $3.25 per share at a  
cost of $735;  
on 5 January 1999 800 Wireless shares purchased at $3.25 per share at a  
cost of $2600.  
over a three-day period in May 2000 15 000 Wireless shares purchased at a cost  
of $206 247.50 at prices ranging from $13.50 to $14.00 (the shares had been  
trading upwards of $21 per share shortly before).  
a little over a year later on three days between mid-July and mid-August 2001 (the  
start of a four-and-a-half year dramatic decrease in the price of Wireless shares)  
an additional 52 000 Wireless shares purchased at a cost of $108 205 at prices  
ranging from $1.80 to $2.20. On 23 October 2001 50 000 Wireless warrants were  
purchased at $2.00 per warrant at a cost of $100 000.  
a little over a year later in July (23 000 shares), August (50 000 shares) and  
November (40 000 shares) 2002 an additional 113 000 Wireless shares purchased  
at a cost of $165 745 at prices ranging from $1.00 to $2.03.  
in February 2004 and December 2004 three separate purchases acquiring an  
additional 52 400 Wireless shares at a cost of $31 675 at prices ranging from  
$0.55 to $1.60.  
between July 2001 and December 2004, with an additional 217 400 Wireless  
shares purchased at a cost of $305 625, Landsiedel reduced his overall cost per  
share to $2.12 or averaged down his Wireless investment by 63% as illustrated in  
the following table:  
Accum.  
Shares  
20,000  
23,600  
25,900  
26,600  
26,800  
27,600  
32,600  
35,100  
37,300  
39,000  
40,000  
42,600  
Cost Per  
Share  
$1.00  
$1.03  
$1.26  
$1.31  
$1.33  
$1.39  
$3.26  
Trade date  
Bought  
Price  
Cost  
13-Dec-96  
06-Mar-97  
29-Dec-98  
30-Dec-98  
04-Jan-99  
05-Jan-99  
10-May-00  
11-May-00  
11-May-00  
12-May-00  
12-May-00  
12-May-00  
Subtotal  
20,000  
3,600  
2,300  
700  
$ 1.00  
$ 1.18  
$ 3.50  
$ 3.50  
$ 3.25  
$ 3.25  
$13.50  
$13.50  
$13.60  
$13.90  
$13.95  
$14.00  
$ 20,000.00  
$ 4,323.00  
$ 8,200.00  
$ 2,450.00  
200  
800  
$
735.00  
$ 2,600.00  
$ 68,000.00  
5,000  
2,500  
2,200  
1,700  
1,000  
2,600  
42,600  
$ 64,182.50  
$4.57  
$5.74  
$ 74,065.00  
$244,555.50  
10-Jul-01  
24-Jul-01  
13-Aug-01  
18-Jul-02  
19-Jul-02  
01-Aug-02  
26-Nov-02  
04-Feb-04  
23-Dec-04  
29-Dec-04  
Subtotal  
20,000  
30,000  
2,000  
20,000  
3,000  
50,000  
40,000  
2,400  
24,500  
25,500  
217,400  
62,600  
92,600  
94,600  
114,600  
117,600  
167,600  
207,600  
210,000  
234,500  
260,000  
$ 2.20  
$ 2.00  
$ 1.80  
$ 1.50  
$ 1.57  
$ 1.00  
$ 2.03  
$ 1.60  
$ 0.55  
$ 0.55  
$ 44,220.00  
$ 60,300.00  
$ 3,685.00  
$ 30,150.00  
$ 4,795.00  
$ 50,000.00  
$ 80,800.00  
$ 3,925.00  
$ 13,600.00  
$ 14,150.00  
$305,625.00  
$4.61  
$3.77  
$3.73  
$3.34  
$3.30  
$2.61  
$2.50  
$2.49  
$2.29  
$2.12  
Total  
260,000  
$550,180.50  
[303] Similarly, in or around 1998 Landsiedel purchased 400 000 shares of Drilcorp at $0.50  
per share at a cost of $200 000. In a 20-month period in 2004 to 2005 Landsiedel purchased a  
further 254 500 Drilcorp shares at prices ranging from $0.28 to $0.37 per share at a total cost of  
$89 961. These additional purchases reduced his cost per share from $0.50 to $0.4430, an 11%  
reduction as illustrated in the following table:  
Accum.  
Shares  
Cost Per  
Share  
Trade date  
Bought  
Price  
Cost  
1998  
400,000  
400,000  
$0.50  
$200,000  
$0.5000  
Subtotal  
400,000  
$200,000  
03-Feb-04  
24-Feb-04  
08-Nov-04  
08-Nov-04  
08-Aug-05  
26-Oct-05  
Subtotal  
1,500  
3,500  
401,500  
405,000  
445,000  
455,000  
554,500  
654,500  
$0.28  
$0.28  
$0.30  
$0.30  
$0.36  
$0.37  
$
462  
$0.4993  
$0.4976  
$0.4801  
$0.4764  
$0.4559  
$0.4430  
$ 1,065  
$ 12,125  
$ 3,125  
$ 35,999  
$ 37,185  
$ 89,961  
40,000  
10,000  
99,500  
100,000  
254,500  
Total  
654,500  
$289,961  
[304] In 2004 Landsiedel opened a ScotiaCapital account in his name (the Landsiedel  
Account) through Roy. Landsiedel's investment profile for the Landsiedel Account indicated  
that Landsiedel had moderate knowledge of mutual funds, bonds and stocks; stated his  
investment objectives to be 100% long-term capital appreciation; and described his risk tolerance  
as medium. Eveready was not a company that was followed by ScotiaCapital.  
4.  
Previous Investment in Eveready  
[305] As noted, Landsiedel said that he first learned about Eveready in 2005 when Bert Holtby  
told him and other members of his Arizona golf group about Eveready. Landsiedel said that he  
became interested in Eveready because he "was very familiar with a lot of the things it did" and  
that he "knew from 40 years of experience that this was a very lucrative end of the market".  
[306] From then on Landsiedel followed Eveready. He became aware that Eveready was  
acquiring a number of other companies and therefore was heavily in debt, but that did not  
concern him. Landsiedel, who did not have a computer, had his business partner follow  
Eveready on the Internet. Landsiedel himself would look at Eveready a few times a month to see  
how it was doing review its trading price, financial statements and sales volumes.  
[307] Landsiedel liked Eveready, was familiar with its operations and knew that its sales were  
good. Landsiedel said that he decided to buy Eveready securities if the Eveready Units fell  
below $5 per Unit, from its previous high of $8 or so. He considered that Eveready would be a  
good buy at $5 per Unit. In 2008 Landsiedel took note of the weakening stock markets and that  
a lot of oil companies' share prices had dropped significantly. With the depressed market  
conditions Landsiedel revised his price target to $3 per Unit.  
[308] In summer 2008 Landsiedel first advised Roy that he wanted to buy Eveready Units at a  
price below $3 per Unit. Following this discussion, Roy began following Eveready. Roy  
advised Landsiedel in this period that he viewed Eveready as a highly risky investment because  
it was a small cap company that was exposed to risks in the energy industry.  
[309] On 29 July 2008 Landsiedel instructed Roy to place a limit order to purchase 30 000  
Eveready Units at $2.83 per Unit, which was entered as "Good Til" 28 August 2008. The market  
price at the time was $3.08 per Unit. The limit order was not filled.  
[310] Sometime after 28 August 2008 Landsiedel changed his 29 July 2008 bid price on the  
30 000 Eveready Units, increasing the price from $2.83 per Unit. On 5 September 2008  
Eveready's trading dropped below $3 per Unit and Landsiedel purchased 30 000 Eveready Units  
at an average cost per Unit of $2.881 for a total cost of $86 404. By October the Eveready Units  
had dropped below $2.00 per Unit. On 2 October Landsiedel bought 20 000 Eveready Units at  
$1.80 per Unit; on 6 October he bought another 20 000 Eveready Units at $1.60 per Unit; and on  
10 October another 20 000 Eveready Units at $1.00 per Unit. In slightly more than one month –  
from 5 September to 10 October Landsiedel purchased a total of 90 000 Eveready Units at a  
total cost of $175 284, lowering his average cost per Unit to $1.948 for an accumulated reduction  
of approximately 32%.  
5.  
Circumstances Surrounding 2009 Eveready Share Purchases  
[311] Landsiedel said that his ScotiaCapital account statement received early in 2009 informed  
him that Eveready had completed a 5:1 share consolidation. This information tweaked his  
interest and Landsiedel said that he called Roy to ask him if he knew anything about the  
transaction, but Roy did not.  
[312] On 28 January 2009 Landsiedel telephoned Roy to inquire about Eveready. Roy's  
assistant gave Landsiedel the stock price quote for Eveready. Landsiedel advised her that he  
would "think on it". No further action was taken at that time.  
[313] Roy recalled that it was "quite a bit earlier [than] March" when Landsiedel called him to  
inquire as to whether Roy would give him a discount on the commission charged if he were to  
make a large trade, a purchase of approximately $200 000 worth of securities. Roy believed that  
the intended purchase was for Eveready Shares. It seems likely that this conversation took place  
on 19 February 2009. Roy made a note on that date stating that he spoke to Landsiedel and that  
they "touched base on the market etc." Roy's notes do not refer to any contact between himself  
and Landsiedel at any other time in February 2009, the next documented contact being mid-  
March and involved Roy receiving instructions from Landsiedel to buy Eveready Shares.  
[314] In approximately late February 2009 Landsiedel recalled running into Bert Holtby while  
visiting four friends at his former golf course in Arizona. Landsiedel said that when they were  
leaving the golf course he had an opportunity to speak with Bert Holtby alone and so asked Bert  
Holtby why Eveready had done the 5:1 share consolidation in December 2008. Bert Holtby told  
Landsiedel that he had not been involved in the transaction and so could not comment. Although  
Landsiedel could not specifically recall the conversation, he thought it possible that Bert Holtby  
might have told him that Eveready was doing well, with good sales and profits, as those were  
typically the types of comments he made about Eveready. Landsiedel recalled that Bert Holtby  
seemed "a little elusive" on the subject but that Landsiedel "just left it at that". Landsiedel said  
that he and Bert Holtby did not discuss a potential acquisition involving Eveready at that time or  
ever.  
[315] Bert Holtby's telephone records show a one to two minute telephone call to Landsiedel's  
phone in Arizona on 27 March 2009. There was no evidence as to who placed the call or  
whether an actual conversation took place.  
[316] Landsiedel said that, when he received his ScotiaCapital statement in March 2009, he  
noticed that the Eveready Shares were trading around $3.00 and he began to get interested in  
buying more Eveready Shares. He said that he decided if the Eveready Shares trading price fell  
to $2.50 he would purchase roughly 120 000 more Eveready Shares. His rationale was that he  
already had an approximate $120 000 loss in Eveready and, if he bought an additional 120 000  
Eveready Shares and the trading price increased by only $1.00, he would break even; and after  
that he would make money. Landsiedel acknowledged that it would take quite a bit of money to  
purchase his targeted 120 000 Eveready Shares at $2.50 per Share but, in his world, it was not a  
lot of money and he "had quite a bit of cash sitting on hand".  
[317] Landsiedel called Roy and told him of his plan to purchase more Eveready Shares.  
During that conversation they also determined that the smallest purchase he could make on a day  
and still get a favourable commission was 10 000 to 15 000 Shares. Roy confirmed that his note  
of 19 March 2009 which stated "[s]poke to Ken [sic] trying to get another 15,000 at 2.40 EIS  
unsolicited/ spoke to client over [the] last few days, buying EIS approx. 12,000 at a time,  
2.65/2.50 etc." was in reference to his advice to Landsiedel regarding commission rates.  
[318] There is a conflict in the evidence. Landsiedel said that when the Eveready Shares hit  
$2.50 he contacted Roy to start buying. Trading data for Eveready Shares indicates that the  
Eveready Shares hit a low of $2.350, closing at $2.560 on 2 March 2009 with its trading price  
continually declining until 16 March when the Eveready Shares closed at $2.330. However, it  
was not until 17 March that Landsiedel instructed Roy to make his first purchase of Eveready  
Shares 12 000 Eveready Shares at a price of $2.660. This is consistent with Roy's 19 March  
note referenced above that a few days earlier Landsiedel had contacted Roy regarding purchasing  
12 000 Eveready Shares at a time at prices ranging between $2.65 and $2.50.  
[319] Landsiedel was in continual contact with Roy or his assistant over the next 14-day period  
during which Landsiedel placed orders to purchase Eveready Shares. Landsiedel said that he  
would contact Roy to see what the Eveready Shares were trading at and would then instruct Roy  
to place an order below that price and see if the order would get filled at that price. Landsiedel's  
practice was to enter a bid typically 10 to 12 cents lower than the market price. Sometimes  
the lower price was obtained, and sometimes it was not. On two occasions, Landsiedel raised his  
bid price the same day (one was an uptick bid) and was then successful in acquiring Eveready  
Shares. Landsiedel acknowledged that in March 2009 during the time he was purchasing  
Eveready Shares the stock market was very volatile. Landsiedel said that he was somewhat  
following Warren Buffet's advice, which he quoted as "when there's blood in the street, it's time  
to buy".  
[320] Details of Landsiedel's purchases of Eveready Shares, including the adjusted cost per  
share are summarized in the following table:  
Shares  
Bought  
Accum.  
Shares  
Accum.  
Cost  
Cost Per  
Share  
Trade date  
Price  
Cost  
Opening  
18,000  
$175,320  
$9.740  
Balance (1)  
17-Mar-09  
18-Mar-09  
19-Mar-09  
20-Mar-09  
23-Mar-09  
24-Mar-09  
26-Mar-09  
27-Mar-09  
30-Mar-09  
31-Mar-09  
Subtotal (2)  
Total  
12,000  
18,200  
19,700  
12,000  
15,000  
15,000  
30,000  
15,000  
12,000  
3,000  
30,000  
48,200  
67,900  
79,900  
94,900  
109,900  
139,900  
154,900  
166,900  
169,900  
$2.660  
$2.500  
$2.437  
$2.568  
$2.400  
$2.422  
$2.444  
$2.450  
$2.300  
$2.300  
$ 32,079  
$ 45,728  
$ 48,010  
$ 30,966  
$ 36,180  
$ 36,504  
$ 73,693  
$ 36,934  
$ 27,738  
$ 6,900  
$374,732  
$550,052  
$207,399  
$253,127  
$301,101  
$332,103  
$368,283  
$404,787  
$478,480  
$515,414  
$543,152  
$550,052  
$6.913  
$5.252  
$4.434  
$4.156  
$3.881  
$3.683  
$3.420  
$3.327  
$3.254  
$3.238  
151,900  
169,900  
$3.238  
(1) OpeningBalance: 90,000 EvereadyUnits (30,000 Eveready Units purchasedon 5 September 2008, 60,000 Eveready Units purchased  
on 2, 6 and10 October 2008). After conversion on the basis of 5 Eveready Units for every 1 new Eveready Share, Landsiedel  
received 18 000 Eveready Shares  
(2) Subtotal of Eveready Share purchases of 17 through 31 March 2009  
[321] On 10 trading days between 17 March and 31 March 2009 Landsiedel purchased 151 900  
Eveready Shares for a total cost of $374 732. There was not enough money in the Landsiedel  
Account to cover these purchases so on 25 March Landsiedel wrote a $280 000 cheque to  
ScotiaCapital to pay for the Eveready Share purchases. Landsiedel said that the money came  
from cash he had on hand that he considered to be surplus money.  
[322] Landsiedel explained that a miscommunication between himself and ScotiaCapital on  
whether certain orders had already been filled led to him purchasing a total of 151 900 Eveready  
Shares, 31 900 more than his targeted 120 000 Eveready Shares. Roy offered to re-sell the extra  
31 900 Eveready Shares without charging a commission, but Landsiedel decided they were a  
good buy and kept the Shares.  
[323] Landsiedel acknowledged that his investment of over $370 000 in Eveready over an  
approximate two-week period was the largest amount of securities he had ever purchased in the  
shortest period of time, although he had made comparable or larger investments in dollar  
amounts than that in Eveready, but over a much more extended period.  
[324] Landsiedel explained that his planned purchases of 120 000 Eveready Shares were done  
to accomplish two things: first, increase his equity in Eveready; and second and more  
importantly, average down his per-Share cost in Eveready. When he began purchasing the  
Eveready Shares in March 2009 Landsiedel said that he did not have a specific time frame for  
acquiring the Shares; he just knew the number of Eveready Shares he wanted to buy each day.  
He thought it would take him three or four months and did not anticipate he would acquire the  
Eveready Shares as quickly as he did.  
6.  
Circumstances Surrounding Sales of Eveready Shares  
[325] On 29 April 2009 Roy telephoned Landsiedel to advise him of the Proposed Acquisition  
but Landsiedel was not at home. Roy left a message for Landsiedel to call him back. Landsiedel  
had been in South America from 8 April until 4 May 2009.  
[326] On 5 May 2009 Roy spoke to Landsiedel and advised him of the details of the Proposed  
Acquisition, including associated risks such as currency risk and risks associated with the size of  
the position in his portfolio. Roy said that Landsiedel "seemed surprised, not jumping up and  
down surprised, but surprised" to learn of the Proposed Acquisition.  
[327] Landsiedel said that, while not disappointed about his profit on Eveready, he was not  
ecstatic either. He had believed that Eveready had more potential upside than would result from  
the Proposed Acquisition. Based on Eveready's past performance, Landsiedel said he believed  
that the Eveready Shares could go as high as $20 per Share.  
[328] On 11 May 2009 Landsiedel and Roy discussed the tax implications of the Proposed  
Acquisition. Roy encouraged Landsiedel to contact Marlin to get more information about the  
transaction.  
[329] On 13 May 2009 Landsiedel entered a sell order for 18 000 Eveready Shares at $10.07,  
which was entered with an order duration to mid-June. The sell order remained unfilled and  
appears to have expired by its terms.  
[330] On 3 August 2009, at the advice of Roy, Landsiedel sold 18 000 Eveready Shares  
(approximately 11.8% of the Eveready Shares bought in March and 10.6% of his total Eveready  
holdings) at a price of $10.50 per Share for net proceeds of 188 055.  
[331] On 7 August 2009 Landsiedel's remaining 151 900 Eveready Shares were exchanged for  
19 807 Clean Harbors Shares.  
[332] Landsiedel sold the bulk of his Clean Harbors Shares between August 2009 and  
December 2010, realizing proceeds of approximately $1.3 million.  
[333] At the time of the Merits Hearing Landsiedel still owned 2000 Clean Harbors Shares  
which were trading at approximately $60 per share.  
K.  
Burdeyney  
1. Background Information  
[334] Burdeyney is a Chartered Accountant and a partner with InVision, a local Peace River  
full-service accounting firm.  
2.  
Relationships and Contact with Others  
[335] There is no evidence that Burdeyney knows, or knows of, any of the other Respondents  
other than Bert Holtby, Gayle Walton and Jaschke.  
[336] Burdeyney had known Jaschke, his former partner at InVision, for 36 years at the time of  
the Proposed Acquisition and was a partner with Gayle Walton at InVision. During the Relevant  
period all three individuals worked together at InVision. In 1995, Burdeyney, as a senior  
partner, had hired Gayle Walton as an articling student.  
[337] Since the early 1980s Burdeyney provided accounting and personal tax services to Bert  
Holtby, his personal corporations 216 Alberta and Holtby Holdings and the Holtby family  
trust. Burdeyney also prepared the personal income tax returns for Bert Holtby, his wife and his  
daughters. 216 Alberta held the majority of Bert Holtby's significant shareholdings in Eveready  
and it had a March 31 year-end. Holtby was a long-time client of InVision.  
[338] As part of his providing accounting and tax advice to Bert Holtby and his family,  
Burdeyney knew that Holtby was a director of Eveready and a significant Eveready shareholder  
at all material times. Burdeyney was also familiar with the nature of Eveready's business  
activities in the Peace River area. Neither InVision nor Burdeyney provided accounting services  
to Eveready, EIF or Clean Harbors.  
[339] Burdeyney described his relationship with Bert Holtby as "purely professional" involving  
the occasional golf game but with no other socializing activities. Burdeyney had never been to  
Bert Holtby's homes in either Medicine Hat or Arizona and had never vacationed with him or  
attended family gatherings. Burdeyney said that Bert Holtby typically came to Peace River  
twice a year at Christmas and in the summer to visit one of his daughters and her family.  
Burdeyney said that during those visits Bert Holtby would typically meet with him to review his  
corporate and personal tax and other accounting matters. Burdeyney described Bert Holtby as a  
good client.  
[340] While he had never met Richard Kowalchuk in person and would not know him to see  
him, Burdeyney knew that Richard Kowalchuk was Bert Holtby's investment advisor in  
Medicine Hat. Burdeyney, because of his relationship as Bert Holtby's accountant, had limited  
dealings with Richard Kowalchuk, contacting Richard Kowalchuk, primarily through email  
communications, when he needed clarification or more information about securities trading  
transactions completed in the Holtby Account or to seek other tax-related information. Bert  
Holtby arranged for CIBC to forward to Burdeyney the monthly statements for his trading  
accounts so that Burdeyney would have the information he needed about the securities trading  
activity in those accounts.  
[341] Burdeyney knew Douglas when he resided in Peace River and was employed as a loans  
officer with Alberta Opportunity Company. Burdeyney has had no contact with Douglas since  
Douglas left the Peace River region some 20 years ago.  
3.  
Contact with Bert Holtby in 2008 and 2009  
[342] In December 2008 Burdeyney and Bert Holtby had discussions, both by email and in  
person, about strategies to create a capital loss in 216 Alberta to offset the very large capital gain  
anticipated from its exchange of limited partnerships units for Eveready Units in light of the  
pending corporate conversion of EIF to Eveready. On 5 December 2008 Burdeyney sent Bert  
Holtby an email advising of the need to create a capital loss in 216 Alberta before 31 March  
2009 to offset the anticipated capital gain. On 23 December, when Holtby was in Peace River  
for Christmas, Burdeyney and Bert Holtby met in person to discuss further strategies to deal with  
this issue as well as other corporate and personal matters being handled for Bert Holtby and his  
family. Burdeyney also recalled one telephone call around Christmas 2008. Following this  
meeting, Burdeyney heard nothing further from Bert Holtby as to implementing a strategy to  
deal with 216 Alberta's capital gain.  
[343] Burdeyney and Bert Holtby were in limited contact between January and the end of April  
2009. Burdeyney said that he and Bert Holtby seldom talked on the telephone as most of their  
communications were by email. On 21 January and 9 February 2009 Burdeyney had email  
communications with Bert Holtby discussing various issues arising from Burdeyney's  
preparation of year-end statements for the Holtby Family Trust. In March and April 2009 there  
were three further email communications and one letter on 3 March and 4, 20 and 21 April –  
from Burdeyney to Bert Holtby regarding matters associated with preparation of income tax  
returns for Bert Holtby and his family. Burdeyney recalled one telephone conversation with Bert  
Holtby on 2 February 2009 regarding the Holtby Family Trust; he made notes of that  
conversation on his copy of the email sent to Bert Holtby on 21 January 2009. Burdeyney  
conceded it was possible that there were other telephone calls between him and Bert Holtby  
between January and the end of April 2009.  
4.  
Trading Practices and Activities  
[344] Between January and April 2009 Burdeyney and his wife had at least six securities  
trading accounts, most of which were held with Investors Group Securities Inc. (IG Securities).  
Burdeyney's IG Securities advisor for all IG Securities trading accounts at all material times was  
Stuart Barr (Barr).  
[345] One securities trading account was an IG Securities non-registered investment account in  
the name of Burdeyney and his wife (Account 993), which held shares of publicly traded  
securities and cash. The account opening documentation for Account 993 stated that, at that  
time, their risk tolerance profile was medium to high and their investment objective for the  
account was long-term capital appreciation. Burdeyney agreed that this was an accurate  
depiction of their investment profile at the time. Burdeyney testified that, while the intention  
was to actively trade securities in Account 993, it ended up being a buy-and-hold account with  
very little trading activity. Between October 2006 and April 2009, no new purchases of  
securities were made and Account 993 held the same six equities, with two additional equities  
acquired through corporate reorganizations or distributions. There were no sales of securities in  
Account 993 in that period.  
[346] Most of the investments made by Burdeyney and his wife in their securities trading  
accounts were in mutual funds and money-market funds. As at 31 March 2009 Burdeyney and  
his wife had cash in excess of $200 000 in various accounts available to them for investment  
purposes.  
5.  
Prior Eveready Investment  
[347] In October 2006 Burdeyney made his first purchase of Eveready securities, buying 1000  
Eveready Units at a price of $6.59 per Unit in Account 993. Burdeyney said that he purchased  
Eveready Units for their monthly dividend and potential for upside, which together he expected  
would provide a very good rate of return. Between October 2006 and January 2008 Burdeyney  
received, on average, a $60 monthly dividend from the Eveready Units and, thereafter until  
December 2008, either a stock or cash dividend, increasing his holdings in Eveready Units to  
1096.  
[348] In January 2009 Burdeyney's 1096 Eveready Units were converted to 219 Eveready  
Shares. In August 2009, as a result of the Proposed Acquisition, his Eveready Shares were  
exchanged for 28 Clean Harbors Shares.  
6.  
The TFSAs  
[349] The first year TFSAs were available was 2009.  
[350] On 26 January 2009 Burdeyney and his wife met with Barr to discuss their investments  
and completed the documentation required to open an IG Securities TFSA in the name of  
Burdeyney (the Burdeyney TFSA) and an IG Securities TFSA in the name of Burdeyney's wife  
(the Susan Burdeyney TFSA).  
Burdeyney's investment profile for the Burdeyney TFSA  
identified the purpose of the account as "retirement savings", the investment objective as "100%  
long term growth" and risk tolerance as "high". Burdeyney testified that he told Barr his  
intention was that the Burdeyney TFSA and the Susan Burdeyney TFSA be trading accounts,  
rather than holding only mutual funds because he "had some unit trusts [he] wanted to be  
purchasing in the tax free trading accounts". Barr's notes confirmed this: "[Burdeyney] has a  
unit trust he wants to but [sic] it into". When Burdeyney and his wife opened the Burdeyney  
TFSA and the Susan Burdeyney TFSA, it was intended that Burdeyney would be authorized to  
conduct the trading in the two accounts and that he would invest in the same securities in each  
account.  
[351] There was a delay in opening the Burdeyney TFSA and the Susan Burdeyney TFSA due  
to incomplete paperwork. Burdeyney learned that their TFSA accounts were opened in mid-  
March 2009.  
7.  
Purchases and Sales in Eveready Shares  
[352] Burdeyney said that he decided to purchase Eveready Shares shortly after the Federal  
Government announced the TFSA program. Burdeyney said that he decided to invest the  
maximum eligible amount of $5000 available in the Burdeyney TFSA and the Susan Burdeyney  
TFSA in two stocks Eveready and Parkland Income Fund (Parkland).  
[353] Burdeyney told us that his decision to purchase Eveready and Parkland was based on  
both of them having a visible presence in Peace River and their business activity in the area.  
Burdeyney had opportunity to frequently drive by premises occupied by Eveready and Parkland  
and in 2009 observed that both business were very active and working in the region.  
Burdeyney's investment decision was also influenced, he said, by the fact that both Eveready and  
Parkland paid monthly distributions, which Burdeyney believed would make them a good  
investment in a TFSA. In addition, Burdeyney had reviewed a summary of Eveready's 2009  
financial statements, revealing it to be a reasonably strong company with assets equal to fair  
market value. Burdeyney concluded that there was no downside risk to acquiring Eveready  
Shares, believing them to be undervalued at the time. Burdeyney believed that Eveready would  
continue paying dividends and concluded an investment in Eveready would provide a good rate  
of return with a potential upside.  
[354] The first time that Burdeyney attempted to purchase Eveready Shares was on 31 March  
2009 when he called IG Securities to purchase Eveready Shares in the Burdeyney TFSA.  
Burdeyney learned, to his surprise, that the $5000 in the Burdeyney TFSA had been invested in  
IGI CDN Money Market Series C (the Money-market Fund) with a maturity date of  
16 December 2011 and that it would cost him $180.66 to sell the securities early to obtain money  
to purchase other securities. Burdeyney did not want to incur the early redemption fee. He sent  
Barr a 31 March email asking for an explanation as to why the $5000 had been invested in a  
closed fund when Barr knew that Burdeyney wanted the money "sitting there free for  
[Burdeyney] to trade at any time [he] wished to". Burdeyney learned during those same  
discussions that the Susan Burdeyney TFSA had the same problem. Burdeyney did not recall  
any further discussions with Barr about this matter as there was no urgency involved.  
[355] After a couple of weeks, Barr advised Burdeyney that $5000 was available for use in the  
Burdeyney TFSA. The $5000 in each account was sourced from the sale of the Money-market  
Fund securities on 16 April 2009. Burdeyney said that he never instructed the sale of the  
Money-market Fund but assumed that the sales were completed by IG Securities to correct Barr's  
mistake. Barr also agreed to pay the redemption fees that were charged to the Burdeyney TFSA  
and the Susan Burdeyney TFSA.  
[356] On 15 April 2009 Burdeyney telephoned IG Securities and purchased 1042 Eveready  
Shares at $2.35 per Share at a cost of $2498.70 and 321 Parkland units at a cost of $2497.23 in  
the Burdeyney TFSA. During that call, Burdeyney, intending to purchase the same securities in  
the Susan Burdeyney TFSA, queried whether his wife could verbally authorize him to do so on  
her behalf over the telephone. Burdeyney was advised that his wife, if present, could give a  
"one-time only" verbal authority over the telephone, pending receipt of a signed Trading  
Authorization (the Authorization). Because his wife was not present, Burdeyney was told to  
obtain an Authorization from Barr and have his wife sign it and return it to IG Securities.  
[357] Susan Burdeyney signed the Authorization on 22 April 2009. Burdeyney believed that in  
the evening of 28 April 2009, at a weekly racquetball league game, Barr informed him that the  
Authorization had been processed and that Burdeyney was able to conduct trades in the Susan  
Burdeyney TFSA. In the interim, Susan Burdeyney never contacted IG Securities to make any  
trades in the Susan Burdeyney TFSA or to provide verbal authorization. Burdeyney said he also  
had no further contact with either IG Securities or Barr to hasten the processing of the  
Authorization because Burdeyney said he saw no urgency.  
[358] Approximately one week after Susan Burdeyney signed the Authorization, on 30 April  
2009, Burdeyney traded in the Susan Burdeyney TFSA, using the $5000 to buy 550 Parkland  
units at between $8.97 and $8.99 per unit. He said that he made no purchases of Eveready  
Shares as originally planned because, due to the 29 April 2009 News Release, the trading price  
of the Eveready Shares had increased dramatically and he believed at that time that Eveready  
Shares may have been overpriced.  
[359] It was on 29 April 2009 when he read the 29 April 2009 News Release posted on his  
Globe Investor account watch list that Burdeyney said he first learned of the name Clean  
Harbors and of the Proposed Acquisition. Burdeyney testified that prior to reading the 29 April  
2009 News Release he had no knowledge of the Proposed Acquisition. Further, he denied being  
told by Bert Holtby at any time anything about Eveready being "in the midst of negotiations for a  
sale", a "candidate for a takeover or a sale or in the throes of a sale with a third party" or words  
to the effect "sounds like there might be a deal or a merger".  
[360] On 30 April 2009 Burdeyney sold the Burdeyney TFSA's Eveready Shares for $10.45 per  
Share for net proceeds of $10 769.12. Burdeyney acknowledged that his buying and selling of  
Eveready Shares in a little over 15 days was not reflective of the buy-and-hold strategy that he  
had utilized with his other securities holdings.  
8.  
Discussions with Gayle Walton about Eveready  
[361] Burdeyney denied that Bert Holtby ever told him something or words to the effect  
"sounds like there might be a deal or a merger". Asked if he told Gayle Walton in late February  
or early March 2009 that "there sounds like there might be a deal or a merger" or words to that  
effect, Burdeyney testified: "I don't recall the conversation." Burdeyney said he "had no  
knowledge" of any pending sale or acquisition of Eveready by Clean Harbors or anyone else at  
the time. Further, Burdeyney said that he never recommended or encouraged Gayle Walton to  
purchase Eveready Shares prior to 29 April 2009.  
9.  
Discussions with Jaschke about Eveready  
[362] Burdeyney testified that the practice at InVision was to have all income tax returns  
reviewed by another Chartered Accountant. Burdeyney said that InVision's practice also called  
for the reviewing accountant to initial the office copy of the standard-form letter that was sent to  
the client enclosing the client's income tax return.  
[363] In the case of Holtby's 2008 personal income tax return, it was prepared by Burdeyney  
and reviewed by Jaschke, an associate at InVision at the time. Burdeyney liked to have Jaschke  
review Bert Holtby's 2008 personal income tax return because "[Jaschke's] an investor and he  
knows a lot about investments and the tax implications of investment income". A 21 April 2009  
InVision letter to Bert Holtby enclosed his 2008 personal income tax return with Jaschke's initial  
above Burdeyney's name as the identified signatory. There is no evidence of any direct  
communication between Burdeyney and Jaschke at this time.  
[364] Burdeyney testified that he never told Jaschke anything in relation to a potential deal or a  
merger between Eveready and another party because he never had anything to tell him. Further,  
Burdeyney said that he never recommended or encouraged Jaschke to purchase Eveready Shares  
prior to 29 April 2009.  
L.  
Gayle Walton  
1. Background Information  
[365] Gayle Walton is a Chartered Accountant and a partner at InVision in Peace River, with an  
accounting practice focused on the agricultural sector.  
[366] Thane Walton was, at all material times, Gayle Walton's husband.  
2.  
Relationships and Contact with Others  
[367] There is no evidence that Gayle Walton knows, or knows of, any of the other  
Respondents other than Bert Holtby, Burdeyney and Jaschke.  
[368] Gayle Walton had been hired by Burdeyney as an articling student with InVision. Gayle  
Walton had been partners with Burdeyney and Jaschke at InVision. She continued to work with  
them at InVision after the two men left the partnership to become InVision associates. She  
described her relationship with both Burdeyney and Jaschke as "very business-like" and, in  
explaining why they never socialized outside the workplace, cited their differences in age, family  
status and outside interests. Gayle Walton said that she never discussed her family finances or  
investments with either Burdeyney or Jaschke.  
[369] Gayle Walton testified that Burdeyney had never recommended any stocks or other  
investments to her. Specifically, Gayle Walton denied that Burdeyney had ever recommended or  
encouraged her to purchase Eveready Shares.  
[370] Gayle Walton told us she had no relationship with Bert Holtby and had never met him.  
Gayle Walton did know that Bert Holtby was a long-time client of InVision and that Burdeyney  
provided the accounting work for Bert Holtby. Gayle Walton knew that Eveready was not a  
client of InVision. Gayle Walton testified that she did know Bert Holtby was a trustee and then a  
director of Eveready. She also said that, although she did not know for certain that Bert Holtby  
continued to be a director of Eveready in 2009, she had no reason to think otherwise.  
3.  
Trading Practices and Activities  
[371] Gayle Walton testified that in their family Thane Walton was in charge of investments.  
She said that Thane Walton was the one who made the investment decisions, and he did the  
buying and selling of securities on behalf of both of them.  
[372] In 2009 Gayle Walton and Thane Walton had four trading accounts that are relevant to  
this proceeding:  
a TD Waterhouse spousal RRSP account in the name of Gayle Walton (the Gayle  
Walton RRSP Account) opened in 1996 with Thane Walton holding a power of  
attorney over the account;  
a TD Waterhouse joint investment account in the names of Gayle Walton and  
Thane Walton (the Galleon Account) opened in May 2008 that was to hold  
investments purchased from money earned from selling securities of Galleon  
Energy Inc. (Galleon) obtained by Thane Walton through stock options granted  
from his consulting arrangement with Galleon;  
a TD Waterhouse non-registered investment account in the name of Thane  
Walton (the Thane Walton Account) with Gayle Walton holding a power of  
attorney over the account; and  
a TD Waterhouse TFSA in the name of Thane Walton (the Thane Walton  
TFSA) opened in 2009.  
4.  
Prior Investment in Eveready  
[373] Gayle Walton and Thane Walton first invested in Eveready in 2006 when Thane Walton  
purchased 8000 Eveready Units in the Thane Walton Account for a total net cost of $48 935.  
Gayle Walton had suggested to Thane Walton that they buy Eveready Units because she had  
learned EIF was paying a cash distribution that approximated a return of about 8%.  
[374] By December 2008 the Thane Walton Account held 8774 Eveready Units with a market  
price of $1.10 per Unit, the additional 744 Eveready Units acquired from EIF through "in-kind"  
distributions.  
[375] In December 2008 Gayle Walton recommended to Thane Walton that the Eveready Units  
in the Thane Walton Account be sold to trigger a capital loss and free up money for Thane  
Walton to make an RRSP contribution. This capital loss, Gayle Walton told us, would offset a  
$460 000 anticipated capital gain realized from Thane Walton's exercise of Galleon stock options  
(and presumably resulting sales of Galleon shares) in the Galleon Account earlier that year.  
Gayle Walton testified it was their intention that Thane Walton would repurchase Eveready  
securities at a later date, which Gayle Walton believed at the time had to be 60 days after the  
initial sale in order to avoid running afoul of the stop-loss tax rules. Gayle Walton said that she  
and Thane Walton did not discuss how many Eveready Shares they would repurchase but she  
thought they would re-invest approximately $10 000 in Eveready.  
[376] On 30 December 2008 Thane Walton sold the entire EIF position in the Thane Walton  
Account 8774 Eveready Units for proceeds of $8264, at a loss of approximately $43 000.  
[377] According to Gayle Walton, in late February or early March 2009 she learned that the  
stop-loss tax rules require a hold of 60 days but with the period beginning 30 days before the  
disposition and ending 30 days after the disposition. This meant that Thane Walton could have  
repurchased the Eveready Shares in late January 2009. Gayle Walton said that she never advised  
Thane Walton of this because the stop-loss tax rules no longer applied to the Eveready Units as  
the 30-day period had expired.  
[378] Gayle Walton had expected the profit ultimately arising from the exercise of the Galleon  
options to be taxed as a capital gain because Thane Walton had not been an employee of Galleon  
and no income tax had been withheld by Galleon as would have been required had any gain  
ultimately been realized from the exercise of an employee stock option. To Gayle Walton's  
surprise, she told us, Thane Walton received a T4 from Galleon in late February 2009 which  
recorded the Galleon stock option share profit as employment income. As a result, the profit  
could not be offset by the EIF capital loss. Thane Walton ultimately claimed the EIF capital loss  
in the 2010 taxation year.  
[379] In January 2009 Thane Walton transferred $9718 from the Thane Walton Account as a  
contribution to the Gayle Walton RRSP Account. Gayle Walton's RRSP Account had a cash  
value of $13 000 as of January 2009.  
5.  
Knowledge of the Proposed Acquisition  
[380] In her 3 November 2010 Investigative Interview, Gayle Walton (under oath and  
represented by counsel) gave the following evidence regarding her knowledge of the Proposed  
Acquisition:  
Q
Ms. Walton, are you aware that on March 2 of 2009, [Eveready], and [Clean Harbors]  
signed a letter of intent with the purpose being to follow up on discussions of the parties  
concerning the interest of Clean Harbors in acquiring all the outstanding shares of  
Eveready?  
A
Q
A
I was not aware of all those details that you listed.  
What details were you aware of?  
I was told that there sounds like there might be a deal or a merger, and I cannot remember  
the exact words, but that's the gist of it.  
Q
Who told you that?  
A
Q
A
Q
A
Ken Burdeyney.  
When did he tell you that?  
I don't recall the day that he told me that.  
Do you recall the month?  
But yeah, I mean it was around the end of February, beginning of March so it would have  
been some time last week of February, first week of March.  
Q
A
Did it provide you any comfort?  
Provide me any comfort? Not really. You know, I didn't know if a merger necessarily  
meant, you know, more money for the -- like you know, a buyout of X dollars, I -- you  
know, I didn't know what exactly that -- the impact that would have.  
Q
A
Impact on what?  
Well, if that would impact the price, if that would, you know -- if that was even -- if that  
has happening, if that was true, how far along the negotiations were. I really didn't know  
and I didn't ask any -- I didn't ask Ken any questions about it.  
[381] Gayle Walton in her testimony elaborated on this information from Burdeyney. She  
explained that during her Investigative Interview she had guessed when it had been conveyed. In  
preparation for the Merits Hearing, she had reviewed her records and was quite certain that the  
latest date this information could have been conveyed was Friday 27 February 2009. She  
recalled that the information had not been conveyed in her meeting with Burdeyney in which  
they discussed the stop-loss rules and other tax implications involving Eveready Shares held by  
one of her clients. Rather, she recalled that Burdeyney "was walking by my office and he poked  
his head in" and made the five-second passing "scant comment" with not much "substance or  
detail". Gayle Walton in her testimony described it as a "comment", not a conversation –  
"Conversation meaning that I would -- we would have dialogue back and forth and that's not how  
it was." Gayle Walton testified that she did not remember the exact words used by Burdeyney  
and that her words in the transcript "sounds like there might be a deal or merger" were not his  
exact words, with her now only remembering him saying "might be" and "deal".  
[382] Gayle Walton testified that Burdeyney did not indicate the source of his information. She  
also did not recall Burdeyney specifically referencing Eveready or Clean Harbors when he made  
the comment, saying anything about Eveready buying or selling, any talk of status of  
negotiations or any particular timing. She said that, because they had shortly before been  
discussing the stop-loss rules concerning the conversion of Eveready Units to Eveready Shares  
for one of her clients, from those circumstances she "took it to mean that [Eveready] was what he  
was talking about". Gayle Walton testified that at the time of her Investigative Interview she had  
assumed the "deal" Burdeyney was referring to was the Proposed Acquisition because:  
. . . I did make that leap or that connection in my mind that what [Burdeyney] was referring to  
back at the end of February was an Eveready deal when -- when the comment was made. And  
then two months later Eveready actually does make a deal. It's -- it -- that was the leap I made in  
my mind that this must be the same thing.  
[383] Gayle Walton said that she was not aware of any negotiations between Eveready and  
third parties, nor that Eveready was going to be acquired by a third party. Gayle Walton said that  
Burdeyney never mentioned Clean Harbors to her. The first time Gayle Walton learned of Clean  
Harbors was when one of her clients faxed her the 29 April 2009 News Release.  
[384] Gayle Walton said that she passed on Burdeyney's comment that there "might be a deal  
with Eveready" to Thane Walton around the same time as she had been told on or about  
27 February 2009 and certainly not later than 1 March 2009. Gayle Walton said that there was  
not much discussion between her and Thane Walton concerning Burdeyney's comment. Gayle  
Walton reiterated that at the time she told her husband this information she had been proceeding  
on her assumption that Burdeyney had been referring to Eveready. Gayle Walton confirmed that  
she gave Thane Walton this information before he made his first repurchase of Eveready  
securities on 4 March 2009.  
6.  
Purchases and Sales of Eveready Shares  
[385] Between 4 and 9 March 2009 Thane Walton purchased 9000 Eveready Shares through  
the Gayle Walton RRSP Account for a total cost (commissions included) of $21 586.  
[386] Between 11 March and 13 March 2009 Thane Walton purchased 2000 Eveready Shares  
through the Thane Walton TFSA for a total cost (commissions included) of $3648. Following  
these purchases, there was a positive cash balance of $1352.  
[387] On 30 April 2009 Thane Walton sold all the Eveready Shares 9000 in the Gayle Walton  
RRSP Account and 2000 in the Thane Walton TFSA at a share price of $10.45, for total net  
proceeds of $114 620.  
M.  
Thane Walton  
[388] Thane Walton did not testify during the Merits Hearing. On 3 November 2010 Thane  
Walton (under oath and represented by counsel) was interviewed under oath by Staff pursuant to  
a summons issued under section 41 of the Act.  
[389] In his Investigative Interview, Thane Walton gave the following evidence:  
He did not know any officers, directors or employees of Eveready.  
He was employed by Galleon until around 2008.  
He had owned Eveready securities for approximately three years until December  
2008 when he and Gayle Walton sold all their Eveready securities to trigger a loss  
to offset money earned from his sale of Galleon options. They had planned to buy  
back Eveready Shares in approximately 60 days in accordance with Gayle  
Walton's tax plan.  
He purchased Eveready Shares in March 2009 because "we were over our -- the  
time, the waiting period, the 60 days, and the price", the "price was cheap".  
In March 2009 he believed that Eveready Shares were "very, very attractive"  
because they "split five to one", their trading price had declined by a further 60%  
and they "were just so undervalued, it was incredible". He bought the Eveready  
Shares in March 2009 because the price "was so cheap. We were buying them  
back."  
Other than from Gayle Walton, he had not heard any rumours from any other  
source with respect to the potential take-over of Eveready.  
He was unaware of the Letter of Intent or of any information about the Proposed  
Acquisition.  
He had heard the name Bert Holtby in Peace River.  
He placed the purchase and sell orders for the 9000 Eveready Shares in the Gayle  
Walton RRSP Account and for the 2000 Eveready Shares in the Thane Walton  
TFSA.  
N.  
Jaschke  
1. Background Information  
[390] Jaschke is a Chartered Accountant from Peace River. In 1980 Jaschke became a partner  
with a predecessor accounting firm to InVision but ceased to be a partner in 2005. Thereafter, he  
continued to work as a Chartered Accountant with InVision, specializing in the oil field  
contracting, energy, farming and automotive sectors.  
2.  
Relationships and Contact with Others  
[391] There is no evidence that Jaschke knows, or knows of, any of the other Respondents  
other than Bert Holtby, Burdeyney and Gayle Walton.  
[392] During the Relevant Period, Jaschke worked with both Burdeyney and Gayle Walton at  
InVision. Jaschke said that when he ceased to be a partner in InVision he no longer attended  
partners' meetings, which would have included InVision partners Burdeyney and Gayle Walton.  
[393] In 2009 Jaschke knew Bert Holtby was a long-time client of InVision and Burdeyney.  
Jaschke provided accounting services at Burdeyney's request to some of Burdeyney's clients, one  
of whom was Bert Holtby. However, Jaschke said he had never had a conversation with Bert  
Holtby, other than to say "hello" to him at InVision's office.  
[394] Jaschke knew that Bert Holtby had sold his company, United Services, to Eveready quite  
some time ago. Jaschke also knew that Bert Holtby was a shareholder of Eveready but said that  
he knew nothing more about Bert Holtby's relationship with Eveready. Jaschke said that he did  
not know Bert Holtby was a director of Eveready.  
3.  
Investment History  
[395] Jaschke described himself as an experienced investor. He said he first became interested  
in the capital markets in the 1980s after attending an investment conference. Since the 1980s he  
has subscribed to the Economist magazine and reads various investment newsletters and other  
sources of information on investing. He told us that he also conducts his own research on  
potential investments, primarily by reading newsletters and other investment publications,  
including Globe Investor, that provide information on publicly traded companies such as  
Eveready.  
[396] In the late 1980s Jaschke began using Keefe at RBC as his investment advisor. Jaschke  
continued to conduct his own research, particularly on smaller companies that were not covered  
by RBC. Eveready was not a stock followed or recommended by Keefe or RBC.  
[397] Jaschke opened three accounts through Keefe, one of which was a margin managed  
securities trading account in the name of Jaschke (the Jaschke Margin Account).  
[398] Jaschke said that he had followed Eveready since 2005, when it was still EIF. Eveready  
was one of the stocks he had on his Globe Investor list, which he looked at on occasion. Jaschke  
said that before 2009 he never purchased any Eveready Units because he believed they were  
overvalued and their trading price was more than he wanted to pay. He recalled that Eveready  
Units were trading around the $4 range and that they continued to rise in price. However, he  
continued to follow Eveready because "Eveready seemed to be able to pull those management  
people together" and Jaschke believed that Eveready "seemed to be well-managed".  
[399] In February 2009 Jaschke met with Keefe to discuss opening his own online trading  
account because he did not believe he was getting value from his managed accounts. On  
13 March 2009 Jaschke opened two trading accounts: an RBC direct investing account (the  
Jaschke Direct Trading Account); and an RBC direct investing TFSA (the Jaschke TFSA).  
Jaschke intended to transfer some securities from the Jaschke Margin Account to the Jaschke  
Direct Trading Account.  
4.  
Purchases and Sales of Eveready Shares  
[400] In March 2009 Jaschke, looking for investments for the Jaschke TFSA, reviewed a  
number of investment publications' recommendations. One of those newsletters, "The 12%  
Letter", recommended income trusts with the potential for appreciation and that paid a good  
return. One specific recommendation was the income trust Peyto Energy Trust (Peyto). Jaschke  
concluded that the investments in the Jaschke TFSA should be "stocks that were going to . . .  
climb over time and -- and provide a capital gain-type return".  
[401] On 20 March 2009 Jaschke bought 500 units of Peyto for $7.45 per unit in the Jaschke  
TFSA, leaving a cash balance of $1246 in the account.  
[402] The 12% Letter had also recommended another income trust, Westshore Terminals  
(Westshore), which Jaschke had considered buying for the Jaschke TFSA but did not purchase  
after reading that Westshore might be affected by a strike. None of the investment reports in  
evidence, including The 12% Letter, mentioned or recommended Eveready as a buy, although  
several other publicly traded oil field services companies were recommended. Jaschke did not  
purchase any of these stocks in 2009.  
[403] Around the same time, Jaschke was reviewing the affairs of a client whose husband  
happened to be an Eveready employee with a registered plan that bought Eveready Shares almost  
monthly. Jaschke said that this information caused him to consider Eveready again, because it  
was also an income trust, so he reviewed his Globe Investor, which told him Eveready was also a  
stock with a depressed stock price.  
[404] On 27 March 2009 Jaschke purchased 400 Eveready Shares at a price of $2.69 per Share  
in the Jaschke TFSA for a total cost of $1104.95. Jaschke explained that he decided to purchase  
Eveready Shares because he believed the Share trading price was reasonable.  
[405] Jaschke acknowledged that prior to his 27 March 2009 purchase of Eveready Shares,  
other than reviewing the information Globe Investor had about Eveready, he had not conducted  
any specific research on Eveready he had not reviewed Eveready's financial statements or other  
continuous disclosure information or reviewed Eveready's debt position, and he did not know  
that Eveready had recently suspended its quarterly dividend.  
[406] On or about 7 April 2009 Jaschke said he reviewed the April 2009 edition of the monthly  
newsletter "S&A Oil Report", which opined that oil service companies would go up in value due  
to rising oil prices. At the time Jaschke knew that Eveready was in the oil service sector and was  
actively engaged in that business in northern Alberta.  
[407] On 21 April 2009 Jaschke reviewed for accuracy Bert Holtby's and his wife's 2008  
annual income tax returns that had been prepared by Burdeyney. Jaschke said that Burdeyney  
designated him as the reviewer because Bert Holtby's income tax return contained complicated  
investment information that Jaschke with his investment knowledge would better understand.  
Jaschke said that he was frequently asked by other accountants at InVision to review income tax  
returns that contained a lot of investment information.  
There apparently was no direct  
communication between Burdeyney and Jaschke about this Jaschke testified that income tax  
returns for his review "would show up on the corner of my desk". Jaschke said that the many  
references to Eveready in Bert Holtby's income tax return reminded him of his Eveready  
investment.  
[408] That same night Jaschke checked the Jaschke TFSA online and learned that the Eveready  
Shares had increased in value by almost 25% in less than one month. Based on that information,  
coupled with the knowledge that analysts were predicting increased values for oil service  
companies, Jaschke said that he decided to buy more Eveready Shares.  
[409] Jaschke said that he intended to buy the Eveready Shares on Monday 27 April 2009 but  
was too busy with work throughout the day to do so.  
[410] On 28 April 2009 Jaschke phoned Keefe to purchase 1600 Eveready Shares in the  
Jaschke Margin Account. Keefe was out of the office so Jaschke dealt with Keefe's colleague  
Singh. Singh said that she had not heard of Eveready so she had to look it up and then gave  
Jaschke a quote as to Eveready's trading price. Jaschke requested that Singh purchase 1600  
Eveready Shares in the Jaschke Margin Account, and Singh executed the purchase at $3.48 per  
Share for a total cost (commission included) of $5715.55. That same day Jaschke placed an  
online order to purchase in the Jaschke Direct Trading Account 400 Eveready Shares at $3.48  
per Share for a total cost (commission included) of $1420.95.  
[411] Jaschke had two explanations for his two separate purchases of Eveready Shares in two  
different trading accounts on the same day, 28 April 2009.  
[412] Jaschke testified that he wanted to own a total of 2000 Eveready Shares because he liked  
round numbers; all of the investments he personally made were in "round numbers". In his  
27 October 2010 Investigative Interview, Jaschke (under oath and not represented by counsel)  
explained that he bought 1600 Eveready Shares in the Jaschke Margin Account because he  
believed that was the maximum margin amount available to him. He said that he then bought  
400 more Eveready Shares in the Jaschke Direct Trading Account to round off his purchase to a  
total of 2000 Eveready Shares.  
[413] At the Merits Hearing Jaschke testified that he bought 1600 Eveready Shares in the  
Jaschke Margin Account because he intended to transfer the 400 Eveready Shares in the Jaschke  
TFSA to the Jaschke Margin Account, which would result in 2000 Eveready Shares held in one  
trading account. He called Singh to purchase Eveready Shares. During their conversation she  
reassured him that he had sufficient margin to purchase 1600 Eveready Shares. However, during  
his conversation with Singh, Jaschke realized that he could not transfer the 400 Eveready Shares  
from the Jaschke TFSA, so he decided to purchase an additional 400 Eveready Shares in the  
Jaschke Direct Trading Account and then transfer the 1600 Eveready Shares purchased in the  
Jaschke Margin Account to the Jaschke Direct Trading Account, giving him an even 2000  
Eveready Shares in one trading account. Jaschke explained that he did this because Eveready  
was not the type of stock that he and Keefe had agreed should be in the Jaschke Margin Account.  
Singh did not recall the discussion with Jaschke regarding margin availability.  
[414] On 29 April 2009 Singh called Jaschke to advise him that the trading price of the  
Eveready Shares had risen by approximately $7 from the day before and advised Jaschke of the  
Proposed Acquisition, with Clean Harbors offering approximately $10 per Eveready Share.  
Singh said that Jaschke sounded surprised "he was unaware" of the Proposed Acquisition.  
Jaschke asked who Clean Harbors was and Singh told Jaschke that Clean Harbors was a  
company from the US.  
[415] Jaschke said he was not pleased that Clean Harbors was a US company he did not like  
owning US stocks as he had lost money with US investments over the years owing to currency  
fluctuations. Singh recalled Jaschke telling her that he did not want to own any US stocks, "have  
US exposure, so he made the decision to sell the security".  
[416] Jaschke said that he initially believed he owned shares of a US company until Singh  
advised him that the Eveready Shares were still trading on the TSX. Singh confirmed that  
Jaschke had not asked her to conduct any research on the Proposed Acquisition or to determine if  
the Shares would be trading on the TSX.  
[417] During their conversation that morning 29 April 2009 Jaschke instructed Singh to sell  
all of the 1600 Eveready Shares in the Jaschke Margin Account. Jaschke stated that, in addition  
to his aversion to owing foreign securities, his reason for selling was that:  
. . . a $3 or $4 share, and all of a sudden, somebody's willing to pay $10. . . . I'd never seen  
something quite like that, and that kinda concerned me, as well, because I didn't know, okay, you  
know, what happens next after that sorta thing?. . . I thought it was a really high price.  
[418] Singh, as instructed, sold Jaschke's entire Eveready position in the Jaschke Margin  
Account at $10.07 per Share for total net proceeds of $15 749.48. Shortly thereafter that same  
day, Jaschke sold his entire positions in both the Jaschke Direct Trading Account and the Jaschke  
TFSA 400 Eveready Shares at $10.04 for total net proceeds of $3987.05, and 400 Eveready  
Shares at $10.07 for total net proceeds of $3999.05.  
5.  
Knowledge of the Proposed Acquisition  
[419] Jaschke testified that between his first purchase of Eveready Shares on 27 March 2009  
and his last purchase on 28 April 2009 he had not spoken with Bert Holtby, Burdeyney, Gayle  
Walton or anyone else about Eveready and had not known that either Burdeyney or Gayle  
Walton had purchased Eveready Shares. Jaschke specifically denied being told anything by  
Burdeyney regarding Eveready being for sale or the Proposed Acquisition between January and  
29 April 2009. Jaschke also denied that Burdeyney recommended or encouraged him to  
purchase the Eveready Shares he purchased.  
[420] Further, Jaschke testified that when he purchased the Eveready Shares he had no  
knowledge about the Proposed Acquisition or that Eveready was involved in a transaction with  
Clean Harbors. Jaschke testified that he had never heard of Clean Harbors until his conversation  
with Singh on 29 April 2009.  
O.  
Tanner  
1.  
Background Information  
[421] In 2009 Tanner, a resident of Banff, Alberta, and a successful businessman, had a  
significant net worth, much of which was held in liquid assets.  
2.  
Relationships and Contact with Others  
[422] There is no evidence that Tanner knows, or knows of, any of the other Respondents other  
than Bert Holtby and Randy Kowalchuk.  
[423] Tanner and Randy Kowalchuk are friends and both had residences in the same town in  
British Columbia, where Randy Kowalchuk resided and Tanner had a summer home. It was  
Randy Kowalchuk who invited Tanner to attend the Political Fundraiser in May 2008 that Randy  
Kowalchuk and his business partner organized.  
[424] Tanner told us that it was at the Political Fundraiser that he first met Bert Holtby. Before  
that event Tanner received two emails from Richard Kowalchuk about Bert Holtby.  
[425] The first email Tanner received from Richard Kowalchuk was on 14 May 2008 and  
stated:  
As per conversation with Randy [Kowalchuk] he explained you would be okay with a couple of  
more guys coming back with you.  
I have arranged for [name of individual and his position], Bert Holtby director Eveready Income  
Fund to come back with us. . . . I think you will like all of the guys all straight shooters.  
[426] Tanner testified that this email was in response to a conversation he had wherein he  
mentioned that he would be flying back by himself to Calgary from the Political Fundraiser (as  
his family was unable to accompany him) and would be willing to take a few individuals back  
with him in "his" plane.  
[427] Tanner received a second email from Richard Kowalchuk on 22 May 2008 (which was  
also sent to others including Bert Holtby) to which was attached a short biography for each of six  
individuals including Bert Holtby and Tanner who would be attending a 30-minute meeting  
(the 30-Minute Meeting) with the Federal Minister of Finance at the Political Fundraiser. Bert  
Holtby's biography identified him as a "Trustee and Director of Eveready Income Fund, a TSX  
listed company with a market cap of $340 million, currently retired from active business".  
[428] Bert Holtby, Tanner, Richard Kowalchuk and Randy Kowalchuk attended the Political  
Fundraiser. Tanner also attended the 30-Minute Meeting. Tanner said that he never had any  
discussions with Bert Holtby, and did not have any discussions with either Richard Kowalchuk  
or Randy Kowalchuk about Bert Holtby, at the Political Fundraiser. Tanner said he did not know  
that Bert Holtby was also a client of Richard Kowalchuk, although he knew that they had some  
sort of relationship enough of a relationship that Richard Kowalchuk had invited Bert Holtby  
to the Political Fundraiser.  
[429] After the Political Fundraiser, Tanner flew back to Calgary with Richard Kowalchuk and  
three of his friends. Tanner said that he could not recall the names of Richard Kowalchuk's three  
friends or any particular conversation they might have had on the plane. Tanner noted that he  
does have difficulty remembering names. Tanner told us that he never had any further  
interaction with Bert Holtby after this flight.  
[430] When questioned about a conversation he had with a Staff investigator in January 2010 –  
in which the investigator asked whether Tanner knew of anyone at Eveready and he said he did  
not Tanner explained that at that time he did not believe he knew of Bert Holtby because "I  
have no reason to know him, remember his name, and I didn't. That's just part of me." In his  
24 June 2010 Investigative Interview, Tanner (under oath and represented by counsel) similarly  
said he did not know who Bert Holtby was; however, when shown the mentioned 14 and 22 May  
2008 emails from Richard Kowalchuk, Tanner was able to recall who Bert Holtby was.  
3.  
Trading History and Strategies  
[431] Tanner became involved in the capital markets in or around 1996 or 1997. At the time he  
invested between $30 000 and $40 000 in various companies based on recommendations he  
received from the CEO of the real estate company he owned at the time.  
[432] Tanner explained that his investment strategy is to use licensed brokers from large  
investment firms. He would receive ideas and recommendations from those brokers, which he  
would usually follow. Tanner told us that, when filling out client forms for investment advisors,  
he lists his investment knowledge as fair or good, but not expert.  
[433] Consistent with his investment practice, in or around 2001 following the sale of his real  
estate company, Tanner retained a Calgary investment advisor to act on his behalf in investing  
the significant sale proceeds.  
[434] In 2002 or 2003 Randy Kowalchuk recommended to Tanner that he use his brother  
Richard Kowalchuk as his investment advisor. Shortly thereafter, Tanner began using Richard  
Kowalchuk, who was with CIBC in Medicine Hat, as his investment advisor.  
Richard  
Kowalchuk continued to be Tanner's investment advisor during the Relevant Period.  
[435] Tanner said that because Richard Kowalchuk resided in Medicine Hat most of Tanner's  
contact with Richard Kowalchuk was by telephone. Tanner testified that he has only met  
Richard Kowalchuk on four occasions. The first occasion was at a birthday party for Randy  
Kowalchuk on Vancouver Island. The second occasion was when Tanner's and Richard  
Kowalchuk's families met for dinner in Vancouver. The third occasion was at the Political  
Fundraiser. The fourth occasion was the Canmore Breakfast Meeting.  
[436] Tanner opened four securities trading accounts with CIBC through Richard Kowalchuk:  
an RRSP account in the names of Tanner and his wife; an RRSP account in the name of Tanner  
(the Tanner RRSP Account); a margin account in the name of Tanner (the Tanner Margin  
Account); and an account in the name of Neil D Tanner Properties Ltd. (the Tanner Company  
Account). The client forms associated with the Tanner RRSP Account and the Tanner Margin  
Account listed Tanner's investment knowledge as "good". The client form associated with the  
Tanner Margin Account stated that the investment objective was "100% Short Term" and "100%  
High Risk".  
[437] Consistent with his investment practice, Tanner said that Richard Kowalchuk would  
bring him investment ideas and recommendations, which he mostly followed.  
Tanner  
acknowledged that on occasion he would have his own investment ideas.  
4.  
Previous Investment in Eveready  
[438] Tanner first learned of Eveready in 2005 from Richard Kowalchuk. Tanner said that he  
knew nothing about Eveready's business or financial position and had relied on Richard  
Kowalchuk's advice.  
Following Richard Kowalchuk's advice and recommendation, Tanner  
made the following purchases and sales of Eveready securities.  
[439] On 8 September 2005 Tanner purchased 10 000 Eveready Units at prices between $5.85  
and $5.90 per Unit in the Tanner Company Account for a total cost of $59 598. On  
14 September Tanner sold the 10 000 Eveready Units in the Tanner Company Account at a price  
of $5.55 per Unit, realizing net proceeds of $55 000.  
[440] That same day 14 September 2005 Tanner purchased 10 000 Eveready Units at a  
price of $5.55 per Unit in the Tanner RRSP Account for a total cost of $56 000. On 11 October  
2005 Tanner sold the 10 000 Eveready Units in the Tanner RRSP Account at prices between  
$5.95 and $5.97 per Unit, realizing net proceeds of $59 002.  
[441] On 21 October 2005 Tanner purchased 300 Eveready Units in the Tanner RRSP Account  
at a price of $5.26 per Unit for a total cost of $1678. On 31 October Tanner purchased a further  
4700 Eveready Units at a price of $5.26 per Unit in the Tanner RRSP Account for a total cost of  
$25 037.52. On 30 January 2006 Tanner sold the 5000 Eveready Units in the Tanner RRSP  
Account at prices between $7.50 and $7.70 per Unit, realizing net proceeds of $37 205.80.  
[442] On 10 February 2006 Tanner purchased 7000 Eveready Units in the Tanner RRSP  
Account at prices between $6.54 and $6.65 per Unit for a total cost of $46 534. On 14 February  
Tanner purchased a further 3000 Eveready Units at a price of $6.24 per Unit in the Tanner RRSP  
Account for a total cost of $18 920. On 21 April 2006 Tanner sold 2000 Eveready Units in the  
Tanner RRSP Account at a price of $7.70 per Unit, realizing net proceeds of $15 200. On  
10 May 2006 Tanner sold the remaining 8000 Eveready Units in the Tanner RRSP Account at a  
price of $8.00 per Unit, realizing net proceeds of $63 037.67.  
[443] Tanner did not trade again in Eveready or, he told us, speak again with Richard  
Kowalchuk about Eveready until April 2009. Tanner also told us that he did not follow  
Eveready during that time.  
5.  
[444] Tanner testified that on or around 23 April 2009 Richard Kowalchuk telephoned Tanner  
to discuss Eveready. Tanner testified that during that conversation Richard Kowalchuk  
2009 Eveready Share Purchases and Sales  
recommended Tanner buy Eveready Shares because Eveready was a "possible takeover target"  
and Eveready was "going to go up in value". Tanner said that nothing further was said about the  
possible takeover, including any mention of Clean Harbors. Tanner did not recall Richard  
Kowalchuk telling him that Eveready would be bought out, or using words to that effect.  
Further, Tanner said that during that conversation there was no reference at all to Bert Holtby, no  
discussion about Eveready's financial results and no discussion of any particular party involved  
or timeframe. Tanner said that he had other discussions with brokers about certain issuers being  
a candidate for a takeover and so did not see anything unusual about this conversation with  
Richard Kowalchuk. Tanner said that he then told Richard Kowalchuk to buy Eveready Shares  
for him.  
[445] On 23 April 2009 Tanner instructed Richard Kowalchuk to purchase 10 000 Eveready  
Shares in the Tanner RRSP Account. Richard Kowalchuk followed those instructions and  
10 000 Eveready Shares were purchased on that day at $3.50 per Share for a total cost of  
$35 500.  
[446] Tanner explained how the Canmore Breakfast Meeting came to happen. Richard  
Kowalchuk was in Canmore for another function. Tanner said that Richard Kowalchuk rarely  
came to the Banff area so as he was in the area Tanner thought it would be a good idea to meet  
face-to-face. At the Canmore Breakfast Meeting, Richard Kowalchuk and Tanner discussed,  
among other topics, some of the stocks Tanner had owned and his current shareholdings,  
including Eveready. Tanner testified that near the end of their meeting they discussed whether  
Tanner should buy more Eveready Shares and how much cash Tanner had. Richard Kowalchuk  
advised Tanner: "Don't go overboard. There's no guarantees in these rumors." Tanner disagreed  
that Richard Kowalchuk conveyed his information with a sense of certainty or confidence.  
Tanner then instructed Richard Kowalchuk to purchase more Eveready Shares for him.  
[447] The following day 27 April 2009 Richard Kowalchuk purchased 11 200 Eveready  
Shares in the Tanner Margin Account at prices between $3.45 and $3.90 per Share for a total  
cost of $39 924.  
[448] Thus, on two days near the end of April 2009, Tanner purchased a total of 21 200  
Eveready Shares at a total cost of $74 098, including commissions.  
[449] Tanner testified that, at the times he purchased Eveready Shares in April 2009 and during  
his discussions with Richard Kowalchuk, neither Richard Kowalchuk nor anyone else discussed  
with him or made any reference to Bert Holtby or Bert Holtby's relationship with Eveready.  
Tanner said that he had not associated Bert Holtby with Eveready in any way at this time. He  
also said he did not have any specific information about the potential takeover, including any  
mention about the Proposed Acquisition, Clean Harbors or any other unnamed acquiring entity  
or that Eveready was going to be bought out.  
[450] At some point between 29 April and 1 May 2009 Richard Kowalchuk telephoned Tanner  
to advise him that Eveready had announced the Proposed Acquisition. Following discussions  
with Richard Kowalchuk, Tanner decided to sell some of his Eveready Shares immediately and  
retain some until the closing of the Proposed Acquisition. On 1 May 2009 Tanner sold 1200  
Eveready Shares from the Tanner Margin Account at prices between $10.20 and $10.22 per  
Share for total net proceeds of $11 907.62. On 8 May 2009 Tanner sold a further 2700 Eveready  
Shares from the Tanner RRSP Account at $10.45 per Share for total net proceeds of $27 469.32.  
P.  
Settlement Agreements  
1. The Bratvold Settlement Agreement  
[451] The Bratvold Settlement Agreement included:  
6.  
At all material times, Bratvold was a client of [Richard] Kowalchuk and relied on  
[Richard] Kowalchuk to advise him on securities and execute securities transactions on  
his behalf.  
7.  
On the advice of [Richard] Kowalchuk, Bratvold purchased securities in Eveready  
commencing in 2005.  
The Acquisition of Eveready by [Clean Harbors]  
8.  
So far as Bratvold is aware, Eveready was a corporation incorporated pursuant to the  
laws of Alberta and was at all material times a "reporting issuer" as that termis defined in  
the Act.  
9.  
So far as Bratvold is aware, on April 29, 2009, at 8:00 a.m. Eastern Standard Time,  
Eveready publicly announced that it had signed a definitive agreement to be acquired by  
[Clean Harbors (the Proposed Acquisition)]. Clean Harbors issued a similar press  
release at the same time. This was the first general disclosure of the [Proposed]  
Acquisition.  
Bratvold's Trading in Eveready Shares  
10.  
On April 18, 2009, [Richard] Kowalchuk and Bratvold discussed purchasing Eveready  
[S]hares. Among other things, [Richard] Kowalchuk advised Bratvold that Eveready was  
an attractive candidate for a takeover and it was a good time to buy the stock. [Richard]  
Kowalchuk encouraged Bratvold to purchase Eveready [S]hares, and Bratvold noted that  
[Richard] Kowalchuk was unusually excited about this recommendation.  
11.  
12.  
13.  
Based on the discussion with [Richard] Kowalchuk of April 18, 2009, Bratvold  
purchased 26,300 Eveready [S]hares between April 21, 2009 and April 23, 2009.  
Between April 29, 2009, following the first general disclosure of the [Proposed]  
Acquisition, and May 4, 2009, Bratvold sold 26,300 Eveready [S]hares.  
Bratvold admits that his total profit from his purchases and sales of Eveready [S]hares  
between [April] 21, 2009 and May 4, 2009, as described above, was not less than  
$185,000.00.  
14.  
All of the above constitute the "Admitted Facts".  
Admissions  
15.  
Based on the Admitted Facts outlined above, Bratvold admits:  
a.  
that the [Proposed] Acquisition was not generally disclosed until April 29, 2009;  
b.  
that he traded Eveready securities prior to April 29, 2009, in reliance on the  
information he had received from [Richard] Kowalchuk;  
c.  
that he did not take sufficient steps to ensure, when trading in reliance on the  
information he received from [Richard] Kowalchuk, that such trades were in  
compliance with Alberta securities laws; and  
d.  
that his actions were contrary to the public interest.  
16.  
. . .  
All of the above constitute the Admissions.  
Settlement and Undertakings  
21.  
Based on the Admitted Facts and the Admissions, Bratvold agrees and undertakes to the  
Executive Director of the Commission:  
a.  
to pay $231,250.00;  
b.  
to cease trading in any and all securities and any and all exchange contracts for a  
period of five years from the execution of this Agreement [with certain carve-  
outs; and]  
c.  
to pay $7,000 for costs of the Investigation.  
2.  
The Stock Settlement Agreement  
[452] The Stock Settlement Agreement included:  
2.  
Staff's investigation confirmed and Stock admits that he acted contrary to the public  
interest.  
. . .  
Circumstances  
7.  
On April 20, 2009, Stock purchased through his wife's account 5000 shares of Eveready  
(Trades). Stock made the Trades at or shortly after a discussion he had with his  
Investment Advisor, [Richard] Kowalchuk.  
8.  
Staff . . . compelled Stock to attend at the Commission on April 29, 2010, to be  
interviewed under oath by a statutorily appointed investigator. During the interview Staff  
questioned Stock with respect to: his Trades, the discussion he had with [Richard]  
Kowalchuk at the time of his Trades concerning Eveready, and his knowledge at the time  
of his Trades of a proposed acquisition of Eveready (Transaction).  
9.  
Stock acknowledges he was not candid with Staff in the interview, having failed to fully  
state the details of his discussion with [Richard] Kowalchuk and his level of knowledge  
of Eveready and the Transaction at the time of his Trades.  
Breaches  
10.  
As a result, Stock admits that he acted contrary to the public interest.  
. . .  
Settlement Payments and Undertakings  
12.  
Based on these facts and admissions, Stock undertakes to the Executive Director of the  
Commission upon execution of this Agreement to pay to the Commission:  
12.1  
12.2  
the amount of $10,000 in settlement; and  
the amount of $2,000 towards investigation costs.  
III.  
A.  
ANALYSIS  
Evidentiary Matters  
1. Standard of Proof  
[453] We are tasked with determining whether, on the evidence before us, Staff have proved, to  
the requisite evidentiary standard, the allegations in the NOH. The standard of proof applied in  
Commission enforcement hearings is the balance-of-probabilities civil standard (Re Arbour  
Energy Inc., 2012 ABASC 131 at para. 36).  
[454] In F.H. v. McDougall, 2008 SCC 53, the Supreme Court of Canada confirmed (at  
para. 49) that the balance-of-probabilities civil standard requires the trier of fact to decide  
"whether it is more likely than not that an alleged event occurred". The court also stated (at  
paras. 40, 45-46):  
. . . I think it is time to say, once and for all in Canada, that there is only one civil standard of proof  
at common law and that is proof on a balance of probabilities. Of course, context is all important  
and a judge should not be unmindful, where appropriate, of inherent probabilities or  
improbabilities or the seriousness of the allegations or consequences. . . .  
. . .  
To suggest that depending upon the seriousness, the evidence in the civil case must be scrutinized  
with greater care implies that in less serious cases the evidence need not be scrutinized with such  
care. I think it is inappropriate to say that there are legally recognized different levels of scrutiny  
of the evidence depending upon the seriousness of the case. There is only one legal rule and that  
is that in all cases, evidence must be scrutinized with care by the trial judge.  
. . . evidence must always be sufficiently clear, convincing and cogent to satisfy the balance of  
probabilities test. . . .  
[455] Therefore, in applying the balance-of-probabilities civil standard, "we must be satisfied  
that there is sufficiently clear, convincing and cogent evidence that the existence or occurrence  
of any alleged fact required to be proved is more likely than its non-existence or non-occurrence"  
(Arbour at para. 38). Although the balance-of-probabilities civil standard is undoubtedly a less  
onerous standard than the beyond-a-reasonable-doubt criminal standard, we disagree with Staff's  
characterization of the former as a standard "not difficult to attain".  
[456] Accordingly, in finding that certain allegations set out in the NOH have been proved, we  
have found that the evidence before us is sufficiently clear, convincing and cogent to prove those  
allegations on the balance of probabilities.  
2.  
Circumstantial Evidence  
[457] The evidence led by Staff includes considerable circumstantial evidence. It would not be  
uncommon in cases involving allegations of illegal insider trading, informing, or recommending  
or encouraging for circumstantial evidence to be the only evidence available. In certain  
situations, circumstantial evidence will be sufficient to ground a finding of illegal insider trading,  
informing, or recommending or encouraging.  
[458] In The Law of Evidence in Canada, 3rd ed. (Markham: LexisNexis Canada, 2009), Alan  
W. Bryant, Sidney N. Lederman and Michelle K. Fuerst commented (at para. 2.78):  
In civil cases, the treatment of circumstantial evidence is quite straightforward. It is treated as any  
other kind of evidence. The weight accorded to it depends on the strength ofthe inference that can  
be drawn from it and this is a task for the trier of fact.  
[459] In Watt’s Manual of Criminal Evidence 2012 (Toronto: Thomson Reuters Canada,  
2012), the Honourable Mr. Justice David Watt distinguished between direct evidence and  
circumstantial evidence (at 44-45):  
Direct evidence is evidence which, if believed, resolves a matter in issue. . . . The only inference  
involved in direct evidence is that the testimony is true.  
. . .  
Circumstantial evidence is any item of evidence, testimonial or real, other than the testimony of an  
eyewitness to the material fact. It is any fact from the existence of which the trier of fact may  
infer the existence of a fact in issue. . . .  
[460] However, we agree that "[n]o useful purpose is served by a comparison of the merits of  
direct and circumstantial evidence" (Colin Tapper, Cross and Tapper on Evidence, 12th ed.  
(Oxford: Oxford University Press, 2010) at 30). This is because, as stated by Côté J.A. in  
Lameman v. Canada (Attorney General), 2006 ABCA 392 (reversed on other grounds 2008 SCC  
14) at para. 94: "There can be no general rule about which is stronger, eyewitness testimony or  
inferences from other types of evidence. It all depends on the facts."  
[461] We are entitled to draw inferences from circumstantial evidence provided the inferences  
are reasonably drawn from a proved fact or proved facts. As set out in Watt’s Manual of  
Criminal Evidence 2012 (at 45):  
Where evidence is circumstantial, it is critical to distinguish between inference and speculation.  
Inference is a deduction of fact that may logically and reasonably be drawn from another fact or  
group of facts found or otherwise established in the proceedings. There can be no inference  
without objective facts from which to infer the facts that a party seeks to establish. If there are no  
positive proven facts from which an inference may be drawn, there can be no inference, only  
impermissible speculation and conjecture. [Emphasis in original.]  
[462] "[T]he inferences to be drawn will depend on the nature of the evidence, the further fact  
that is sought to be inferred from that evidence, the positions of the parties, and the totality of the  
evidence"; and "[w]hether an inference can reasonably be supported based on circumstantial  
evidence is variously said to depend on common sense, experience and logic" (McWilliams'  
Canadian Criminal Evidence, 4th ed., vol. 1 (Toronto: Canada Law Book, 2012; loose-leaf  
updated September 2012, release 24) at 28-9 (footnotes omitted)). Moreover, as stated by the  
Ontario Securities Commission (the OSC) in Re Suman (2012), 35 OSCB 2809 (at para. 307):  
. . . Clearly, the more facts and evidence supporting an inference, the stronger and more  
compelling that inference will be. At the same time, however, even when an inference is properly  
drawn, there will always be a gap between the direct evidence and the inference made. The  
existence of that inferential gap does not mean that an inference is simply conjecture or  
speculation. . . .  
[463] To summarize, when drawing an inference from circumstantial evidence, we must ensure  
that the inference is grounded on proved, not hypothetical or assumed, facts and is a reasonable  
one one drawn using common sense, human experience and logic having considered the  
totality of the evidence and any competing inferences. That said, a reasonable inference need not  
be the only inference that can be drawn, nor the one that is most obvious or most easily drawn  
(Suman at para. 308). As for considering the totality of the evidence, as noted in The Law of  
Evidence in Canada, 3rd ed. (at para. 2.77), "[p]ieces of evidence, each by itself insufficient,  
may . . . when combined, justify the inference that the facts exist."  
[464] Circumstantial evidence as to motive may be used, in combination with other relevant  
evidence, to meet the standard of proof necessary to establish a breach of the Act allegedly so  
motivated. However, we are mindful that "[i]t is . . . easy to attach too much weight to evidence  
of motive" (Cross and Tapper on Evidence at 32), and that "[c]aution must be exercised not to  
overemphasize the probative force of inferred motive" (McWilliams' Canadian Criminal  
Evidence at 28-128).  
[465] Circumstantial evidence that a person was in the practice or habit of acting in a certain  
way may justify an inference that the person acted in that way on a particular occasion  
(McWilliams' Canadian Criminal Evidence at 28-124 - 28-125).  
[466] Circumstantial evidence of a respondent's after-the-fact conduct the conduct of a  
respondent following his or her alleged breach of the Act may reflect a consciousness of guilt  
and may reasonably raise an inference of guilt. However, such circumstantial evidence "must be  
analyzed with care and not over-emphasized, as it is easily misinterpreted" and "must not be  
analyzed in isolation, but rather weighed with all of the evidence" in determining whether a  
breach of the Act has been proved (The Law of Evidence in Canada, 3rd ed. at para. 6.436).  
[467] Knowledge of a non-public material fact or material change might be inferred from  
circumstantial evidence (Re Podorieszach, [2004] A.S.C.D. No. 360 at paras. 76-77). For  
example, the OSC ruled in Suman (at para. 307):  
. . . Knowledge of an undisclosed material fact may be properly inferred based on circumstantial  
evidence that includes proof of the ability and opportunity to acquire the information combined  
with evidence of well-timed, highly uncharacteristic, risky and highly profitable trades. . .  
[468] Finally, we disagree with Staff that Re Keith, 2012 ABASC 382 applied an incorrect  
standard for the use and application of circumstantial evidence. As we understand Keith, the  
hearing panel did not draw the inferences sought by Staff because such inferences were not  
warranted on the circumstantial evidence adduced.  
3.  
Credibility and Conflicting Evidence  
[469] Credibility of many of the witnesses, including all of the Respondents, is particularly at  
issue in this proceeding.  
[470] In deciding the weight to give certain evidence before us, we have assessed the credibility  
of various witnesses from whom we heard, or grappled with conflicting evidence, or both. In our  
assessments and determinations, we have taken guidance from R. v. Boyle, 2001 ABPC 152 at  
para. 107, citing Faryna v. Chorny, [1952] 2 D.L.R. 354 (B.C.C.A.) at 357:  
The credibility of interested witnesses, particularly in cases of conflict of evidence, cannot be  
gauged solely by the test of whether the personal demeanour of the particular witness carried  
conviction of truth. The test must reasonably subject his story to an examination of its consistency  
with the probabilities that surround the currently existing conditions. In short, the real test of the  
truth of the story of a witness in such a case must be its harmony with the preponderance of the  
probabilities which a practical and informed person would readily recognize as reasonable in that  
place and in those conditions.  
[471] To similar effect are the words of O'Halloran J.A. of the British Columbia Court of  
Appeal in R. v. Pressley, 1948 CarswellBC 123 at para. 13 (referenced in Springer v. Aird &  
Berlis LLP, 2009 CarswellOnt 1832 (S.C.J.) at para. 14 and in Suman at para. 315):  
. . . The Judge is not given a divine insight into the hearts and minds of the witnesses appearing  
before him. Justice does not descend automatically upon the best actor in the witness box. The  
most satisfactory judicial test of truth lies in its harmony or lack of harmony with the  
preponderance of probabilities disclosed by the facts and circumstances in the conditions of the  
particular case.  
[472] Whenever assessing the credibility of witnesses in general or on particular points, we  
have taken into account all facts and circumstances. We have not decided any allegations on  
credibility findings alone but rather have considered credibility in conjunction with the totality of  
the evidence.  
[473] Our specific conclusions on credibility and conflicting evidence are noted elsewhere.  
4.  
Statements against Interest  
[474] We consider too simplistic Staff's contention that "by and large, wrongdoers would prefer  
to avoid sanction for their wrongdoing and therefore causing themselves to believe a certain set  
of exonerating facts may be a natural tendency", such that reasonable-sounding explanations  
apparently consistent with the evidence may be attempts, many months in the making, to "cover  
their tracks". As some of the Respondents correctly pointed out, innocent parties also wish –  
perhaps even more strongly to avoid sanction for wrongdoing. Accordingly, we are not  
swayed by Staff's argument in this regard, instead agreeing with the comments (albeit in the  
criminal context) in R. v. Laboucan, 2010 SCC 12 at para. 12:  
The common sense proposition that a witness's interest in the proceedings may have an impact on  
credibility also applies to an accused person who testifies in his or her defence. The fact that the  
witness is the accused, however, raises a specific concern. The concern arises from the fact that  
both innocent and guilty accused have an interest in not being convicted. Indeed, the innocent  
accused has a greater interest in securing an acquittal. Therefore, any assumption that an accused  
will lie to secure his or her acquittal flies in the face of the presumption of innocence, as an  
innocent person, presumably, need only tell the truth to achieve this outcome. In R. v. B. (L.)  
(1993), 13 O.R. (3d) 796 (C.A.), Arbour J.A. (as she then was) succinctly described the inherent  
danger in considering the accused's motive arising from his or her interest in the outcome of the  
trial. In an often-quoted passage, she stated as follows (at pp. 798-99):  
It falls into the impermissible assumption that the accused will lie to secure his  
acquittal, simply because, as an accused, his interest in the outcome dictates that  
course of action. . . . [I]t cannot be assumed that the accused must lie in order to  
be acquitted, unless his guilt is no longer an open question. If the trial judge  
comes to the conclusion that the accused did not tell the truth in his evidence,  
the accused's interest in securing his acquittal may be the most plausible  
explanation for the lie. The explanation for a lie, however, cannot be turned into  
an assumption that one will occur. [Emphasis added in Laboucan.]  
[475] Staff also submitted that "statements made against interest", including admissions of  
wrongdoing, are "inherently reliable, on the common-sense notion that people do not, by and  
large, falsely admit to wrongful behaviour". This should, in Staff's contention, lead the panel to  
consider more reliable statements against interest made by Richard Kowalchuk, Douglas,  
Wreggit and Gayle Walton. Bert Holtby contended that such admissions of wrongdoing are "red  
flags" indicating a "lack of reliability and integrity", rather than "badges of credibility".  
Burdeyney argued that any "admissions" by Gayle Walton of statements made to her by  
Burdeyney were either not admissions or were "ambiguous and of questionable reliability, due to  
the passage of time and frailties of human memory".  
[476] In making our determinations, we have given any statements against interest, including  
admissions of wrongdoing, the weight we think warranted in light of all other evidence and all  
the circumstances. In so doing, we have reached conclusions as to the credibility of certain  
witnesses both in general and on particular points.  
5.  
Hearsay Evidence  
[477] We received hearsay evidence from many of the parties, much of which is in the form of  
documentary evidence.  
[478] Relevant hearsay evidence is admissible in Commission enforcement hearings under  
sections 29(e) and (f) of the Act, provided the rules of natural justice and procedural fairness are  
observed. Thus, in determining the weight, if any, to accord such evidence, we have examined  
the content of such evidence and taken into account any indicators of reliability, such as  
corroboration.  
[479] The documentary evidence includes the Agreed Facts, the Investigative Interviews and  
the Settlement Agreements.  
[480] The Agreed Facts were entered in evidence with the knowledge and informed consent of  
Staff and Bert Holtby. None of the other Respondents objected to the admission of the Agreed  
Facts, nor contested their accuracy. In all the circumstances, we accept the statements in the  
Agreed Facts as true and have given them substantial weight.  
[481] This Commission has stated many times that it will exercise caution when assessing the  
weight, if any, to attach to evidence such as investigative interview transcripts and settlement  
agreements. In general such evidence is accorded less weight than testimony given at a hearing,  
particularly when such evidence is inconsistent with or not supported by other evidence.  
[482] Concerning the weight to be given to Investigative Interview content, we have considered  
(Arbour at para. 54):  
. . . whether the interviewee was examined under oath, indicating sufficient appreciation of the  
solemnity of the process; whether the interviewee was represented by counsel during the  
interview; whether the interviewee testified, or could have been summoned to testify, at the Merits  
Hearing, thereby allowing testing or clarification by way of cross -examination or panel  
questioning; and whether there was other evidence of the interviewee's trustworthiness.  
[483] Each of the interviewees in the Investigative Interviews had either been sworn or  
affirmed, which should have demonstrated to them the serious nature of the proceeding and the  
importance of telling the truth. Some of the interviewees were also represented by counsel at  
their respective Investigative Interviews.  
[484] Many of the interviewees in the Investigative Interviews, including all of the  
Respondents, testified at the Merits Hearing. Their appearances as witnesses at the Merits  
Hearing allowed us to observe them as they gave their testimony and allowed for testing or  
clarification of their evidence through cross-examination and panel questioning, including the  
putting of some Investigative Interview content directly to them. There are contradictions or  
inconsistencies, or seemingly so, in what some of these individuals said in their Investigative  
Interviews and subsequently in their testimony at the Merits Hearing. Testimony was elicited  
about certain of these contradictions or inconsistencies. However, portions of these Investigative  
Interviews were left unchallenged, with parties relying instead, in their submissions, on other  
apparent contradictions or inconsistencies as ostensible proof of certain facts or as a means of  
impeaching credibility.  
[485] Certain interviewees in the Investigative Interviews did not testify at the Merits Hearing,  
thus providing no opportunity for the panel to observe these interviewees, or for the testing or  
clarification of their evidence through cross-examination or panel questioning. We note also  
that, although the Respondents themselves testified at the Merits Hearing, they chose not to  
summon any of the other interviewees who were not called as witnesses by Staff, apparently  
electing not to challenge the content of those interviewees' Investigative Interviews.  
[486] Overall, we have been cautious with the Investigative Interview evidence, generally  
assigning little or no weight to unchallenged portions of the Investigative Interviews when also  
inconsistent with or not supported by other evidence. Also, we have not relied solely on any  
Investigative Interview content in reaching our conclusions or making our findings.  
[487] Two of those who entered into Settlement Agreements also testified at the Merits Hearing  
(Richard Kowalchuk and Douglas); the others did not. Thus, we did not have the benefit of  
observing three of the settling parties, nor was there any opportunity to test or clarify the  
evidence they might have proffered had they testified at the Merits Hearing.  
[488] We have given weight to admissions made in the Settlement Agreements if  
uncontroversial or if consistent with or supported by other evidence. Beyond that, we have  
attached little weight to the Settlement Agreements for the reasons set out by this Commission in  
Re Stewart, 2005 ABASC 91 (at paras. 25-28):  
Caution is called for in part because of the fact that parties to any legal proceeding, if they are  
endeavouring to arrive at a negotiated settlement, may conduct themselves very differently than if  
they are pursuing contentious litigation through to a hearing and decision. To achieve a broadly  
acceptable negotiated conclusion, a party might make admissions or concessions, and advance or  
abandon particular legal positions, that would be handled very differently in the course of a  
contested hearing.  
There was, moreover, no direct examination or cross-examination of parties to the Settlement  
Agreements as to their content. . . .  
Finally, the Settlement Agreements relate to Staff's cases against three of the respondents, not  
against Stewart. The allegations against the three respondents were not the same as the allegation  
that was the subject of this hearing . . .  
The Settlement Agreements contain statements concerning Stewart's conduct, including the extent  
to which he did or did not exercise trading discretion. However, even though it was Stewart  
(albeit without benefit of legal counsel) who tendered the Settlement Agreements into evidence,  
Stewart was not a party to any of the Settlement Agreements, and the statements set out in them  
were not his. We are not prepared to construe those statements in the Settlement Agreements as  
admissions by Stewart nor, without more information, to treat them as proven for the purpose of  
these proceedings.  
6.  
Expert Witness  
[489] We were asked at the Merits Hearing to qualify Stewart as an "expert witness"; with that  
qualification she could give evidence of opinions as well as facts. However, even when a  
witness is qualified as an expert and gives opinion evidence, a panel is not obliged to accept such  
evidence it is the panel's responsibility to make the final decision on the issues before it.  
[490] Landsiedel requested that Stewart be qualified as an expert on "the analysis and  
interpretation of trading in securities, including trading practices, strategies, techniques, and  
patterns, and on drawing inferences as to potential trading motives from the nature of trading in  
securities", and as an expert "in conducting investigations in the context of trading and market-  
related cases, including insider trading allegations in cases involving circumstantial evidence".  
Landsiedel sought to have Stewart provide an opinion on three questions, namely:  
whether Landsiedel's purchases of Eveready shares in March 2009 were  
"consistent with his evidence that he was attempting to average down the cost per  
share of his investment";  
whether Landsiedel's purchases of Eveready shares in March 2009 were  
"consistent with his historical trading in Eveready and . . . other companies"; and  
the nature of Staff's investigation in connection with the trading in Eveready  
Shares before the 29 April 2009 News Release.  
[491] We decided for the purposes of the Merits Hearing that Stewart "is an expert in the  
analysis of trading in securities, including trading practices, strategies, techniques, and patterns",  
and was qualified to give opinion evidence as to the first two questions. However, we were not  
satisfied that Stewart had the requisite expertise to draw inferences as to motive from  
Landsiedel's trading practices nor were we persuaded that was essential so we declined to  
qualify her as an expert for that purpose.  
[492] We also declined to qualify Stewart as an expert in securities regulatory investigations of  
illegal insider trading as we were not satisfied that she was an expert in the area, nor, more  
importantly, that opinions expressed as to the conduct or quality of Staff's investigation would be  
relevant to our task of making findings on the merits of Staff's allegations against Landsiedel.  
[493] Stewart gave opinion evidence that Landsiedel's trading in the Relevant Period is  
consistent both with an attempt to average down the per-Share cost of his Eveready position and  
with his historical trading of Eveready Shares and the shares of two other issuers. Ultimately,  
after considering the totality of the evidence, we have given little weight to Stewart's opinion  
evidence, as we discuss below. We did, however, find useful data she provided relating to the  
state of the economy, the Eveready Share price and Landsiedel's trading activity.  
B.  
Consideration of All Arguments  
[494] Although this decision and our reasons for it do not explicitly address each and every  
argument made by the parties, we have fully considered all arguments presented to us.  
C.  
Alleged Illegal Insider Trading, Informing, and Recommending or Encouraging  
1. Allegations and Law  
[495] Staff alleged that each of the Respondents breached one or more of sections 147(2), (3)  
and (3.1) of the Act. More particularly, Staff alleged that:  
Illegal Trading  
all of the Respondents but Gayle Walton, while in a "special relationship" with  
reporting issuer Eveready and with knowledge of a non-public material fact or  
material change with respect to Eveready the Proposed Acquisition purchased  
Eveready Shares, contrary to section 147(2) and to the public interest;  
Illegal Informing  
Bert Holtby, Dale Holtby and Burdeyney, while in a "special relationship" with  
reporting issuer Eveready, informed another person of a non-public material fact  
or material change with respect to Eveready the Proposed Acquisition –  
contrary to section 147(3) and to the public interest; and  
Illegal Recommending or Encouraging  
Bert Holtby, Dale Holtby, Burdeyney and Gayle Walton, while in a "special  
relationship" with reporting issuer Eveready and with knowledge of a non-public  
material fact or material change with respect to Eveready the Proposed  
Acquisition recommended or encouraged another person to purchase Eveready  
Shares, contrary to section 147(3.1) and to the public interest.  
[496] Sections 147(2), (3) and (3.1) of the Act state:  
(2)  
No person or company in a special relationship with a reporting issuer shall purchase or  
sell securities of the reporting issuer with the knowledge of a material fact or material change with  
respect to the reporting issuer that has not been generally disclosed.  
(3)  
No reporting issuer or person or company in a special relationship with a reporting issuer  
shall, other than when it is necessary in the course of business, informanother person or company  
of a material fact or material change with respect to the reporting issuer before the material fact or  
material change has been generally disclosed.  
(3.1)  
No reporting issuer or person or company in a special relationship with a reporting issuer  
with knowledge of a material fact or material change with respect to the reporting issuer that has  
not been generally disclosed shall recommend or encourage another person or company to  
(a)  
purchase or sell a security of the reporting issuer . . .  
[497] A person in a special relationship with a reporting issuer includes:  
under section 9(c) of the Act, a director, officer or employee of a reporting issuer;  
and  
under section 9(e), a person who:  
learns of a material fact or material change with respect to the reporting  
issuer from any other person in a special relationship with the reporting  
issuer; and  
knows or ought reasonably to know that the other person is in such special  
relationship.  
[498] Section 1(gg) of the Act defines a "material fact" as "a fact that would reasonably be  
expected to have a significant effect on the market price or value of" particular securities. A  
"material change", defined in section 1(ff), includes "a change in the business, operations or  
capital of [a particular] issuer that would reasonably be expected to have a significant effect on  
the market price or value of a security of the issuer".  
[499] As for the phrase "generally disclosed", which is not defined in the Act, it "bears its  
ordinary meaning. . . . [T]his connotes information being disseminated so as to reach a general  
audience not limited to the particular reporting issuer and those in a special relationship with it,  
but including the market (if any) for the particular securities" (Re Kapusta, 2011 ABASC 322 at  
para. 235).  
[500] To find that a Respondent breached section 147(2) of the Act, we must conclude from the  
evidence that:  
Eveready was a reporting issuer in Alberta at all relevant times;  
the Respondent was in a special relationship with Eveready at all relevant times;  
the Respondent purchased Eveready Shares;  
the Respondent had knowledge of a material fact or material change (or both)  
with respect to Eveready at the time or times he or she purchased Eveready  
Shares; and  
the material fact or material change was (or both were) not generally disclosed at  
the time or times the Respondent purchased Eveready Shares.  
[501] To find that a Respondent breached section 147(3) of the Act, we must conclude from the  
evidence that:  
Eveready was a reporting issuer in Alberta at all relevant times;  
the Respondent was in a special relationship with Eveready at all relevant times;  
the Respondent informed another person of a material fact or material change (or  
both) with respect to Eveready; and  
the material fact or material change was (or both were) not generally disclosed at  
the time the Respondent informed the other person of the material fact or material  
change (or both).  
[502] To find that a Respondent breached section 147(3.1) of the Act, we must conclude from  
the evidence that:  
Eveready was a reporting issuer in Alberta at all relevant times;  
the Respondent was in a special relationship with Eveready at all relevant times;  
the Respondent recommended or encouraged another person to purchase  
Eveready Shares;  
the Respondent had knowledge of a material fact or material change (or both)  
with respect to Eveready at the time he or she recommended or encouraged the  
other person to purchase Eveready Shares; and  
the material fact or material change was (or both were) not generally disclosed at  
the time the Respondent recommended or encouraged the other person to  
purchase Eveready Shares.  
[503] Illegal insider trading, informing, and recommending or encouraging are referred to as  
strict liability offences because there is no requirement to prove mens rea motivation and intent  
are irrelevant. In R. v. Woods, 1994 CarswellOnt 1080 (Gen. Div.) (leave to appeal refused 1994  
CarswellOnt 1081 (C.A.)), Justice Farley observed (at para. 24) that "[t]he offence then is in  
essence not a question of using insider information but of buying or selling securities of a  
company while possessed of insider information" (emphasis in original). He continued (at  
para. 26): "The critical aspect is not of course that insider information is in fact used to make the  
trading decision but rather that a person with a special relationship with a reporting issuer cannot  
trade while possessed of insider information." Thus, a person need not specifically use insider  
information to run afoul of the Act. A person who purchases or sells securities with knowledge  
of non-public material information will have breached the Act regardless of the motivation for  
the purchasing or selling.  
Further, there is no requirement that an alleged informer or  
recommender or encourager know or intend that the recipient will buy or sell the particular  
securities, thus making use of non-public material information or a recommendation or  
encouragement. Rather, "[t]he mere fact of informing another person of confidential material  
information constitutes an offence" (Re Rankin (2008), 31 OSCB 3303 at para. 32).  
2.  
Issues for Determination  
[504] We found that, throughout the Relevant Period, Eveready was a reporting issuer under  
the Act, Eveready Shares and Eveready Units were securities within the meaning of the Act and  
Bert Holtby, as a director of Eveready, was a person in a special relationship with Eveready  
within the meaning of the Act.  
[505] Despite referring to "material changes" in the NOH, Staff pursued their allegations on the  
basis of "material facts" alone. It is not seriously disputed that information regarding the  
Proposed Acquisition constituted a material fact or material facts (although some Respondents  
contended that what they did know was not specific enough to constitute a material fact). For the  
reasons set out below, we find that the Proposed Acquisition was a material fact within the  
meaning of the Act. (In the circumstances, we need not address whether or at what point there  
may also have been a material change with respect to Eveready.)  
[506] It is not disputed that Dale Holtby, Shepert, Landsiedel, Burdeyney, Jaschke, Randy  
Kowalchuk, Tanner, Richard Kowalchuk, Wreggit, the Kaufmans and Thane Walton purchased  
Eveready Shares at various times in the Relevant Period, and that Eveready Shares were  
purchased through the Douglas Account at various times in the Relevant Period. It is also not  
disputed that the Proposed Acquisition was first generally disclosed in the 29 April 2009 News  
Release. We so find. Thus, certain of the elements necessary to find contraventions of  
sections 147(2), (3) and (3.1) of the Act are proved.  
[507] We must determine the following issues:  
When did the Proposed Acquisition become a material fact?  
Did any or all of the Respondents but Gayle Walton, while in a "special  
relationship" with Eveready and with knowledge of the Proposed Acquisition  
purchase Eveready Shares, contrary to section 147(2) of the Act?  
Did any or all of Bert Holtby, Dale Holtby and Burdeyney, while in a "special  
relationship" with Eveready, inform another person of the Proposed Acquisition,  
contrary to section 147(3)?  
Did any or all of Bert Holtby, Dale Holtby, Burdeyney and Gayle Walton, while  
in a "special relationship" with Eveready and with knowledge of the Proposed  
Acquisition, recommend or encourage another person to purchase Eveready  
Shares, contrary to section 147(3.1)?  
Did any or all of the Respondents act contrary to the public interest?  
3.  
When Did the Proposed Acquisition Become a Material Fact?  
[508] To reiterate, the Proposed Acquisition the fact that an entity (whether or not named)  
was proposing to acquire Eveready by way of take-over, merger or other business combination  
(whether or not priced) was a material fact within the meaning of the Act. Our reasons for so  
finding are as follows.  
[509] An assessment of materiality involves applying what has been described as an objective  
market impact test (see, for example, Kapusta at para. 240) would the fact that an entity was  
proposing to acquire Eveready reasonably be expected to have affected the market's assessment  
of Eveready's prospects and, therefore, reasonably be expected to have a significant effect on the  
market price of Eveready Shares?  
[510] We do not doubt that information that an entity is seriously contemplating the acquisition  
by way of take-over, merger or otherwise of a publicly-traded company would generally have a  
significant effect on the market price of the target company's securities were such information  
to be publicly disclosed, the market would almost invariably react positively. As the BCSC  
noted in Re Bennett, 1996 CarswellBC 3106 (at para. 486), "[t]he market always expects a  
premium to be paid for shares to be bought under a take over bid" and "[t]he market would  
always expect that the premium would significantly affect the price of the shares." Further, as  
noted in Bennett (at para. 489), information about a potential acquisition could very often have a  
significant effect on the market price of the target company's securities:  
During August and September 1988, the fact Merlo and Doman were having serious discussions  
about a merger and the facts regarding the negotiations, including price and timing and other  
matters, were all facts that could reasonably be expected to significantly affect the market price of  
the Doman shares and, therefore, were material facts within the definition of material fact in  
section 1(1) and were material facts in the affairs of Doman Industries under section 68(1)(b) [of  
the British Columbia Securities Act]. We already know the effect that the rumours of a take over  
had on the market price for Doman shares. It is a reality that information related to take over  
negotiations very often could significantly affect the market price of the shares if disclosed to the  
market. As a consequence, responsible market participants go to great lengths to ensure  
confidentiality about negotiations until they are able to announce a deal. They will keep the group  
who have access to information as small as possible. They will watch the trading in the shares  
affected, so that they will know immediately of any unusual trading. If there is unusual trading,  
and it appears to be related to the negotiations, they then deal with the unfortunate situation where  
an announcement may need to be made, notwithstanding that a deal has not been made between  
the parties. They will watch who trades the shares affected. Most certainly they would have  
alerted all those involved in the negotiations to the provisions of section 68. Sadly, it appears to  
us that these negotiations were conducted without these matters in mind.  
[511] Accordingly, in our view, news of a publicly-traded company's acquisition by way of  
take-over, merger or otherwise would always be a material fact. Similarly, we think it obvious  
that news of the real potential for such, whether or not specifying the identity of the potential  
acquirer or the potential acquisition price or both, would typically be a material fact. Concerning  
the latter, we note that in S.E.C. v. Mayhew, 121 F.3d 44 (2d Cir. 1997) a purchaser of securities  
who was given information, but not the specifics, regarding a potential merger was found to  
know material information: "Although Mayhew was not given the specific details of the merger,  
a lesser level of specificity is required because he knew the information came from an insider  
and that the merger discussions were actual and serious." The OSC applied this reasoning in Re  
Donnini (2002), 25 OSCB 6225 at para. 152 in finding that the respondent knew material facts –  
he "may not have been aware of all the specifics of the negotiation but he knew it was being  
undertaken at the highest level . . . he knew that the negotiations were actual and serious".  
[512] For these reasons, we are satisfied that the Proposed Acquisition, whether or not  
completed, would reasonably be expected to have a significant effect on the market price of  
Eveready Shares. This finding, we note, is corroborated by the fact that on 29 April 2009, when  
the Proposed Acquisition was first generally disclosed, the price of Eveready Shares increased  
nearly $7 per Share (200%) over the previous day's closing price, a clearly "significant effect on  
the market price" of Eveready Shares.  
[513] The more pertinent question for our purposes is when did the Proposed Acquisition  
become a material fact within the meaning of the Act?  
[514] Staff submitted that the latest date the Proposed Acquisition became a material fact was  
26 January 2009, when "there was sufficient probability and magnitude of the [acquisition of  
Eveready by Clean Harbors] taking place to meet the test of materiality". By that date, as Staff  
pointed out, negotiations between Eveready and Clean Harbors had reached a stage such that  
they were apparently close to agreement on the acquisition price and Eveready management had  
executed the Confidentiality Agreement and was expecting to receive a letter of intent from  
Clean Harbors later that week.  
[515] In our view, because negotiations between Eveready and Clean Harbors on the Proposed  
Acquisition had reached a significant level of seriousness earlier than 26 January 2009, the  
Proposed Acquisition likely became a material fact at an earlier date. However, given that all  
allegations we are to decide involve alleged misconduct by the Respondents after 26 January  
2009 Staff's latest date it is unnecessary for us to pinpoint the exact prior date on which the  
Proposed Acquisition became a material fact. We find that the Proposed Acquisition was a  
material fact by 26 January 2009.  
[516] We do not agree with Landsiedel's suggestion that the Proposed Acquisition was not a  
material fact in mid-February 2009 because "the likelihood of deal completion was so low at this  
point". Although acquisition price became a point of contention between Eveready and Clean  
Harbors in mid-February 2009, the evidence indicates that their respective management  
continued to engage in serious negotiations directed at bringing the Proposed Acquisition to  
fruition. Common sense tells us that, had the occurrence of these continuing negotiations been  
publicly disclosed, this would reasonably be expected to have affected the market's assessment  
of Eveready's prospects and, therefore, would reasonably be expected to have a significant effect  
on the market price of Eveready Shares. In the result, we find that the Proposed Acquisition,  
which was a material fact within the meaning of the Act by 26 January 2009, remained as such  
until it was generally disclosed in the 29 April 2009 News Release.  
4.  
Allegations against Bert Holtby  
(a)  
Did Bert Holtby Engage in Illegal Insider Trading of Eveready  
Shares?  
(i)  
Staff's Position  
[517] Staff contended that it is more likely than not, considering all the facts and circumstances,  
that the Douglas Account was a nominee account set up as a joint venture of sorts among Bert  
Holtby, Richard Kowalchuk and Douglas whereby: all three would contribute money to the  
Douglas Account; Bert Holtby and, to a lesser degree, Richard Kowalchuk would direct the  
purchases and sales of securities in it; and all three would share in its profits according to their  
agreed ownership position (Bert Holtby, 40%; Richard Kowalchuk, 40%; and Douglas, 20%).  
Staff pointed to evidence that they say supports the only logical inference that on 12 March 2009  
Bert Holtby directed Richard Kowalchuk to start purchasing Eveready Shares through the  
Douglas Account. Staff also pointed to evidence that they say supports the only logical inference  
that the purchases of 28 000 Eveready Shares through the Douglas Account between 19 March  
and 28 April 2009 were made using Bert Holtby's "inside information". Staff submitted that Bert  
Holtby's denials are not credible.  
[518] In the result, it is Staff's position that Bert Holtby, a director of Eveready and as such a  
person in a special relationship with Eveready, contravened section 147(2) of the Act when, with  
knowledge of the non-public Proposed Acquisition, he directed Richard Kowalchuk to purchase  
Eveready Shares through the Douglas Account (in which Bert Holtby had a 40% beneficial  
ownership interest) in March and April 2009.  
(ii)  
Bert Holtby's Position  
[519] Bert Holtby emphatically denied Staff's allegations relating to the Douglas Account. He  
urged us to find that Staff's key witnesses Richard Kowalchuk and Douglas are not credible and  
that "their evidence must be rejected in its entirety" because it "demonstrated such a profound  
degree of unreliability".  
Bert Holtby submitted that "their stories are unbelievable and  
inconsistent with the documentary record, each gave inconsistent evidence at the hearing, each  
gave evidence inconsistent with the other, and each had made prior inconsistent statements on  
material points". Bert Holtby submitted that his evidence that he did not participate in the  
Douglas Account is "believable and probable"; that his explanation of lending money to Douglas  
undocumented is not incredible (as Bert Holtby claimed to conduct business often on a  
handshake); that his generosity should not be misconstrued; and that there is no credible  
evidence that Bert Holtby "would stand to make any material gain from participating in the  
scheme alleged by Staff, or a reason he would risk so much for little upside, or that he received  
any payout".  
(iii)  
Findings  
Ownership of, and Control and Direction over, the Douglas Account  
[520] To find that Bert Holtby illegally purchased Eveready Shares, as alleged, we must first  
find that he had an ownership interest in the Douglas Account and that he, with knowledge of the  
non-public Proposed Acquisition, instructed Richard Kowalchuk to purchase Eveready Shares in  
March and April 2009 through the Douglas Account. There is conflicting evidence, some of it  
direct evidence, on these points from Bert Holtby, Richard Kowalchuk and Douglas.  
[521] In his evidence Bert Holtby denied that he set up the Douglas Account or had direction  
over or beneficial ownership in it, although he acknowledged lending Douglas money to open a  
trading account with Richard Kowalchuk. Both Richard Kowalchuk and Douglas in their  
evidence, including their respective Settlement Agreements, stated that Bert Holtby was involved  
in initiating, setting up and funding the Douglas Account and that the beneficial owners of the  
Douglas Account were Bert Holtby (40% interest), Richard Kowalchuk (40% interest) and  
Douglas (20% interest). Further, Richard Kowalchuk's evidence is that the purchases and sales  
of securities in the Douglas Account were directed principally by Bert Holtby.  
[522] Having considered the totality of the evidence, and having had the opportunity to assess  
the credibility of Bert Holtby, Richard Kowalchuk and Douglas as they testified before us, we  
conclude that, generally, the testimony of Richard Kowalchuk and Douglas on the key points  
about the Douglas Account is credible and we prefer it to that given by Bert Holtby. In reaching  
that conclusion, we note that the testimony of Richard Kowalchuk and Douglas on many of these  
key points is remarkably similar, and that their testimony on these key points is supported by or  
consistent with other evidence before us, or otherwise believable given the evidence as a whole.  
While there are some inconsistencies in the evidence of Richard Kowalchuk and Douglas about  
the Douglas Account (inconsistencies as between their evidence as well as internal  
inconsistencies), we do not find these inconsistencies material; in our view, the essence of their  
evidence about the Douglas Account persists despite any imprecision in language used. Further,  
we do not believe Bert Holtby's testimony that he was not involved in, nor had any financial  
interest in, the Douglas Account; this testimony, in our view, is not plausible given the evidence  
as a whole. Finally, we discern no reasonable motive for Richard Kowalchuk to make false  
admissions implicating a person he had known for most of his life and his "largest client" Bert  
Holtby in illegal activity. Richard Kowalchuk's admissions implicated himself in engaging in  
illegal insider trading, informing and recommending or encouraging, for which he has suffered  
severe consequences, including the payment of $210 000 to the Commission and the end of his  
chosen career and employment. Had Bert Holtby not been involved in the illegal activity  
admitted by Richard Kowalchuk, there would have been no admissions to make as no wrongful  
acts would have been committed. For similar reasons, we discern no reasonable motive for  
Douglas to make false admissions implicating his close friend Bert Holtby in illegal activity.  
Douglas, too, has suffered relatively severe consequences for his admitted misconduct, including  
the payment of $70 000 to the Commission and the jeopardizing of his career. Accordingly, we  
conclude it is more likely than not that Bert Holtby had a financial interest in the Douglas  
Account and thus was a beneficial owner of the account, and that Bert Holtby principally  
directed the purchases and sales of securities in, and thus had control and direction over, the  
account. We now make particular note of certain of the evidence and of findings made thereon,  
leading to these conclusions.  
[523] A critical factor is the relationship among the three men. Bert Holtby is the common link  
between Richard Kowalchuk and Douglas. It is clear from the evidence, we find, that Bert  
Holtby arranged the September 2005 Meeting. Despite Bert Holtby's somewhat evasive  
testimony on this point, it is also sufficiently clear from the evidence, and we find, that Richard  
Kowalchuk and Douglas had not met prior to this meeting and that it was Bert Holtby who  
introduced the two to each other. Before that lunch Richard Kowalchuk and Douglas did not  
know each other, other than at most by reputation. In contrast, and as confirmed by Bert Holtby,  
he had known Douglas for more than 25 years, they were friends and they trusted each other.  
Similarly, Bert Holtby had known Richard Kowalchuk his investment advisor from  
approximately 2002 since Richard Kowalchuk was "a kid"; Richard Kowalchuk described their  
relationship as a "fairly good" one and said that Bert Holtby was "somebody that I looked up to  
because he was self-made and did very, very well with building his businesses". Indeed, the  
evidence indicates that to the date of the Merits Hearing there was little relationship or contact  
between Richard Kowalchuk and Douglas other than for activities undertaken in the Douglas  
Account, in contrast to the regular contact between Bert Holtby and Richard Kowalchuk and  
between Bert Holtby and Douglas. We do not think it believable that two relative strangers –  
Richard Kowalchuk and Douglas would agree to embark on a venture such as the Douglas  
Account whereby Richard Kowalchuk would surrender a significant amount of money to  
Douglas and Douglas would surrender trading authority over the account to Richard Kowalchuk  
both surrenders undocumented unless they were encouraged and supported in such actions by  
Bert Holtby, a person with whom each had a longstanding relationship and whom they both  
trusted.  
[524] In essence, Bert Holtby's explanation for the establishment of the Douglas Account was  
that Richard Kowalchuk was always looking for new clients, so Bert Holtby provided Douglas.  
According to Bert Holtby, he approached Douglas to see whether he would be interested in  
opening a trading account with Richard Kowalchuk. It was Bert Holtby's testimony that,  
because Douglas needed $100 000 to open a trading account with Richard Kowalchuk and did  
not have that amount of money, Bert Holtby told Douglas he would help Douglas and lent  
Douglas $50 000 of the required $100 000. We do not find Bert Holtby's explanation credible,  
as it raises questions that cannot be plausibly answered in his favour. Why would Douglas be  
willing, perhaps eager, to open a trading account with Richard Kowalchuk when Douglas had  
very little money to invest in such an account? Why, if Douglas were interested in opening a  
trading account, did he not simply open an account not requiring a minimum investment of  
$100 000? If Richard Kowalchuk only wanted clients who could invest at least $100 000, why  
would he, knowing Douglas could only contribute one-tenth of that amount, accept Douglas as a  
client, and why would Richard Kowalchuk himself contribute $40 000 (four times Douglas's  
contribution) to a client's trading account? Such considerations lead us to disbelieve Bert  
Holtby's explanation as to why the Douglas Account was established.  
[525] Douglas testified that Bert Holtby "introduced the idea of setting up a joint investment  
account" for him, Bert Holtby and Richard Kowalchuk that would be in Douglas's name because  
Douglas was in "the lowest tax bracket". Douglas described Bert Holtby as an investor in the  
Douglas Account, although not named as such. It is clear from the whole of the evidence, and  
we find, that Douglas did not fully understand why Bert Holtby and Richard Kowalchuk were  
setting up the Douglas Account in Douglas's name, but Douglas did understand that his monetary  
contribution to the account would be $10 000, that the three of them would share in the profits  
earned through the account, that his share of the profits would be 20% (Bert Holtby having said  
he would match Douglas's $10 000), and that he would be responsible for paying taxes on  
account earnings with money from the account. We think it probable that Douglas, who clearly  
trusted Bert Holtby, was prepared to do what Bert Holtby asked of him, make a little money and  
not ask too many questions. Indeed, Douglas signed the "Know Your Client Form" for the  
Douglas Account, completed by Richard Kowalchuk, despite answers exaggerating his  
investment experience and concealing Bert Holtby's and Richard Kowalchuk's authority over, or  
financial interest in, the account. And Douglas testified: "I guess I, basically, trusted those two  
[Bert Holtby and Richard Kowalchuk] to look after the account and hopefully make money."  
[526] Richard Kowalchuk's evidence concerning the purpose of the Douglas Account in our  
view sufficiently internally consistent is that the Douglas Account was to permit Bert Holtby to  
make money by purchasing or selling Eveready Shares when he was unable to do so because of  
blackout periods, and by purchasing other securities or pursuing other opportunities. Richard  
Kowalchuk testified that Bert Holtby explained "this is something that's always happening out  
there and is very common". Richard Kowalchuk also testified that Douglas would be responsible  
for paying taxes on earnings in the Douglas Account with money from the account. We  
conclude that Richard Kowalchuk's evidence, considered in light of all other evidence, provides  
the most plausible explanation as to why the Douglas Account was established. In so  
concluding, we are of the view that Richard Kowalchuk's evidence concerning the purpose of the  
Douglas Account is not rendered problematic, as Bert Holtby contended, by the inclusion of  
securities trading that could have been undertaken by Bert Holtby in his own trading accounts,  
whether the purchase of Eveready securities in non-blackout periods or the purchase of other  
securities. It is conceivable that such activities would have been undertaken in the Douglas  
Account to deal with earned profits in a manner less likely to attract attention and whenever  
reinvesting in Eveready might not be profitable or otherwise desirable. We accordingly find that  
a principal purpose of the Douglas Account was to permit Bert Holtby to purchase or sell  
Eveready securities when he was unable to do so because of blackout periods or legal  
impediments and with some assurance of non-detection.  
[527] All three men acknowledged that at the September 2005 Meeting there was discussion  
about the sharing of any profits earned through the Douglas Account. However, contrary to the  
evidence of Richard Kowalchuk and Douglas that all three men agreed to profit-sharing of 40%  
(Bert Holtby), 40% (Richard Kowalchuk) and 20% (Douglas), Bert Holtby denied he agreed to  
any profit-sharing, his reason being "[t]here's no way I can participate in something like this. It's  
just detrimental to everyone's health and there's no way. I'll give you a loan, but that's -- after  
that, it's up to you. Paddle your own canoe". Again, we find such explanation nonsensical and  
inconsistent with the other evidence, including that of Richard Kowalchuk and Douglas. We  
perceive no real benefit to Richard Kowalchuk and Douglas participating together in the Douglas  
Account. Douglas could have opened a trading account with, as he noted, as little as $1000, for  
which he needed neither a "loan" from Bert Holtby, nor a partner in Richard Kowalchuk. And  
we do not think it believable that Richard Kowalchuk, a successful broker consistently in the  
top 25% of his CIBC peers in production and revenue would be so desperate for a client that he  
would assist in funding such an account, particularly for a relative stranger. Moreover, as among  
the three men, Bert Holtby would benefit most from the establishment of the Douglas Account,  
which would enable him alone to purchase and sell Eveready securities uninhibited by Eveready  
corporate governance policies or legal impediments (applicable because of his special  
relationship with Eveready), all with some assurance that any such activity would go undetected.  
The evidence is clear, and we find, that Bert Holtby is a seasoned and successful businessman  
who, through his position as a director of a public company, is very well acquainted with the  
prohibitions on insider trading and informing and with blackout periods. Therefore, we do not  
doubt he would know that, to circumvent those restrictions with some assurance of non-  
detection, he would need help from another or others he trusted (such as Richard Kowalchuk and  
Douglas) and preferably without apparent connection to Eveready (such as Douglas). We accept  
as credible and prefer the testimony of Richard Kowalchuk and Douglas concerning the profit-  
sharing arrangement for the Douglas Account, having considered it in light of all other evidence,  
and thus find that Bert Holtby expected to receive 40% of any profits earned through the Douglas  
Account.  
[528] Richard Kowalchuk's evidence is that the purchases and sales of securities in the Douglas  
Account were executed by Richard Kowalchuk but directed principally by Bert Holtby, although  
at times by Richard Kowalchuk. Douglas testified that, apart from the "joint decision" at the  
September 2005 Meeting that the "initial buy" would be Eveready securities, he played basically  
no role in the activities undertaken in the Douglas Account, and that he did not know who –  
whether Bert Holtby, Richard Kowalchuk or both directed the purchases and sales of securities  
in the account. Douglas admitted in the Douglas Settlement Agreement that the initial buy of  
Eveready securities in the Douglas Account was executed by Richard Kowalchuk at Bert  
Holtby's "direction and with Douglas's knowledge and input", and that the purchases and sales of  
securities in the account were made by Bert Holtby, Richard Kowalchuk or both. Although Bert  
Holtby characterized Douglas's evidence about the initial buy as inconsistent and thus  
demonstrative of Douglas's lack of reliability, we do not discern any material inconsistency in  
Douglas's evidence on this point or generally concerning his role in relation to the Douglas  
Account and his limited knowledge of how purchases and sales in the account were directed. It  
is not disputed and the evidence is that Douglas contributed no personal money other than his  
initial deposit of $10 000 in September 2005. Consistent with this minimal personal monetary  
contribution and with Richard Kowalchuk's evidence, Douglas testified that he had no input into  
or active involvement with any purchases or sales of securities, other than the initial buy, in the  
Douglas Account. Having considered the totality of the evidence, we are satisfied it is more  
likely than not, and we find, that Douglas had no input into or active involvement with any  
purchases or sales of securities, other than the initial buy, in the Douglas Account.  
[529] Bert Holtby testified that he never provided any instructions to purchase or sell any  
securities in the Douglas Account. We do not find this testimony credible. Having considered it  
and Richard Kowalchuk's evidence on this point in light of all other evidence, we accept Richard  
Kowalchuk's evidence as credible, it being supported by or consistent with other evidence before  
us.  
[530] Consistent with Richard Kowalchuk's evidence concerning the purpose of the Douglas  
Account and with Richard Kowalchuk's and Douglas's evidence as to Bert Holtby's involvement  
in the account, including Richard Kowalchuk's evidence that the purchases and sales of securities  
in the account were directed principally by Bert Holtby, is that, other than the initial $10 000  
paid by Douglas, all of the money deposited to the Douglas Account was sourced from either  
Bert Holtby or Richard Kowalchuk. The initial deposits were made in accordance with the  
proportional-ownership arrangement Bert Holtby transferred $90 000 from the Holtby Account  
($40 000 of which came from Richard Kowalchuk and was routed through the Holtby Account),  
and $10 000 came from Douglas. It is telling, in our view, that Douglas did not request, and had  
no apparent need for, any of this money sourced from Bert Holtby and Richard Kowalchuk;  
rather, it was offered up by them. In February 2006 $10 000 was deposited to the Douglas  
Account, sourced from Richard Kowalchuk (which money was repaid from the Douglas Account  
in March 2006). In May 2006 $50 000 was deposited to the Douglas Account, sourced from  
Bert Holtby (which money was paid to Bert Holtby's nephew-in-law from the Douglas Account  
in October 2007). In July 2008 $11 200 was deposited to the Douglas Account, sourced from  
Richard Kowalchuk. On 19 March 2009 $50 000 was deposited to the Douglas Account,  
sourced from Bert Holtby. On 29 April 2009 $30 000 was deposited to the Douglas Account,  
sourced from Richard Kowalchuk. We note that the proportional-ownership arrangement to  
which Richard Kowalchuk and Douglas testified was essentially maintained throughout the  
period these additional amounts were deposited to and in some instances paid from the Douglas  
Account. We simply do not believe Bert Holtby's testimony that $50 000 of his $90 000 transfer  
and the two subsequent deposits (each $50 000) sourced by him were loans to Douglas for  
Douglas's benefit, having considered this testimony in light of all other evidence, including the  
evidence of the use to which this money was put.  
[531] Also consistent with Richard Kowalchuk's evidence concerning the purpose of the  
Douglas Account and with Richard Kowalchuk's and Douglas's evidence as to Bert Holtby's  
involvement in the account, particularly Richard Kowalchuk's evidence that the purchases and  
sales of securities in the account were directed principally by Bert Holtby, is that there were, by  
far, more purchases of Eveready securities than any other security in the Douglas Account.  
Indeed, from the inception of the Douglas Account until August 2009 when Eveready Shares  
were exchanged for Clean Harbors Shares, only two other issuers' securities were purchased and  
sold in the account. By 22 September 2005 the Douglas Account had on deposit $100 000. A  
few days later 8000 Eveready Units were purchased for approximately $45 000 and by the end of  
October 2005 the Douglas Account had paid a total of $70 515 (including commissions) for  
12 600 Eveready Units. The only purchases and sales of securities in the Douglas Account were  
purchases and sales of Eveready securities until August 2006 when 5000 Destiny securities were  
purchased for almost $50 000, 2600 of which were sold in September 2006, the balance in  
October 2006. Then, the only purchases and sales of securities in the Douglas Account were  
purchases and sales of Eveready securities from November 2006 until July 2007 when 3000 Peak  
securities were purchased for approximately $15 300, 600 of which were sold in July 2008, the  
balance in May 2009. Thereafter, the Douglas Account held only Eveready Shares until August  
2009 when they were exchanged for Clean Harbors Shares.  
[532] We make note of a particular purchase of Eveready securities. On 23 February 2006  
$10 000 sourced from Richard Kowalchuk was deposited to the Douglas Account because, he  
told us, the account was under-margin due to a purchase of 20 000 Eveready Units part of a  
"president's list" offering of Eveready Units under a prospectus three or more days earlier.  
Bert Holtby recalled recommending at a Board meeting that Douglas be put on an Eveready  
president's list. According to Bert Holtby, he had asked Douglas whether he wanted this to  
happen but did not know whether it had and, if so, whether he had participated or not. However,  
Douglas testified that he was not aware or told that his name was included on this Eveready's  
president's list.  
That Bert Holtby was admittedly instrumental in having Douglas's name  
included on this Eveready's president list is strongly indicative of his having directed this  
purchase of Eveready securities in the Douglas Account.  
[533] Also consistent with Richard Kowalchuk's evidence concerning the purpose of the  
Douglas Account and with Richard Kowalchuk's and Douglas's evidence as to Bert Holtby's  
involvement in the account, particularly Richard Kowalchuk's evidence that the purchases and  
sales of securities in the account were directed principally by Bert Holtby, is that throughout the  
history of the Douglas Account there were purchases of Eveready securities made while Bert  
Holtby was in blackout periods. These were purchases well-timed to benefit financially from  
favourable market reaction to any positive financial or other information, once generally  
disclosed. Some of these purchases were ultimately profitable.  
[534] The Douglas Account purchased 4600 Eveready Units on 25 October 2005 (with a  
settlement date of 28 October); this purchase was made while Bert Holtby was in a blackout  
period due to the pending release of Eveready's third-quarter financial results, which occurred on  
14 November 2005.  
[535] Also, on 4 May 2006 Bert Holtby gave Douglas a cheque for $50 000, which amount  
Douglas routed through his bank account and deposited on 5 May to the Douglas Account.  
Forthwith, the Douglas Account purchased 13 000 Eveready Units on 4, 5, 8 and 9 May (with  
settlement dates of 9, 10, 11 and 12 May) for $94 800 (including commissions), which purchases  
were made while Bert Holtby was in a blackout period due to the pending release of Eveready's  
first-quarter financial results. On 9 May Eveready released its first-quarter financial results  
together with a very positive news release. Less than one week later and after the "outstanding  
quarter" news release, 3000 Eveready Units were sold from the Douglas Account at a profit.  
[536] At the 15 January 2009 Board Meeting, attended by Bert Holtby, a trading blackout was  
imposed on all those with knowledge of the Proposed Acquisition, including Eveready directors,  
which trading blackout remained in place until the issuance of the 29 April 2009 News Release.  
Bert Holtby attended the 11 March 2009 Board Meeting in Edmonton. At this meeting, the  
Board was advised that Eveready had entered into the Letter of Intent with Clean Harbors and  
that the parties were in the process of commencing due diligence. The next day 12 March –  
there were two telephone calls between Bert Holtby and Richard Kowalchuk, the first for 12  
minutes from 8:26 a.m. Alberta time and the second for four minutes from 9:43 a.m. Alberta  
time. Immediately following the first of these telephone calls, Richard Kowalchuk placed a limit  
order to purchase 4000 Eveready Shares at $1.60 through the Douglas Account, which was not  
filled.  
Richard Kowalchuk testified that, in conversations with Bert Holtby, Bert Holtby  
"explained to me that I should be buying Eveready" because Bert Holtby "thought that it was  
going to be going up". We think it reasonable and logical to infer from these facts and the fact  
that on 12 March Bert Holtby provided a $50 000 cheque to Douglas for deposit to the Douglas  
Account that it is more likely than not that, in the 12-minute 12 March telephone call, Bert  
Holtby directed Richard Kowalchuk to purchase Eveready Shares through the Douglas Account,  
purchases to be funded by Bert Holtby. On 19 March (settling on 24 March) Richard  
Kowalchuk purchased 5000 Eveready Shares through the Douglas Account. Richard Kowalchuk  
testified that he would have had a conversation with Bert Holtby explaining what he had  
purchased. From 1 to 28 April 2009 (settling from 6 April to 1 May 2009) the Douglas Account  
purchased a further 23 000 Eveready Shares. Richard Kowalchuk testified that all of these  
purchases in April 2009 were instructed by Bert Holtby. On 29 April $30 000 sourced from  
Richard Kowalchuk was deposited through Douglas to the Douglas Account because a margin  
position had to be covered as a result of these Eveready Share purchases.  
[537] The last purchase of Eveready securities in the Douglas Account prior to the March and  
April 2009 purchases was in August 2007. On 30 January 2009, following the 5:1 share  
consolidation, the Douglas Account held 5045 Eveready Shares. Between 19 March and  
28 April 2009 the Douglas Account purchased a total of 28 000 Eveready Shares. On 28 April  
2009 the Douglas Account held 33 045 Eveready Shares, a greater than six-fold increase in the  
Eveready position. We think it reasonable and logical to infer from such a sudden and large  
increase in the Douglas Account holding of Eveready Shares that these purchases of Eveready  
Shares were made on the basis of Bert Holtby's knowledge of the non-public Proposed  
Acquisition.  
[538] Further consistent with Richard Kowalchuk's evidence concerning the purpose of the  
Douglas Account and with Richard Kowalchuk's and Douglas's evidence as to Bert Holtby's  
involvement in the account, including Richard Kowalchuk's evidence that the purchases and  
sales of securities in the account were directed principally by Bert Holtby, is that Bert Holtby  
had online access to the Douglas Account and so had the ability to monitor all activity in the  
Douglas Account.  
Douglas testified that Bert Holtby requested "he be provided with the  
password and data to access the account", which Douglas provided. Douglas also told us that, a  
few years later, when Bert Holtby requested that Douglas change the password which, Bert  
Holtby said, would not work for some reason Douglas changed the password and provided it to  
Bert Holtby. Bert Holtby admitted that Douglas had given him the online user name and  
password for the Douglas Account but only because Douglas had wanted Bert Holtby to look at  
"a trade or something to that effect" about which Douglas was excited. Bert Holtby testified that  
he was not aware he had asked Douglas for login particulars a second time. We do not find  
credible Bert Holtby's explanation for receiving login particulars for the Douglas Account –  
information that most people consider sensitive and confidential personal information not  
typically shared with friends or indeed family. Rather, the most likely explanation for Bert  
Holtby's having online access to the Douglas Account is that he was one of the owners of, and  
had control and direction over, the Douglas Account and, as such, was entitled to and wanted to  
be able to monitor all activity in the account.  
[539] For these reasons, we find it is more likely than not that Bert Holtby had a financial  
interest in the Douglas Account and thus was a beneficial owner of the account. We also find it  
is more likely than not that Bert Holtby principally directed the purchases and sales of securities  
in, and thus had control and direction over, the account more specifically, that he directed the  
purchases of Eveready securities (securities in which he had a particular interest) in the Douglas  
Account.  
Alleged Illegal Insider Trading  
[540] The evidence is clear that throughout March and April 2009 Bert Holtby had knowledge  
of the non-public Proposed Acquisition. Whether Richard Kowalchuk purchased the Eveready  
Shares through the Douglas Account with such knowledge is not relevant in our consideration of  
the illegal insider trading allegation against Bert Holtby.  
What is relevant is that, with  
knowledge of the non-public Proposed Acquisition, Bert Holtby, a person in a special  
relationship with Eveready, directed or instructed that purchases of Eveready Shares be made  
through the Douglas Account, of which he was a beneficial owner.  
[541] In conclusion, having considered the totality of the evidence, we find that Bert Holtby, a  
person in a special relationship with Eveready with knowledge of the non-public Proposed  
Acquisition, caused the purchase of purchased Eveready Shares through the Douglas  
Account from 19 March through 28 April 2009, contrary to section 147(2) of the Act. This  
allegation of illegal insider trading is sustained.  
(b)  
Did Bert Holtby Engage in Illegal Informing, or Recommending or  
Encouraging?  
(i)  
Parties' Positions  
[542] Staff argued that the most reasonable and probable inference to be drawn from the facts  
and circumstances is that Bert Holtby informed each of Richard Kowalchuk, Wreggit, Dale  
Holtby, Shepert, Landsiedel and Burdeyney of the Proposed Acquisition before it was generally  
disclosed in the 29 April 2009 News Release, or alternatively he, with knowledge of the non-  
public Proposed Acquisition, recommended or encouraged them to purchase Eveready Shares.  
Staff relied on Richard Kowalchuk's and Wreggit's admissions that Bert Holtby informed them  
of the non-public Proposed Acquisition. Staff argued that "the collective pattern of very timely  
trading in Eveready by those in proximity to Bert Holtby" leads to the natural and probable  
inference that Bert Holtby also informed Dale Holtby, Shepert, Landsiedel and Burdeyney –  
family and friends of the Proposed Acquisition before it was generally disclosed, or  
recommended or encouraged them to purchase Eveready Shares.  
[543] Bert Holtby argued that his testimony is probable and believable he stated that he did  
not inform any person other than his wife of the non-public Proposed Acquisition. He also  
testified he understood that he was prohibited from trading on non-public material information  
about Eveready and from "tipping" others. Bert Holtby argued that there is no plausible reason  
why he would disclose insider information to Richard Kowalchuk or any of the other  
Respondents. Bert Holtby noted that at the 15 January 2009 Board Meeting he participated in  
the Board's decision to impose a trading blackout. Bert Holtby urged us to disregard Richard  
Kowalchuk's evidence on this point (indeed in its entirety) because Richard Kowalchuk was not  
a credible or reliable witness as evidenced by numerous inconsistencies in his evidence. Bert  
Holtby urged us to prefer his viva voce evidence over "the record concerning Wreggit", the latter  
"leav[ing] many questions about Wreggit's story unanswered" and there being no satisfactory  
reason for Staff's failure to call Wreggit as a witness. Bert Holtby argued that each of the other  
Respondents provided a believable and credible explanation for their purchasing of Eveready  
Shares, and each of them, consistent with his own denials, denied acquiring knowledge of the  
non-public Proposed Acquisition from Bert Holtby or others with a connection to him. Finally,  
Bert Holtby argued that he could not have encouraged others to purchase Eveready Shares as  
alleged because he did not inform them as alleged.  
(ii)  
Findings  
[544] There is no dispute that Bert Holtby had knowledge of the Proposed Acquisition from, at  
the latest, 26 January 2009 until it was generally disclosed in the 29 April 2009 News Release.  
What is in dispute is whether Bert Holtby, with knowledge of the non-public Proposed  
Acquisition, informed Richard Kowalchuk, Wreggit, Dale Holtby, Shepert, Landsiedel and  
Burdeyney of it, or alternatively recommended or encouraged that they purchase Eveready  
Shares. There is conflicting evidence, some of it direct evidence.  
[545] Having considered the totality of the evidence, particularly the contact between Bert  
Holtby and each person alleged to have been informed or recommended or encouraged in the  
months or weeks leading up to the issuance of the 29 April 2009 News Release, the relationship  
between Bert Holtby and each such person, and the circumstances surrounding and explanations  
for the purchases of Eveready Shares in the Relevant Period, we do not find Bert Holtby's denials  
credible we do not believe that he did not inform any person (but his wife) of the non-public  
Proposed Acquisition, nor do we believe that he did not recommend or encourage the purchase  
of Eveready Shares when he had knowledge of the non-public Proposed Acquisition. We also do  
not find credible the corresponding denials of Dale Holtby, Landsiedel and Burdeyney. As we  
found, Bert Holtby, a seasoned and successful businessman, was very well acquainted with the  
prohibitions on insider trading and informing. Accordingly, we think it likely that Bert Holtby  
would in general be cautious in his sharing of what he knew was non-public material  
information. We think the most reasonable and logical inference to be drawn from all the facts  
and circumstances is that, in the period leading up to the general disclosure of the Proposed  
Acquisition, Bert Holtby informed certain members of his family (Wreggit and Dale Holtby) and  
certain other persons with whom he had a close business and personal relationship (Richard  
Kowalchuk and Burdeyney) of the Proposed Acquisition, and recommended or encouraged  
another with whom he had a sufficiently close personal relationship (Landsiedel) to purchase  
Eveready Shares. We now review certain key facts and circumstances leading us to draw this  
inference.  
Richard Kowalchuk  
[546] Richard Kowalchuk admitted in his testimony, in the Richard Kowalchuk Settlement  
Agreement and in his two Investigative Interviews that Bert Holtby informed him of the non-  
public Proposed Acquisition, an admission which Bert Holtby urged us to reject as not being  
credible. Instead, Bert Holtby urged us to believe his testimony to the contrary. Noting that  
"Eveready was viewed by many market participants as an attractive buy in March/April 2009",  
Bert Holtby also suggested that Richard Kowalchuk's activities involving Eveready Shares in the  
Relevant Period were consistent with an "intense interest in Eveready", particularly following the  
release of Eveready's 2008 Audited Financial Statements and December 2008 MD&A on  
12 March 2009 and the issuance of the 14 April 2009 News Release.  
[547] To reiterate, we do not believe Bert Holtby's testimony on this point. Nor does the  
evidence satisfy us that Richard Kowalchuk's activities involving Eveready Shares in March and  
April 2009 were prompted only by Eveready being "an attractive buy" in that period. We do not  
believe that Richard Kowalchuk, a successful broker, would, in March and April 2009 in the  
midst of one of the greatest market meltdowns in modern history, be fortunate enough to read the  
market for Eveready Shares so accurately that the numerous aggressive and risky investments he  
made in Eveready for himself and his wife and on behalf of many of his clients would  
ultimately increase in value well over 200% in a few weeks' time. Moreover, if one, who has  
been informed of non-public material information, has another legitimate reason to purchase the  
securities (or does not purchase at all), this legitimate reason does not negate the illegal  
informing.  
[548] Rather, we believe Richard Kowalchuk's testimony that he was informed of the non-  
public Proposed Acquisition by Bert Holtby, which is supported by or consistent with other  
evidence, including:  
Bert Holtby and Richard Kowalchuk had a long-time personal and business  
relationship. We found that Bert Holtby trusted Richard Kowalchuk enough to  
enlist his assistance in setting up the Douglas Account so that Bert Holtby could  
purchase and sell Eveready Shares uninhibited by Eveready corporate governance  
policies or legal impediments. We believe that Bert Holtby, a person very well  
aware of prohibitions on trading on non-public material information about  
Eveready, felt secure in sharing such information with Richard Kowalchuk, a  
person he trusted and apparently believed would keep such information  
confidential.  
The circumstances contact, timing, funding and volume purchased –  
surrounding the purchasing of Eveready Shares in the Douglas Account in March  
and April 2009 discussed above are, in our view, consistent with Richard  
Kowalchuk's admission that Bert Holtby had informed him of the non-public  
Proposed Acquisition.  
Richard Kowalchuk purchased Eveready Shares in his and his wife's TFSAs on  
27 April 2009, on or about which date (according to an admission in the Richard  
Kowalchuk Settlement Agreement) Bert Holtby told Richard Kowalchuk that the  
acquisition price for Eveready Shares would be approximately $10 per Share.  
There is no evidence that Richard Kowalchuk was in contact with, or was  
informed of the non-public Proposed Acquisition by, any other person in a special  
relationship with Eveready in the Relevant Period. Peter Stubbs, the only person  
associated with Eveready other than Bert Holtby with whom Richard Kowalchuk  
had a relationship, was not in a special relationship with Eveready and was not  
one of the persons Eveready identified as having knowledge of the non-public  
Proposed Acquisition.  
Richard Kowalchuk alerted multiple clients about Eveready, and between  
13 April 2009 and the issuance of the 29 April 2009 News Release placed  
purchase orders for Eveready Shares on behalf of multiple clients, including  
Randy Kowalchuk, Laura Kowalchuk, Tanner, Bratvold and Stock.  
It was Tanner's testimony that on 23 April 2009 Richard Kowalchuk told him that  
Eveready was a "possible takeover target" and was "going to go up in value".  
In the Bratvold Settlement Agreement, Bratvold admitted that Richard  
Kowalchuk advised him Eveready was "an attractive candidate for a takeover and  
it was a good time to buy the stock" and that Richard Kowalchuk "was unusually  
excited about this recommendation".  
For reasons already discussed, we discern no reasonable motive for Richard  
Kowalchuk to make false admissions implicating Bert Holtby.  
[549] In conclusion, having considered the evidence as a whole, we find it more likely than not  
that Bert Holtby informed Richard Kowalchuk of the Proposed Acquisition before it was  
generally disclosed in the 29 April 2009 News Release.  
[550] Having determined that Bert Holtby informed Richard Kowalchuk of the non-public  
Proposed Acquisition, we must also determine when he did so, as this is relevant for our  
determination of other allegations.  
[551] There are inconsistencies in Richard Kowalchuk's evidence in his testimony, the  
Richard Kowalchuk Settlement Agreement and his Investigative Interviews as to when he was  
informed by Bert Holtby of the non-public Proposed Acquisition.  
[552] In his Investigative Interviews, occurring one year or so after the impugned purchases of  
Eveready Shares, Richard Kowalchuk admitted that Bert Holtby told him in March 2009 that  
Eveready would be purchased at a premium and might have identified Clean Harbors as the  
acquirer, and that in a second conversation (which he believed occurred sometime between mid  
to late April) Bert Holtby identified Clean Harbors as the acquirer (if he had not earlier done so)  
and stated a purchase price of approximately $10 per Share. In his first Investigative Interview,  
Richard Kowalchuk candidly admitted that he was not certain of the exact date in March it  
might have been earlier but he believed it was in March because he recalled Bert Holtby  
telephoning him from Edmonton. In his second Investigative Interview, Richard Kowalchuk  
again said that, although he could not remember the exact date, he believed, given the Eveready  
Share purchases in the Douglas Account and particularly the first purchase on 19 March, it was  
in March 2009 that Bert Holtby informed him by telephone of the non-public Proposed  
Acquisition.  
[553] In the Richard Kowalchuk Settlement Agreement, Richard Kowalchuk admitted that: on  
or about 19 March 2009 Bert Holtby advised Richard Kowalchuk that Eveready was going to be  
acquired, at a premium to its current Share price, by Clean Harbors; on 23 April 2009 Bert  
Holtby advised Richard Kowalchuk that Clean Harbors' purchase of Eveready would be publicly  
announced on 29 April 2009; and on or about 27 April 2009 Bert Holtby advised Richard  
Kowalchuk that, in purchasing Eveready, Clean Harbors' purchase price for Eveready Shares  
would be approximately $10 per Share.  
[554] In his direct testimony, Richard Kowalchuk claimed not to recall the exact date when  
Bert Holtby informed him of the non-public Proposed Acquisition but thought it was in April  
2009. When referred to the deposit of $50 000 and the purchase of Eveready Shares on 19  
March 2009, Richard Kowalchuk testified that he then began purchasing Eveready Shares  
because, in conversations with Bert Holtby, Bert Holtby "explained to me that I should be buying  
Eveready" "he thought that it was going to be going up, and . . . I can't recall the entire  
conversation, whether we discussed who was buying the company or why it was going up".  
When referred to purchases of Eveready Shares made through the Douglas Account in April  
2009, Richard Kowalchuk testified that they were "done in conjunction with conversations with  
Bert Holtby" at sometime he could not recall the dates but believed they occurred "somewhere  
in between" these April purchases.  
[555] In cross-examination by Bert Holtby's counsel, Richard Kowalchuk confirmed that, in  
light of his testimony in direct examination, he was not trading on any insider information in the  
month of March 2009 (as he had said when interviewed by Staff and as he had admitted in the  
Richard Kowalchuk Settlement Agreement), and he could not explain why his recollection had  
changed. Richard Kowalchuk also conceded that he had no recollection of Bert Holtby advising  
on 23 April 2009 that Clean Harbors' purchase of Eveready would be publicly announced on  
29 April (as was admitted in the Richard Kowalchuk Settlement Agreement); said that (as was  
the case when he was interviewed by Staff) he could not be sure of the date when Holtby advised  
that the purchase price pursuant to the Proposed Acquisition would be approximately $10 per  
Share (although he had admitted to "on or about 27 April" in the Richard Kowalchuk Settlement  
Agreement); and agreed that for the trades occurring on or before 27 April 2009 "[i]t's possible"  
he still did not have any insider information "it's been a long time, and I -- I can't guarantee  
what I knew at that point in time and what I know now." However, concerning an email chain  
between him and his brother, Richard Kowalchuk ultimately testified that his emailed response  
was made in an effort to obscure that he and Randy Kowalchuk knew about the Proposed  
Acquisition by 21 April 2009. Richard Kowalchuk also testified that in late April 2009 with  
specific reference to his purchases in his TFSA and his wife's on 27 April he believed that  
Eveready Shares were "probably worth at least $5, if not more, because I think, at that point in  
time, I knew it was going to be taken over". He elaborated: "I can't be -- I'm unsure of the exact  
dates, but I do remember that I did purchase the stock with knowledge of it. I would not have  
given up my career if I didn't."  
[556] Questioned by the panel, Richard Kowalchuk said that he knew before 29 April 2009 but  
did not know before the beginning of April that Eveready was going to be sold it was sometime  
in April that he became aware of this and from Bert Holtby.  
[557] It is clear to us that Richard Kowalchuk's testimony when speaking to the dates on which  
he was informed by Bert Holtby of the non-public Proposed Acquisition is not credible. When  
speaking to this topic, he was at times evasive or conveniently forgetful. Further, he offered no  
explanation as to why his recollection would have improved from March and May 2010 and  
April 2011 to when he testified in May 2012. Moreover, his testimony concerning this topic is  
inconsistent with other evidence before us and not believable given the evidence as a whole. We  
surmise he changed the dates in his testimony out of a concern that his testimony on this topic  
might implicate, or be damaging to, some of the Respondents, namely his brother Randy  
Kowalchuk and his client Tanner in relation to the allegations they faced in the Merits Hearing.  
We think it not at all unexpected that Richard Kowalchuk would attempt to present his evidence  
in such a manner that it might provide assistance to his brother and a former client in answering  
the allegations against them, alleged misconduct in which he played a part.  
[558] Having considered the totality of the evidence, we believe it more likely than not that  
Bert Holtby informed Richard Kowalchuk of the non-public Proposed Acquisition by, at the  
latest, 19 March 2009. Indeed, we think it very plausible that the information was given as early  
as 12 March in the first of two telephone calls between Bert Holtby and Richard Kowalchuk  
following the 11 March 2009 Board Meeting that Bert Holtby attended in Edmonton. Further,  
given the four-minute telephone call between Bert Holtby and Richard Kowalchuk on 23 April  
2009 and the six-minute telephone call between them on 26 April, we believe it more likely than  
not that Bert Holtby informed Richard Kowalchuk of the announcement date on 23 April and of  
the acquisition price on or about 27 April, as set out in the Richard Kowalchuk Settlement  
Agreement.  
[559] We conclude that Bert Holtby informed Richard Kowalchuk of the non-public Proposed  
Acquisition by, at the latest, 19 March 2009 and perhaps as early as 12 March after considering  
the following evidence. On three separate occasions Richard Kowalchuk voluntarily advised  
Staff that Bert Holtby first informed him of the non-public Proposed Acquisition in mid-March  
2009. The first two times were approximately one year after the impugned purchases of  
Eveready Shares on 22 March 2010 and then on 3 May 2010 when presumably Richard  
Kowalchuk's recollection of events would have been clearer and more accurate. The third time  
was approximately one year later when he entered into the Richard Kowalchuk Settlement  
Agreement, for which admitted misconduct he has suffered severe consequences. Consistent  
with those admissions are the following events, all in our view supportive of Richard  
Kowalchuk's statements that Bert Holtby first informed him of the non-public Proposed  
Acquisition in mid-March 2009:  
The 12-minute telephone call between Bert Holtby and Richard Kowalchuk on  
12 March, the day after the 11 March 2009 Board Meeting in Edmonton, is  
consistent with Richard Kowalchuk's recollection in his first Investigative  
Interview that Bert Holtby was in Edmonton when they spoke via telephone that  
day. At the 11 March 2009 Board Meeting, the Letter of Intent and the due  
diligence process were discussed. The Board's reaction, according to Brennan,  
was: "By this point in time, I think people are getting excited. I think they're  
thinking, Wow, this deal has a chance of happening. This is now looking like a  
good deal."  
On 12 March Bert Holtby had his wife write a cheque for $50 000 drawn on their  
bank account and payable to Douglas, this for deposit to the Douglas Account.  
The same day Richard Kowalchuk placed a limit order for Eveready Shares. This  
limit order and another placed on 16 March, both with an order price of $1.60,  
were never filled. Indeed, having regard to the prices at which Eveready Shares  
were trading on those two days, it was unlikely that these limit buy orders would  
be filled. These unfilled orders could be viewed as inconsistent with Bert Holtby  
informing Richard Kowalchuk of the non-public Proposed Acquisition as early as  
12 March. However, when we consider them in light of all other evidence, we  
think these unfilled orders could be viewed indeed are better viewed as  
consistent with Bert Holtby so informing Richard Kowalchuk. To that end, we  
note Richard Kowalchuk's testimony that in trading Eveready securities through  
the Douglas Account he tried not to move the market price upwards and not to  
raise any alarms; his testimony satisfies us that he was alert to trading strategies,  
including the use of limit orders, that could deflect unwanted attention from any  
illegal trading activities.  
On 11 and 12 March 2009 Bert Holtby telephoned Wreggit. In a telephone call in  
mid-March, according to the Wreggit Settlement Agreement, Bert Holtby told  
Wreggit that "Eveready was in a sales process and that it should be sold at a better  
price than it was then trading at", which is very similar to what Richard  
Kowalchuk said Bert Holtby told him about the Proposed Acquisition around the  
same time.  
On 19 March Douglas deposited the $50 000 sourced from Bert Holtby to the  
Douglas Account and Richard Kowalchuk made his first 2009 purchase of  
Eveready Shares through the Douglas Account. Richard Kowalchuk said in his  
second Investigative Interview that this purchase prompted his recollection that by  
that date he would have known of the non-public Proposed Acquisition from Bert  
Holtby. On 1 April Richard Kowalchuk purchased additional Eveready Shares  
through the Douglas Account, with further purchases throughout April ending on  
28 April, the day before the issuance of the 29 April 2009 News Release.  
[560] For these reasons, we find that Richard Kowalchuk learned of the non-public Proposed  
Acquisition from Bert Holtby by, at the latest, 19 March 2009.  
[561] In conclusion, we find it more likely than not that Bert Holtby, a person in a special  
relationship with Eveready, informed Richard Kowalchuk of the Proposed Acquisition before it  
was generally disclosed in the 29 April 2009 News Release, contrary to section 147(3) of the  
Act. This allegation of illegal informing is sustained.  
Wreggit  
[562] Wreggit admitted in his Investigative Interview and in the Wreggit Settlement Agreement  
that Bert Holtby informed him of the non-public Proposed Acquisition.  
[563] In his testimony Bert Holtby denied that he informed Wreggit of the Proposed  
Acquisition before it was generally disclosed in the 29 April 2009 News Release. Having  
considered Bert Holtby's denial in light of all other evidence, we find it is not credible. While  
mindful of the untested nature of Wreggit's evidence, we conclude that it is more in harmony  
with the preponderance of the evidence as a whole, including the following:  
Bert Holtby and Wreggit are brothers-in-law with a relatively close relationship.  
Because of their longstanding familial relationship, we believe that Bert Holtby  
trusted his brother-in-law enough to feel secure in disclosing the non-public  
Proposed Acquisition to him, information that Bert Holtby knew would benefit  
his sister and brother-in-law financially.  
There were on 10 and 11 March 2009 telephone communications between  
Bert Holtby and Wreggit shortly before Wreggit began purchasing Eveready  
Shares in March and April 2009, the first purchase of 4600 Eveready Shares  
having a purchase date of 16 March 2009 and a settlement date of 19 March.  
Between 16 March and 16 April 2009 (settling between 19 March and 21 April)  
Wreggit purchased a significant number 18 237 of Eveready Shares for a total  
cost of almost $50 000.  
We discern no reasonable motive for Wreggit to make false admissions  
implicating his brother-in-law. Wreggit's admissions implicated himself in illegal  
insider trading, for which he has suffered severe consequences, including payment  
of $165 000 to the Commission and his permanent resignation as a mutual fund  
salesperson. Had Bert Holtby not informed Wreggit of the non-public Proposed  
Acquisition, there would have been no admissions to make as no wrongful acts  
would have been committed.  
[564] In conclusion, having considered the evidence as a whole, we find it more likely than not  
that Bert Holtby, a person in a special relationship with Eveready, informed Wreggit of the  
Proposed Acquisition before it was generally disclosed in the 29 April 2009 News Release,  
contrary to section 147(3) of the Act. This allegation of illegal informing is sustained.  
Dale Holtby  
[565] Both Bert Holtby and Dale Holtby testified that they never, at any time, discussed the  
Proposed Acquisition, and specifically not at any time before the issuance of the 29 April 2009  
News Release. Having considered their denials in light of all other evidence, we do not find  
either of their denials believable they are not in harmony with the preponderance of the  
evidence as a whole. We make particular note of the following evidence and inferences and  
conclusions drawn from that evidence:  
We do not believe Dale Holtby's testimony that he and Bert Holtby are not close,  
that Bert Holtby has not forgiven him for the loss of the family farm and that Bert  
Holtby has never given him "tips" or helped him "in a way like that". Bert Holtby  
described their relationship as not close "[o]nly because of distance", not because  
of animus. We think that description more accurate of their relationship. Bert  
Holtby and Dale Holtby are brothers with a close enough relationship that Bert  
Holtby travelled to California to visit Dale Holtby and stay with him and his wife  
for the 21-23 March 2009 weekend. Through this visit and the use of Skype to  
communicate, there had been greater contact between the brothers in recent years.  
Bert Holtby also testified that "after the farm episode" he had loaned Dale Holtby  
$75 000 to $100 000 for a travel agency or tour company venture. We think it  
more likely than not that Bert Holtby had a sufficiently close relationship with his  
brother to trust his brother enough to feel secure in disclosing the non-public  
Proposed Acquisition to him information which would financially benefit his  
brother, who Bert Holtby knew was of limited means and had struggled  
financially over the years.  
Around 18 March 2009 Dale Holtby received $57 000 from his mother's estate.  
This was deposited to the BC Bank Account, where it remained until he began  
transferring money to Shepert on 30 March 2009. Between these two dates was  
the visit of Bert Holtby, a person in a special relationship with Eveready who had  
knowledge of the non-public Proposed Acquisition and who had in mid-March  
told his brother-in-law Wreggit, according to the Wreggit Settlement Agreement,  
that "Eveready was in a sales process and . . . it should be sold at a better price  
than it was then trading at" or words to that effect. At the time of his March 2009  
visit, Bert Holtby would have known that Dale Holtby had received money from  
their mother's estate and so had money to invest.  
The evidence is, and we find, that on or before 25 March 2009 within days of  
Bert Holtby's March 2009 visit Dale Holtby asked Shepert whether Shepert  
would purchase Eveready Shares for Dale Holtby through Shepert's trading  
account. In so finding, we note that certain of Dale Holtby's testimony is directed  
at having us believe he transferred $19 300 to Shepert to buy "whatever" stocks  
Shepert decided to buy and that it was a mere coincidence that Shepert "liked  
Eveready the best", a company of which Dale Holtby's brother who had just  
visited was a director with knowledge of non-public material information.  
Inconsistently, certain of Dale Holtby's testimony is directed at having us believe  
that he wanted Shepert to purchase Eveready Shares for him, sent him $9800 for  
this purpose and then for some reason got up the "nerve" to send a further $9500  
to purchase additional Eveready Shares.  
We do not believe either Dale Holtby's or Shepert's explanation for using the  
Shepert Account to purchase Dale Holtby's Eveready Shares. According to Dale  
Holtby, this was because he did not know how to open a trading account;  
according to Shepert, it was because Dale Holtby was an American without a  
Canadian trading account. Prior to their Eveready investments, Dale Holtby and  
Shepert had not discussed investing in securities, and before March 2009 Shepert  
had never been asked to purchase, or purchased, any securities for Dale Holtby.  
There is no evidence that Dale Holtby attempted to open a trading account in  
March or April 2009, although we note he subsequently in 2010 opened a  
trading account with TD Ameritrade through which he purchased securities of a  
Canadian issuer trading on the TSX (and Eveready was a Canadian issuer with  
securities trading on the TSX).  
Also within days of Bert Holtby's March 2009 visit on or before 26 March –  
Dale Holtby telephoned his daughter Tracy Kaufman and discussed Eveready  
with her and her husband Arnold Kaufman. The Kaufmans then opened a joint  
trading account (on 26 March) for, we find, the purpose of buying Eveready  
Shares, with their first Eveready Share purchase occurring on 30 March 2009.  
On 29 March 2009 Dale Holtby received Shepert's bank information. On  
30 March and on 16 and 17 April 2009 Dale Holtby forwarded $9800, $5000 and  
$4500, respectively, from the BC Bank Account to Shepert's bank account so that  
Shepert could buy Eveready Shares for Dale Holtby. On 31 March and 20 April  
2009 Shepert purchased a total of 7500 Eveready Shares in the Shepert Account  
on behalf of Dale Holtby using $19 069 of the $19 300 sent by Dale Holtby.  
Approximately one week elapsed from Bert Holtby's March 2009 visit until  
Shepert's first purchase of Eveready Shares for Dale Holtby, suggesting that this  
transaction was conducted with some urgency.  
Dale Holtby, an individual of limited means who prior to investing in Eveready  
had never purchased any securities, invested approximately 33% of his  
inheritance almost $20 000 in securities of one issuer, Eveready. This was a  
significant and risky investment for him, especially in the spring of 2009 when the  
North American capital markets remained volatile. This turned out to be a well-  
timed highly profitable venture for him.  
Rather than transferring one lump sum of $19 300 to Shepert to purchase  
Eveready Shares, three separate transfers all under $10 000 were made.  
Similarly, rather than transferring to Dale Holtby one lump sum of $65 000,  
representing total proceeds from the sale of his Eveready Shares less an amount  
retained by Shepert for taxes, Shepert sent seven separate transfers all under  
$10 000 between May and September 2009.  
Dale Holtby's actions raise several concerning questions:  
Why were the transfers of money back and forth all under $10 000?  
Why were the Eveready Shares bought in Shepert's name? If Dale Holtby  
were merely an investor taking a chance on a stock, why did he not open  
his own trading account and purchase the securities in his own name?  
Why did Shepert retain money and pay Dale Holtby's taxes on the gain  
realized from the sale of Dale Holtby's Eveready Shares?  
What was the urgency to purchase Eveready Shares in March and April  
2009 specifically, what was the urgency in a volatile market to purchase  
shares in a junior oil and gas service company which had seen its share  
price decline significantly over the preceding few months, which had  
recently consolidated its shares on a 5:1 basis and which had just advised  
the market it was suspending its quarterly dividend (typically not positive  
news)?  
Why did Dale Holtby invest such a large amount (for him) in what those  
without insider information would have considered to be a risky  
investment?  
We do not believe Dale Holtby's and Shepert's explanations for transferring  
money in multiple tranches. Dale Holtby testified that he sent the money in three  
tranches because the first $9800 sent was all he wanted to invest at the time, after  
which "I just got more nerve and I thought maybe I'd invest a little bit more" –  
$5000 on 16 April. The next day he apparently got even more nerve and sent a  
further $4500.  
He proffered no explanation for getting more "nerve" and  
investing another $9500 in Eveready. It apparently was not anything said by  
Shepert Dale Holtby said that he and Shepert had no further discussions other  
than that Shepert was to use the money sent to him to buy Eveready Shares for  
Dale Holtby. Notably, however, there was a three-minute telephone call from  
Bert Holtby to Dale Holtby on 15 April. Shepert testified that he and Dale Holtby  
probably had a conversation about keeping the money transfers under $10 000  
because they thought there might be a law that prohibited transfers of money over  
$10 000 or a form that had to be completed for transfers of money over $10 000.  
Shepert was not certain whether the idea of keeping transfers of money under  
$10 000 was his idea or Dale Holtby's; Shepert said "I can't think of it as being  
my idea because it was of no value to me". We think that Dale Holtby's and  
Shepert's explanations for using the Shepert Account to purchase Dale Holtby's  
Eveready Shares and for transferring money in multiple tranches point to a  
"consciousness of guilt" on the part of both Dale Holtby and Shepert an effort to  
avoid regulatory detection and supports a reasonable inference that Bert Holtby  
informed Dale Holtby of the non-public Proposed Acquisition.  
Despite Dale Holtby telling us that the only public company he had ever followed  
was his brother's company Eveready and that he was considering an investment in  
Eveready (his first securities investment in his life), Dale Holtby would have us  
believe that he never raised the topic of Eveready or his interest in investing in  
Eveready with Bert Holtby at the March 2009 Barbeque or at all during the March  
2009 visit. We do not believe him. We think it more likely than not that in such  
circumstances it would be commonplace to discuss, or at least attempt to discuss,  
with one's brother a successful businessman a potential first-time investment  
in a company of which the brother was also a director. We think Dale Holtby's  
denial that any discussion, or attempted discussion, about Eveready occurred  
during the March 2009 visit shows consciousness of guilt and supports a  
reasonable inference that Bert Holtby informed Dale Holtby of the non-public  
Proposed Acquisition.  
The testimony of Dale Holtby and Shepert as to who made the decision to  
purchase Eveready Shares for Dale Holtby is inconsistent. Dale Holtby testified  
that in approximately mid-February 2009 he first discussed buying Eveready  
Shares with Shepert, who was in California for the winter months, and that  
Shepert agreed to conduct some research into Eveready and let Dale Holtby know  
what he thought once Shepert got back to Canada. Dale Holtby told us that, after  
Shepert had returned to Canada near the end of March 2009 and had conducted  
some research, Shepert telephoned and told him that he thought Eveready would  
be a good long-term investment for Dale Holtby. Dale Holtby said that Shepert  
also told him about other companies in which Shepert was interested in investing.  
Dale Holtby said he told Shepert: "Well, fine. If -- if you've got better companies  
to invest in, go ahead. You know, use those. But when it all came down to it, he  
said he liked Eveready the best." In contrast, according to Shepert, shortly after  
the March 2009 Barbeque, Dale Holtby telephoned Shepert in Edmonton and  
asked him to purchase Eveready Shares for him. Shepert said that, while they  
may have talked about other oil and gas companies, Dale Holtby's instructions to  
Shepert were to buy Eveready Shares, and to buy as much as he could at the best  
price with the money Dale Holtby would send. Shepert said it was after the  
March telephone call with Dale Holtby that he did a bit of research on Eveready –  
"[a] little bit, but not very much". There being no reason for Shepert to deny  
having recommended Eveready to Dale Holtby or having done some research to  
that end, we simply do not believe Dale Holtby's testimony that he sought  
Shepert's advice on the merits of Eveready as a potential investment. We  
perceive Dale Holtby's claim of relying on Shepert's research and advice as the  
basis for Dale Holtby's purchase of Eveready Shares in March 2009 as an attempt  
by Dale Holtby to minimize his involvement in the decision to purchase Eveready  
Shares. This shows consciousness of guilt and supports a reasonable inference  
that Bert Holtby informed Dale Holtby of the non-public Proposed Acquisition.  
[566] In summary, around the time Bert Holtby told his brother-in-law Wreggit, according to  
the Wreggit Settlement Agreement, that "Eveready was in a sales process and . . . it should be  
sold at a better price than it was then trading at" or words to that effect, Dale Holtby spent the  
weekend with his brother Bert Holtby, a director of Eveready with knowledge of the non-public  
Proposed Acquisition. A few days later Dale Holtby, unfamiliar with the stock market,  
telephoned his daughter Tracy Kaufman and discussed Eveready with her and her husband  
Arnold Kaufman. At approximately the same time, Dale Holtby telephoned Shepert to make  
arrangements for Shepert to buy Eveready Shares for him through Shepert's trading account,  
after which money, in transfers all under $10 000, was sent back and forth between Dale Holtby  
and Shepert. These actions had the effect of keeping the distinctive "Holtby" surname from any  
record of these transactions. And, notably, the first transfer from Dale Holtby occurred a few  
days after he spent the weekend with his brother, and his second and third transfers occurred on  
the two days following the day after he spoke with his brother via telephone. Considering his  
very limited 2009 income and net worth, Dale Holtby made an uncharacteristic, very significant  
(for him) and risky investment in Eveready, his first and only investment at the time. Moreover,  
it was a well-timed investment, one that put him in a position to benefit financially from  
favourable market reaction to the Proposed Acquisition, once generally disclosed. When the  
Proposed Acquisition was publicly announced, Dale Holtby's approximate $19 000 investment  
was worth approximately $76 000, a return of some 300% in less than 30 days. These were not  
ordinary circumstances. Indeed, we find that, considered together, these facts and circumstances  
were highly unusual and are strongly supportive of a reasonable inference that Dale Holtby had  
knowledge of the Proposed Acquisition before its general disclosure in the 29 April 2009 News  
Release.  
[567] In conclusion, having considered the evidence as a whole, we infer it is more likely than  
not that Bert Holtby, a person in a special relationship with Eveready, informed Dale Holtby of  
the Proposed Acquisition by, at the latest, 23 March 2009 and thus before it was generally  
disclosed in the 29 April 2009 News Release, contrary to section 147(3) of the Act. In our view,  
in all the circumstances this is the most likely explanation for Dale Holtby's purchases of  
Eveready Shares. We so find. This allegation of illegal informing is sustained.  
Shepert  
[568] Both Bert Holtby and Shepert testified that they never, at any time, discussed the  
Proposed Acquisition, and specifically not at any time at the March 2009 Barbeque or before the  
issuance of the 29 April 2009 News Release. Having considered the totality of the evidence, we  
cannot conclude on a balance of probabilities that Bert Holtby informed Shepert of the non-  
public Proposed Acquisition, or alternatively that Bert Holtby recommended or encouraged  
Shepert to purchase Eveready Shares.  
[569] We make particular note of the following circumstantial evidence that could support an  
inference that the non-public Proposed Acquisition was discussed by Bert Holtby and Shepert,  
although each denied that happened:  
The evidence is uncontroverted that there was contact between Bert Holtby and  
Shepert at the March 2009 Barbeque at Dale Holtby's home. Though no one  
admitted that the Proposed Acquisition was discussed, Shepert testified that  
Eveready was a topic of conversation and Bert Holtby testified to thinking it was.  
The evidence is uncontroverted that Shepert purchased Eveready Shares four days  
after the March 2009 Barbeque, thereafter accumulating unusually large positions  
for him and his family members over a very short period of time at a level of  
financial risk much greater than was the case with his previous securities  
purchases. As noted by the OSC in Suman (at para. 332): "A substantial,  
uncharacteristic and highly risky investment relative to the trader's previous  
trading patterns and net worth can also constitute a fact supporting an inference of  
insider trading."  
Further, these were well-timed investments, ones that put  
Shepert and his family members in a position to benefit financially from  
favourable market reaction to the Proposed Acquisition, once generally disclosed.  
As we discuss below, Shepert's explanation for his purchases of Eveready Shares  
is not plausible in all the circumstances.  
[570] Despite the evidence just discussed, however, we found that Bert Holtby is a seasoned  
and successful businessman who, through his position as a director of a public company, is very  
well acquainted with the prohibitions on insider trading and informing and with blackout periods.  
We also found that Bert Holtby was a beneficial owner of, and had control and direction over,  
the Douglas Account, a principal purpose of which was to permit Bert Holtby to purchase or sell  
Eveready securities when he was unable to do so because of blackout periods or legal  
impediments and with some assurance of non-detection. We think it likely that Bert Holtby  
would in general be cautious in his sharing of non-public material information. Bert Holtby and  
Shepert were no more than mere acquaintances, by reason only of their respective relationships  
with Dale Holtby. Dale Holtby and Shepert were the ones with the close relationship a close  
friendship. We accept that Bert Holtby and Shepert had not seen, or had any communication  
with, each other in over 45 years when they encountered each other at the March 2009 Barbeque.  
And there is no evidence of any contact between them after the March 2009 Barbeque.  
[571] Shepert's timely contact with Bert Holtby and opportune, uncharacteristic, risky and  
lucrative purchases of Eveready Shares with no plausible satisfactory explanation are highly  
suspicious and could be supportive of an inference that the non-public Proposed Acquisition was  
discussed by Bert Holtby and Shepert. However, we do not think there is clear, convincing and  
cogent evidence that it was Bert Holtby who either informed Shepert of the non-public Proposed  
Acquisition or recommended or encouraged him to purchase Eveready Shares. Cognizant that  
Bert Holtby and Shepert are no more than mere acquaintances, we do not think it reasonable to  
infer that Bert Holtby, especially given his familiarity with the prohibitions on insider trading  
and informing, would have been so careless or imprudent to have informed Shepert, a person  
clearly outside Bert Holtby's circle of family and close friends and business associates, of the  
non-public Proposed Acquisition. We do not think that Bert Holtby would have placed himself  
at risk to financially benefit a relative stranger. We do not perceive, from the evidence before us,  
any incentive or motive for Bert Holtby either to inform Shepert of the non-public Proposed  
Acquisition or to recommend or encourage Shepert to purchase Eveready Shares.  
[572] In the result, we are unable to infer from the evidence in totality that Bert Holtby  
informed Shepert of the non-public Proposed Acquisition, or recommended or encouraged him  
to purchase Eveready Shares in March or April 2009. In our view, in all the circumstances, this  
is not the most likely explanation for Shepert's purchases of Eveready Shares. These allegations  
fail.  
Landsiedel  
[573] Both Bert Holtby and Landsiedel testified that they never, at any time, discussed the  
Proposed Acquisition, and specifically not at any time before the issuance of the 29 April 2009  
News Release. Having considered the totality of the evidence, we cannot conclude on a balance  
of probabilities that Bert Holtby informed Landsiedel of the non-public Proposed Acquisition;  
however, we think it a reasonable inference, and we find, that Bert Holtby with knowledge of the  
non-public Proposed Acquisition recommended or encouraged Landsiedel to purchase Eveready  
Shares.  
[574] We make particular note of the following evidence and inferences and conclusions drawn  
from that evidence:  
Bert Holtby and Landsiedel had a casual social friendship. Their socializing  
activities took place only in the winter months when they each lived in Arizona.  
In approximately late February 2009 Landsiedel recalled running into Bert Holtby  
while visiting four friends at his former golf course in Arizona. Landsiedel said  
that when they were leaving the golf course he had an opportunity to speak with  
Bert Holtby alone and so asked Bert Holtby why Eveready had done the 5:1 share  
consolidation in December 2008. Bert Holtby told Landsiedel that he had not  
been involved in the transaction and so could not comment. Although Landsiedel  
could not specifically recall the conversation, he thought it possible that Bert  
Holtby might have told him that Eveready was doing well, with good sales and  
profits, as those were typically the types of comments he made about Eveready.  
Landsiedel recalled that Bert Holtby seemed "a little elusive" on the subject but  
that Landsiedel "just left it at that". In his 23 June 2010 Investigative Interview  
Landsiedel (under oath and not represented by counsel) initially told Staff that he  
only asked Bert Holtby about Eveready's share consolidation to which Bert  
Holtby responded "he didn't really know; he hadn't been involved in the decision"  
and, because of Bert Holtby's position with Eveready, Landsiedel "didn't think it  
was a proper thing to ask him other questions". However, pressed why he did not  
ask Bert Holtby anything more about Eveready given Landsiedel had said that he  
was then considering whether to purchase additional Eveready Shares and that a  
part of his investment research strategy was to talk to company people,  
Landsiedel responded that he probably asked about how Eveready was doing and  
that Bert Holtby probably gave his typical response that Eveready was busy and  
was making money. Given that one of Landsiedel's trading strategies is to  
preferably know someone involved with the company to whom he could speak  
and on whom he could rely, we think it reasonable to infer that Landsiedel would  
have talked to Bert Holtby, his only contact at Eveready, about more than  
Eveready's share consolidation before investing hundreds of thousands of dollars  
in Eveready in March 2009. What is clear is that Landsiedel had contact and  
communications with Bert Holtby a person in a special relationship with  
Eveready with knowledge of the non-public Proposed Acquisition shortly  
before Landsiedel's purchases of Eveready Shares. In short, Landsiedel had  
opportunity to learn of the non-public Proposed Acquisition or to be  
recommended or encouraged by Bert Holtby to purchase Eveready Shares. Such  
facts could be supportive of an inference that Bert Holtby informed Landsiedel of  
the non-public Proposed Acquisition, or recommended or encouraged Landsiedel  
to purchase Eveready Shares.  
On 19 February 2009 Landsiedel called his investment advisor Roy to inquire as  
to whether Roy would give him a discount on the commission for purchasing  
approximately $200 000 worth of securities. Roy believed that the intended  
purchase was for Eveready Shares. This large purchase of securities was being  
contemplated in the same period in which Landsiedel had discussions about  
Eveready with Bert Holtby. Such facts could be supportive of an inference that  
Bert Holtby informed Landsiedel of the non-public Proposed Acquisition, or  
recommended or encouraged Landsiedel to purchase Eveready Shares.  
Landsiedel had a significant net worth, and his Eveready investment after his  
March 2009 Eveready Share purchases represented a small percentage of his net  
worth. Landsiedel used cash on hand (which he described as "mad money") to  
pay for these purchases. We concur with Stewart's observation noted in her  
2 April 2012 Report (the Stewart Report) that "Landsiedel has historically  
invested on both a large and small financial scale, in smaller capitalization, higher  
risk companies, often in the oil and gas industry and in companies not usually  
identified as blue chip investments". This is consistent with the evidence of  
Landsiedel's historical trading including his March 2009 purchases of Eveready  
Shares and is consistent with his having experience in the oil and gas industry.  
Such facts would not typically be supportive of a reasonable inference that Bert  
Holtby informed Landsiedel of the non-public Proposed Acquisition, or  
recommended or encouraged Landsiedel to purchase Eveready Shares. However,  
they do not in all the circumstances rule out such an inference.  
It is clear from the evidence that on 10 days on almost every trading day in a 14-  
day period from 17 to 31 March 2009 Landsiedel purchased 151 900 Eveready  
Shares for a total cost of $374 732. These purchases more than doubled his  
investment in Eveready (from an adjusted book value (ABV) as set out in the  
Landsiedel Account statements of some $175 000 to approximately $550 000  
ABV), making his Eveready investment the largest holding in his investment  
portfolio on both ABV and market-value bases. This was an unprecedented  
investment by Landsiedel in the sense that it was the largest amount of securities  
he had ever purchased in the shortest period of time. Landsiedel had made other  
substantial investments in short periods, but, in our view, the only other  
investments approaching this magnitude and timing were his investment of  
approximately $206 000 in Wireless shares over three days in May 2000 and his  
one-time $200 000 IPO investment in Drilcorp, subsequently known as Twin  
Butte (although this could be viewed as a different type of investment as at the  
time of purchase it was not an open-market purchase subject to daily market-price  
fluctuations). Further, we do not know the circumstances under which these other  
substantial investments were made so, while we accept that Landsiedel had  
previously invested substantial sums in securities (including a one-day 5  
September 2008 purchase of Eveready Units for a total cost of $86 404, and  
from 5 September to 10 October 2008 increased his investment in Eveready to  
$175 284), this does not in all the circumstances rule out an inference that Bert  
Holtby informed Landsiedel of the non-public Proposed Acquisition or  
recommended or encouraged Landsiedel to purchase Eveready Shares.  
Landsiedel's explanation for his Eveready purchases in March 2009 was that he  
wanted to increase his equity in Eveready and at the same time, and more  
importantly, average down his cost per Share. Landsiedel's explanation was  
supported by Stewart. While we agree with Stewart that Landsiedel's March 2009  
purchases of Eveready Shares did average down the per-Share cost of his  
Eveready investment, we do not place much weight on her opinion because her  
analysis failed to take into account the totality of the facts and circumstances,  
including the contact that had occurred between Bert Holtby and Landsiedel  
before these purchases began and Landsiedel's trading strategy in light of his  
other securities holdings. For example, Landsiedel explained that his intention  
was to purchase roughly 120 000 Eveready Shares at $2.50 per Share to break  
even; and after that he would make money. We find unpersuasive Landsiedel's  
explanation, which was predicated on his rationale that, were Eveready Shares to  
increase by only $1.00 per Share, that would restore his Eveready holding to its  
original value. It did not account for the possibility that Eveready Shares would  
continue to decline in price but rather focused solely on a market-price increase of  
at least $1.00 per Share. His strategy of averaging down also required him to  
invest substantially more cash into Eveready, thus exposing him to a risk of even  
greater financial loss. We consider this strategy illogical, given the widespread  
market volatility and his recent financial losses (from the end of September 2008  
to the end of February 2009 the Landsiedel Account had declined in value by  
some $300 000). Roy had advised Landsiedel in summer 2008 that he viewed  
Eveready as a highly risky investment because it was a small cap company that  
was exposed to risks in the energy industry. Further, Eveready had recently  
completed the 5:1 share consolidation, and on 12 March had publicly announced  
the suspension of its quarterly dividend, signals to the market of a cash-flow  
problem. In our view, Landsiedel's significant investment in Eveready in March  
demonstrated a confidence that there would be an increase in the market price of  
Eveready Shares. Such confidence was markedly inconsistent with prevailing  
market conditions, his investment advisor's advice and Eveready's public  
disclosures, but is strongly supportive of an inference that Bert Holtby informed  
Landsiedel of the non-public Proposed Acquisition, or recommended or  
encouraged Landsiedel to purchase Eveready Shares.  
At the end of February 2009 Eveready was the largest equity holding on an ABV  
basis ($175 284) in the Landsiedel Account. There were three other equity  
holdings of comparable size in Landsiedel's investment portfolio. The shares of  
three of these four holdings, Eveready, Front Street and Wireless, were all trading  
at approximately 33% to 40% of their adjusted average cost (as that term is used  
in the Landsiedel Account statements) and the other, Twin Butte, was trading at  
approximately 12% of its adjusted average cost. We note that Stewart did not  
consider these facts about these holdings in her analysis or testimony. Landsiedel  
offered no explanation as to why, from among these four investments, he selected  
Eveready as the one in which he would increase his equity and average down his  
cost per Share. The other three investments apparently could have benefited  
similarly or, in one case, more advantageously from an increase in their equity  
and a corresponding averaging down in their cost per share. Yet no similar  
averaging-down strategy was undertaken for them. All of the focus was on  
Eveready. And Landsiedel's March 2009 Eveready Share purchases were well-  
timed ones that put him in a position to benefit financially from favourable market  
reaction to the Proposed Acquisition, once generally disclosed. Such facts are  
strongly supportive of an inference that Bert Holtby informed Landsiedel of the  
non-public Proposed Acquisition or recommended or encouraged Landsiedel to  
purchase Eveready Shares.  
When he began purchasing the Eveready Shares in March 2009 Landsiedel said  
that he did not have a specific time frame for acquiring the Shares; he just knew  
the number of Eveready Shares he wanted to buy each day. He told us he thought  
it would take him three or four months and did not anticipate he would acquire the  
Eveready Shares as quickly as he did. We do not believe this testimony. We  
perceive Landsiedel's March 2009 purchases of Eveready Shares as deliberate and  
calculated focused on purchasing a large volume of Eveready Shares in a short  
period. Landsiedel was in continual contact with Roy or his assistant over the 14-  
day period during which Landsiedel placed orders to purchase Eveready Shares.  
Landsiedel said that he would contact Roy to see what the Eveready Shares were  
trading at and would then instruct Roy to place an order below that price and see  
if the order would get filled at that price. Landsiedel's practice was to enter a bid  
typically 10 to 12 cents lower than the market price. Sometimes the lower  
price was obtained, and sometimes it was not. On two occasions, Landsiedel  
raised his bid price the same day and was then successful in acquiring Eveready  
Shares. In the Stewart Report, Stewart described Landsiedel's March 2009  
purchases of Eveready Shares as "passive" trading, but we attach little weight to  
such characterization as it was based on a very limited definition of "passive  
order" "[a]n order where the bidder/offeror enters an order which does not  
match the price of either the prevailing market offer or market bid. The order is  
priced at a level that is not immediately executable and is allocated to the  
Electronic Book to be executed later if, as and when possible." Indeed, we view  
Landsiedel as being very active, as the word "active" is commonly understood, in  
purchasing Eveready Shares over the 14-day period, which is, in our view,  
consistent with an intent to purchase a high volume of Eveready Shares in that  
period. Having considered all the facts and circumstances of Landsiedel's March  
2009 Eveready Share purchases, we conclude it was no mere coincidence (as  
Landsiedel would have us believe) that he accumulated the large volume of  
Eveready Shares he did in that short period.  
Although Landsiedel typically held his investments for 10 to 15 years, he began  
selling his Eveready Shares within a few months of their purchase. On 3 August  
2009 Landsiedel sold 18 000 Eveready Shares (approximately 11.8% of the  
Eveready Shares bought in March and 10.6% of his total Eveready holdings) at a  
price of $10.50 per Share for net proceeds of 188 055. From 3 August to 2  
December 2004, Landsiedel sold the bulk of his Clean Harbors Shares (his  
remaining 151 900 Eveready Shares has been exchanged for Clean Harbors  
Shares), realizing proceeds of approximately $1.3 million. Such facts could be  
supportive of an inference that Bert Holtby informed Landsiedel of the non-public  
Proposed Acquisition, or recommended or encouraged Landsiedel to purchase  
Eveready Shares.  
[575] In summary, having considered the evidence as a whole, we do not believe Landsiedel's  
explanations for, or that they fully account for, his March 2009 Eveready purchases of Eveready  
Shares. If one, who has been informed of non-public material information or been recommended  
or encouraged to purchase securities, has another legitimate reason to purchase the securities (or  
does not purchase at all), this legitimate reason does not negate the illegal informing or  
recommending or encouraging.  
The facts are that Landsiedel spoke with Bert Holtby,  
Landsiedel's only contact at Eveready, and that shortly thereafter Landsiedel made a well-timed  
and significant investment in Eveready evincing a confidence in Eveready markedly inconsistent  
with prevailing market conditions, his investment advisor's advice and Eveready's public  
disclosures signalling a cash-flow problem. In all the circumstances, we find ourselves unable to  
reach any other reasonable or logical conclusion but that Bert Holtby conveyed sufficient  
information to Landsiedel to assure him that the purchase of Eveready Shares would be more  
than speculation, an increase in the Eveready Share price was to be expected, and he would  
recoup his losses.  
[576] We must then decide the nature of the information conveyed by Bert Holtby. For reasons  
already discussed, we think it likely that Bert Holtby would in general be cautious in his sharing  
of non-public material information. Further, given the nature of the relationship between Bert  
Holtby and Landsiedel, we do not think it reasonable to infer that Bert Holtby, especially given  
his familiarity with the prohibitions on insider trading and informing, would have been so  
careless or imprudent to have informed Landsiedel, a person outside Bert Holtby's circle of  
family and close friends and business associates, of the non-public Proposed Acquisition.  
However, we are compelled to conclude on the evidence before us that Bert Holtby must have  
conveyed information recommending or encouraging Landsiedel to purchase Eveready Shares;  
the confidence demonstrated by Landsiedel in making his March 2009 investment in Eveready  
admits of no other reasonable or logical explanation.  
[577] In conclusion, having considered the evidence as a whole, we infer it is more likely than  
not that Bert Holtby recommended or encouraged Landsiedel to purchase Eveready Shares when  
Bert Holtby, a person in a special relationship with Eveready, had knowledge of the Proposed  
Acquisition before it was generally disclosed in the 29 April 2009 News Release, contrary to  
section 147(3.1) of the Act. In our view, in all the circumstances this is the most likely  
explanation for Landsiedel's purchases of Eveready Shares. We so find. This allegation of  
illegal recommending or encouraging is sustained.  
Burdeyney  
[578] Both Bert Holtby and Burdeyney testified that they never, at any time, discussed the  
Proposed Acquisition, and specifically not at any time before the issuance of the 29 April 2009  
News Release. There is, however, direct evidence from Gayle Walton that Burdeyney conveyed  
information to her seemingly at odds with these denials of Bert Holtby and Burdeyney. Bert  
Holtby and Burdeyney urged us not to rely on this evidence from Gayle Walton, and Gayle  
Walton proffered an exculpatory explanation for it that Burdeyney's comment was not a  
reference to the Proposed Acquisition.  
[579] Having considered Bert Holtby's and Burdeyney's denials and Gayle Walton's  
explanation in light of all other evidence, we do not find them believable they are not in  
harmony with the preponderance of the evidence as a whole. Having considered the evidence in  
its entirety, we infer it is more likely than not that Bert Holtby informed Burdeyney of the non-  
public Proposed Acquisition. We make particular note of the following evidence and inferences  
and conclusions drawn from that evidence:  
Burdeyney had been Bert Holtby's family tax accountant since the early 1980s  
and they had a friendly, albeit professional, relationship. The evidence is that the  
two did not socialize together other than at an occasional golf game. Bert Holtby  
was a good client of Burdeyney and InVision.  
Given the longstanding  
professional relationship and trust that had developed between Bert Holtby and  
Burdeyney, it would not have been unreasonable for Bert Holtby to disclose  
information about his business affairs to Burdeyney with the expectation that any  
such information would go no further. Such facts could be supportive of an  
inference that Bert Holtby informed Burdeyney of the non-public Proposed  
Acquisition, or recommended or encouraged Burdeyney to purchase Eveready  
Shares.  
In December 2008 Bert Holtby and Burdeyney had discussions, one on  
5 December by email and another on 23 December in person. These were to  
discuss accounting and tax issues, including an Eveready-related issue arising in  
one of Bert Holtby's companies, 216 Alberta, that held the majority of Bert  
Holtby's significant shareholdings in Eveready. Bert Holtby and Burdeyney were  
in limited contact between January and the end of April 2009. On 21 January and  
9 February 2009 Burdeyney had email communications with Bert Holtby  
discussing various issues arising from Burdeyney's preparation of year-end  
statements for the Holtby Family Trust. In March and April 2009 there were  
three further email communications and one letter on 3 March and 4, 20 and 21  
April from Burdeyney to Bert Holtby regarding matters associated with  
preparation of income tax returns for Bert Holtby and his family. Bert Holtby and  
Burdeyney seldom communicated via telephone.  
Burdeyney recalled one  
telephone conversation with Bert Holtby on 2 February 2009 regarding the Holtby  
Family Trust. While there is no evidence of any other telephone calls between  
them between January and the end of April 2009, Burdeyney conceded it was  
possible that there were other such telephone calls. In short, Burdeyney had  
opportunity from 26 January 2009 albeit limited to learn of the non-public  
Proposed Acquisition or to be recommended or encouraged by Bert Holtby to  
purchase Eveready Shares. Such facts could be supportive of an inference that  
Bert Holtby informed Burdeyney of the non-public Proposed Acquisition, or  
recommended or encouraged Burdeyney to purchase Eveready Shares.  
Burdeyney knew that Bert Holtby was a director of Eveready in the Relevant  
Period. There is no evidence that in the same period Burdeyney knew another  
person who was connected to Eveready or who, more importantly, had knowledge  
of the non-public Proposed Acquisition. Such facts could be supportive of an  
inference that Bert Holtby informed Burdeyney of the non-public Proposed  
Acquisition, or recommended or encouraged Burdeyney to purchase Eveready  
Shares.  
Burdeyney's investing history suggests that he is a conservative investor,  
favouring mutual funds and money-market funds. Between October 2006 and  
April 2009, no new purchases of securities were made in Account 993, which  
held the same six equities, with two additional equities acquired through corporate  
reorganizations or distributions. One of these investments was Eveready. In  
October 2006 Burdeyney had purchased 1000 Eveready Units (219 Shares  
following the share consolidation), which were exchanged for Clean Harbors  
Shares in August 2009. His 15 April 2009 purchase in the Burdeyney TFSA of  
additional Eveready Shares, viewed as a higher-risk, more speculative investment  
(IG Securities updated Burdeyney's profile to 100% speculative due to the higher  
risk of the two securities he was purchasing, one of which was Eveready) could  
be supportive of an inference that Bert Holtby informed Burdeyney of the non-  
public Proposed Acquisition, or recommended or encouraged Burdeyney to  
purchase Eveready Shares.  
Burdeyney first attempted to purchase Eveready Shares in the Burdeyney TFSA  
on 31 March 2009 but could not because of a misunderstanding over where the  
money in that account was to have been invested. Eventually this issue was  
resolved and the money in this account and the Susan Burdeyney TFSA was made  
available for the purchasing of securities. Burdeyney did not appear concerned  
about the time it was taking to get this issue resolved or to obtain the  
Authorization for the Susan Burdeyney TFSA so that he could purchase Eveready  
Shares. Burdeyney ultimately made no purchases of Eveready Shares in the  
Susan Burdeyney TFSA. The circumstances surrounding Burdeyney's purchases  
of Eveready Shares in April 2009 do not exhibit the urgency often seen in cases of  
illegal insider trading, informing, or recommending or encouraging. Such facts in  
and of themselves would not generally be supportive of an inference that Bert  
Holtby informed Burdeyney of the non-public Proposed Acquisition, or  
recommended or encouraged Burdeyney to purchase Eveready Shares. However,  
they do not in all the circumstances rule out such an inference.  
The most striking evidence that Burdeyney had knowledge of the non-public  
Proposed Acquisition is Gayle Walton's evidence in her Investigative Interview  
and in her testimony of a comment made to her by Burdeyney by, at the latest,  
27 February 2009. We agree with Staff that this evidence of Gayle Walton should  
be accorded great weight, it being evidence against her own interest as well as  
that of her partner Burdeyney. We discern no reasonable motive for Gayle  
Walton to have given such evidence were it not true. Having considered Gayle  
Walton's evidence in light of all other evidence, we find ourselves unable to reach  
any reasonable or logical conclusion but that, in making the comment about  
which Gayle Walton gave evidence, Burdeyney informed Gayle Walton of the  
non-public Proposed Acquisition. To that end, we make particular note of the  
following:  
Gayle Walton's explanation that Burdeyney had not identified Eveready or  
that he may have been referring to Eveready making its own acquisition is  
not, in our view, believable for the following reasons:  
In her Investigative Interview, when asked whether she was aware  
on 2 March 2009 that Eveready and Clean Harbors had signed the  
Letter of Intent for the purpose of following up "on discussions of  
the parties concerning the interest of Clean Harbors in acquiring all  
the outstanding shares of Eveready", Walton responded: "I was  
not aware of all of those details that you listed." Asked of what  
details she was aware, Walton said that Burdeyney had told her  
"there sounds like there might be a deal or a merger". She then  
said that this information did not influence her and her husband's  
decision to purchase Eveready Shares because she "didn't know if  
a merger necessarily meant . . . more money" or would "impact the  
price" or "how far along the negotiations were". She confirmed  
that she had not heard "talk on the street in Peace River about  
[Eveready] being bought". In our view, these statements made by  
her evince her clear understanding, gained from Burdeyney, that  
Eveready was involved in some sort of merger or negotiations  
involving its acquisition by a third party.  
We do not believe, as Gayle Walton would have us do from her  
testimony, that she had merely guessed about who or what  
Burdeyney was speaking.  
We conclude that she must have  
understood his comment in context perhaps because they had  
shortly before been discussing Eveready or alternatively that  
there was more said than they would have us believe. We also  
think it nonsensical to suggest that Burdeyney would have offered  
up such an off-the-cuff comment without an expectation that Gayle  
Walton as the recipient would have some understanding as to what  
he was referring. And, if she did not, the natural expectation is that  
she would have asked him what he was talking about.  
Gayle Walton acted on the information conveyed by Burdeyney.  
Given Gayle Walton's actions, we do not doubt that the  
information she received sufficiently conveyed to her that  
Burdeyney was referring to Eveready. The information conveyed  
by Burdeyney was sufficiently clear and significant for Gayle  
Walton to pass it on to her husband (who conducted their  
purchases and sales of securities). He too must have thought the  
information sufficiently clear and significant in that he purchased  
11 000 Eveready Shares on their behalf.  
Burdeyney denied that Bert Holtby ever told him something or words to  
the effect "sounds like there might be a deal or a merger". Asked if he  
told Gayle Walton in late February or early March 2009 that "there sounds  
like there might be a deal or a merger" or words to that effect, Burdeyney  
testified:  
"I don't recall the conversation." We find this testimony  
internally inconsistent. If Burdeyney had no such information, he would  
have had no information about Eveready to pass on to Gayle Walton. If  
such were the case, he could not have made the impugned comment to  
Gayle Walton at all, and thus would have denied doing so.  
We find it no mere coincidence that Burdeyney's comment to Gayle  
Walton was a true statement of fact. Eveready was in the midst of  
negotiations with Clear Harbors to be acquired by it there was a "deal"  
being negotiated with Eveready. On balance, we find that Burdeyney did  
inform Gayle Walton of the non-public Proposed Acquisition, perhaps  
using, in reference to Eveready, words to the effect that "there might be a  
deal or a merger".  
Because Burdeyney conveyed the information of the non-public Proposed  
Acquisition to Gayle Walton, it follows that Burdeyney must have known about  
it. That Burdeyney had knowledge of the non-public Proposed Acquisition is  
strongly supportive of an inference that Bert Holtby informed Burdeyney of it, or  
recommended or encouraged Burdeyney to purchase Eveready Shares.  
[580] In conclusion, having considered the evidence as a whole, we infer it is more likely than  
not that Bert Holtby, a person in a special relationship with Eveready, informed Burdeyney of  
the Proposed Acquisition by, at the latest, 27 February 2009 and thus before it was generally  
disclosed in the 29 April 2009 News Release, contrary to section 147(3) of the Act. We so find.  
This allegation of illegal informing is sustained.  
(c)  
Summary of Conclusions  
[581] Based on the foregoing, we find that Bert Holtby:  
by purchasing Eveready Shares through the Douglas Account in March and April  
2009, breached section 147(2) of the Act;  
informed Richard Kowalchuk, Wreggit, Dale Holtby and Burdeyney of the non-  
public Proposed Acquisition contrary to section 147(3); and  
recommended or encouraged Landsiedel to purchase Eveready Shares contrary to  
section 147(3.1).  
[582] We do not find that Bert Holtby informed Shepert of the non-public Proposed  
Acquisition contrary to section 147(3) of the Act, or recommended or encouraged Shepert to  
purchase Eveready Shares contrary to section 147(3.1).  
5.  
Allegations against Dale Holtby  
(a)  
Did Dale Holtby Engage in Illegal Insider Trading of Eveready  
Shares?  
[583] To find that Dale Holtby illegally purchased Eveready Shares, as alleged, we must find  
that, when he purchased Eveready Shares, he was in a special relationship with Eveready and  
had knowledge of the non-public Proposed Acquisition.  
[584] We found that Bert Holtby informed Dale Holtby of the non-public Proposed Acquisition  
by, at the latest, 23 March 2009. Thus, from at the least 23 March 2009 until the issuance of the  
29 April 2009 News Release, Dale Holtby had knowledge of the non-public Proposed  
Acquisition. We so find.  
[585] Dale Holtby knew that Bert Holtby was involved with Eveready and on the Board. He  
knew that Bert Holtby's company United Services had been sold to Eveready. Dale Holtby said  
that he had been following his brother's company Eveready since it went public, to see how  
successful it was. He said that once or twice a year he would go on the Internet and see what the  
Eveready trading price was. Bert Holtby was a director of Eveready throughout the Relevant  
Period, and this, we note, was public information readily accessible to those who followed  
Eveready online. In our view, the evidence is sufficiently clear that in March and April 2009,  
Dale Holtby knew or ought reasonably to have known that Bert Holtby was a director of  
Eveready. We so find.  
[586] Dale Holtby learned of the non-public Proposed Acquisition from Bert Holtby who, as a  
director of Eveready, was a person in a special relationship with Eveready. Dale Holtby knew or  
ought reasonably to have known that Bert Holtby was a person in a special relationship with  
Eveready. In the result, under section 9(e) of the Act, Dale Holtby was a person in a special  
relationship with Eveready in March and April 2009. We so find.  
[587] It is clear from the evidence that Dale Holtby gave instructions to Shepert to purchase  
Eveready Shares in March and April 2009 on Dale Holtby's behalf. On 30 March and 16 and  
17 April Dale Holtby transferred money to Shepert to purchase Eveready Shares on Dale  
Holtby's behalf. On 31 March and 20 April Shepert purchased on behalf of Dale Holtby a total  
of 7500 Eveready Shares through the Shepert Account. Thus, it is clear from the evidence that  
Dale Holtby through Shepert made purchases of Eveready Shares when Dale Holtby had  
knowledge of the non-public Proposed Acquisition.  
[588] In conclusion, having considered the totality of the evidence, we find that Dale Holtby, a  
person in a special relationship with Eveready with knowledge of the non-public Proposed  
Acquisition, purchased Eveready Shares, contrary to section 147(2) of the Act. This allegation  
of illegal insider trading is sustained.  
(b)  
Did Dale Holtby Engage in Illegal Informing, or Recommending or  
Encouraging?  
(i)  
Parties' Positions  
[589] Staff alleged that, if Bert Holtby did not inform Shepert of the Proposed Acquisition  
before it was generally disclosed in the 29 April 2009 News Release, then it was Dale Holtby  
who had done so while in a special relationship with Eveready, contrary to section 147(3) of the  
Act. Staff further alleged that Dale Holtby, while a person in a special relationship with  
Eveready, had recommended or encouraged the Kaufmans his daughter and son-in-law to  
purchase Eveready Shares in breach of section 147(3.1).  
[590] Dale Holtby argued that, to accept Staff's position, we would have to conclude that he,  
Shepert and the Kaufmans were all lying or entirely mistaken in their evidence about these  
allegations.  
Dale Holtby contended that an examination of the surrounding facts and  
circumstances shows a more plausible explanation for the Kaufmans' purchases of Eveready  
Shares, particularly the role played by Dr. Ling in making their investment decision. Dale  
Holtby argued that, given Dr. Ling's recommendation to the Kaufmans, it is reasonable to infer  
that Shepert's decision to purchase Eveready Shares was made on publicly available information  
and not on information of the non-public Proposed Acquisition received from Dale Holtby. Dale  
Holtby noted that his evidence is "not contradicted, but rather corroborated" by the testimony  
given by Shepert and Bert Holtby and the evidence of the Kaufmans given in their Investigative  
Interviews, and contended that their explanations provide "both a plausible and realistic  
narrative" of the events involving Dale Holtby in Eveready Share purchases by Shepert and the  
Kaufmans.  
[591] Shepert argued that Staff's alternative theory that Dale Holtby informed Shepert that Bert  
Holtby had informed Dale Holtby of the non-public Proposed Acquisition is speculation and  
contrary to the direct evidence of Bert Holtby, Dale Holtby and himself, who all gave the same  
evidence in their Investigative Interviews and in their testimony before us. Shepert urged us to  
accept his testimony as providing "a plausible, mundane and innocent explanation" for his  
purchases of Eveready Shares in March and April 2009.  
(ii)  
Did Dale Holtby Inform Shepert of the Non-public Proposed  
Acquisition?  
[592] We found that Bert Holtby informed Dale Holtby of the non-public Proposed Acquisition  
by, at the latest, 23 March 2009, and thus found that Dale Holtby had knowledge of the non-  
public Proposed Acquisition from at least 23 March 2009. We next decide whether Dale Holtby  
informed Shepert of the Proposed Acquisition before it was generally disclosed in the 29 April  
2009 News Release. There is conflicting evidence, some of it direct evidence.  
[593] Consistent with his denial that he and his brother had never discussed the Proposed  
Acquisition, Dale Holtby (under oath and not represented by counsel) denied in his second  
(5 May 2011) Investigative Interview that he informed Shepert of the non-public Proposed  
Acquisition. Similarly, Shepert denied in his Investigative Interviews and in his testimony  
before us that Dale Holtby had informed him of the Proposed Acquisition before its general  
disclosure. Dale Holtby and Shepert would have us believe that Shepert chose to purchase  
Eveready Shares on his own initiative, without any input or assistance from Dale Holtby. Dale  
Holtby and Shepert would also have us believe that Shepert's substantial purchases of Eveready  
Shares, which commenced immediately following a telephone call with Dale Holtby on or before  
25 March and were all completed before the issuance of the 29 April 2009 News Release, were a  
fortuitous coincidence.  
[594] Having considered Dale Holtby's and Shepert's denials and explanations in light of all  
other evidence, we do not find them believable they are not in harmony with the preponderance  
of the evidence as a whole. Rather, having considered the evidence in its entirety, we infer it is  
more likely than not that Dale Holtby informed Shepert of the non-public Proposed Acquisition.  
We make particular note of the following evidence and inferences and conclusions drawn from  
that evidence:  
Shepert and Dale Holtby were close friends; they had been friends for some  
50 years. They, we are satisfied, trusted each other Dale Holtby trusted Shepert  
enough to transfer to him almost $20 000 cash under a verbal agreement that  
Shepert would purchase Eveready Shares for Dale Holtby.  
As discussed above, on or before 25 March 2009, within days of when Bert  
Holtby (we found) informed Dale Holtby of the non-public Proposed Acquisition,  
Dale Holtby made an unusual request of his long-time trusted friend Shepert –  
Shepert was asked to purchase Eveready Shares through his trading account for  
Dale Holtby. When presented with this unusual request and agreeing to it,  
Shepert knew that Dale Holtby's investment knowledge was limited and that  
Shepert had never before purchased any securities for Dale Holtby or received  
money from Dale Holtby for that purpose, and Shepert to the best of his  
knowledge knew that Dale Holtby had never traded in stocks before 2009. Dale  
Holtby and Shepert also apparently agreed that all transfers of money back and  
forth were to be, curiously, under $10 000. Shepert said that Dale Holtby wanting  
to buy Eveready Shares seemed somewhat "odd" and that Dale Holtby's wanting  
to buy shares in his brother's company "piqued" Shepert's interest. Nevertheless,  
Shepert said that he did not ask Dale Holtby why he wanted to purchase Eveready  
Shares. Rather, he assumed that Dale Holtby might know "something about"  
Eveready that he did not. We do not believe Shepert's testimony on this point;  
rather, in all the circumstances, we think it reasonable and logical to infer that  
Shepert would have questioned, and did question, his long-time close friend Dale  
Holtby as to why he had decided to purchase Eveready Shares, and why through  
Shepert's trading account.  
When Dale Holtby telephoned Shepert three weeks later about sending more  
money to buy more Eveready Shares, Shepert thought it was "interesting -- more  
interesting when he wanted me to buy him some more shares". Shepert said that  
he did not know what Dale Holtby knew but decided to buy Eveready Shares  
because Dale Holtby was buying and "it might be worth a shot". Shepert said that  
he might have brought up the subject of a take-over with Dale Holtby because it  
would have been "my normal conversations with anyone when we talk about  
stocks or whatever that's starting to move", but assuming he did he could not  
recall specifically he was left with the impression that Dale Holtby knew  
nothing. Shepert denied that Dale Holtby told him anything about the Proposed  
Acquisition, saying that he would have "bet the farm on it" if he "had known that  
this was insider information". But, in our view, Shepert did "bet the farm" he  
used most of the money, and sold other securities, in the Shepert Family Accounts  
in order to purchase Eveready Shares, highly speculative securities of a small cap  
company in a period of financial and market volatility and upheaval.  
After speaking with Dale Holtby, Shepert made a substantial investment in  
Eveready on his own behalf and on behalf of his wife, son and daughter. On 25,  
26, 27 and 31 March and 20, 21 and 27 April 2009 Shepert purchased a total of  
18 400 Eveready Shares in the Shepert Family Accounts at a total cost of  
$46 081.22 (commissions included). These purchases began almost immediately  
after Dale Holtby and Shepert spoke on or before 25 March and with Shepert  
having conducted only "[a] little bit" of research on Eveready Shepert told us he  
knew that Eveready was in the oil and gas business and that its Share price had  
declined. Shepert agreed that spending almost $25 000 to purchase Eveready  
Shares from 25 to 27 March was somewhat unusual for him, but there had been  
times when he had invested more money. Statements for the Shepert Family  
Accounts show that the largest book value in any one investment in all of those  
accounts was approximately $37 400 in Connacher Oil and Gas Limited. The  
evidence is that Shepert's March and April 2009 investment in Eveready was his  
largest-ever investment in securities.  
Statements for the Shepert Family Accounts show that these accounts (with the  
exception of the Shepert TFSA which was opened in April 2009), together, had  
suffered significant losses by March 2009, losing over half their book value.  
Despite these losses, Shepert did not hesitate to make a substantial investment in a  
risky, speculative stock in a period of great market volatility and upheaval. He  
explained that he thought Eveready was a "good speculative stock" and, with the  
market "down in the dumps", Eveready was actively trading and he thought he  
might make "a couple of bucks". But what made him think that he would make  
money in these circumstances, not lose it? We think it reasonably unlikely that  
Shepert, who testified to being market-savvy and to typically researching a stock  
before purchasing it, decided to purchase a substantial amount of a risky,  
speculative stock based on little more than the purchasing of this stock by his  
friend Dale Holtby, who (Shepert knew) had limited investment knowledge.  
Shepert's purchases of Eveready Shares were well-timed purchases, ones that put  
him and his family in a position to benefit financially from favourable market  
reaction to the Proposed Acquisition, once generally disclosed. On 29 April 2009  
Shepert sold all of the Eveready Shares he had purchased, realizing a significant  
profit in a very short period of time a return of some 300% in less than 30 days  
(from approximately $46 000 to approximately $186 000).  
The 50-year close and trusting personal relationship between Dale Holtby and  
Shepert and the substantial investment in Eveready made by Shepert are, in our  
view, more consistent with Dale Holtby having informed Shepert of the non-  
public Proposed Acquisition than with recommending or encouraging Shepert to  
purchase Eveready Shares. We are satisfied that Dale Holtby would not have  
considered himself at risk in sharing such confidential information with Shepert,  
and Dale Holtby was motivated to do so because he would benefit from Shepert's  
purchases of Eveready Shares made on Dale Holtby's behalf.  
[595] In conclusion, having considered the evidence as a whole, we infer it is more likely than  
not that Dale Holtby, a person in a special relationship with Eveready, informed Shepert of the  
Proposed Acquisition on or before 25 March 2009 and thus before it was generally disclosed in  
the 29 April 2009 News Release, contrary to section 147(3) of the Act. In our view, in all the  
circumstances this is the most likely explanation for Shepert's purchases of Eveready Shares in  
March and April 2009. We so find. This allegation of illegal informing is sustained.  
(iii)  
Did Dale Holtby Recommend or Encourage the Kaufmans to  
Purchase Eveready Shares?  
[596] We next decide whether Dale Holtby recommended or encouraged the Kaufmans to  
purchase Eveready Shares when Dale Holtby, a person in a special relationship with Eveready,  
had knowledge of the non-public Proposed Acquisition.  
[597] In his testimony Dale Holtby denied having recommended or encouraged the Kaufmans  
to purchase Eveready Shares before the Proposed Acquisition was generally disclosed. In their  
Investigative Interviews the Kaufmans denied that Dale Holtby so recommended or encouraged  
them, and they pointed to the role played by Dr. Ling. Having considered these denials and  
Kaufmans' explanation in light of all other evidence, we do not find them believable they are  
not in harmony with the preponderance of the evidence as a whole. Rather, having considered  
the evidence in its entirety, we infer it is more likely than not that Dale Holtby recommended or  
encouraged the Kaufmans to purchase Eveready Shares when Dale Holtby, a person in a special  
relationship with Eveready, had knowledge of the non-public Proposed Acquisition. We make  
particular note of the following evidence and inferences and conclusions drawn from that  
evidence:  
Dale Holtby is the father of Tracy Kaufman. Tracy Kaufman spoke with her  
mother and father on a very regular basis. We are satisfied that Dale Holtby, who  
had knowledge of the non-public Proposed Acquisition, would not have  
considered himself at risk in discussing Eveready with Tracy Kaufman and her  
husband, and would have wanted to benefit his daughter and son-in-law  
financially. This close familial relationship could be supportive of an inference  
that Dale Holtby recommended or encouraged the Kaufmans to purchase  
Eveready Shares.  
Shortly after deciding to invest in Eveready (his telephone call to Shepert  
occurred on or before 25 March), Dale Holtby telephoned Tracy Kaufman and  
discussed Eveready with her and her husband. According to all three individuals,  
Dale Holtby told the Kaufmans to "look" at or into Eveready as a potential  
investment but said nothing more. We do not believe them. Dale Holtby is not a  
wealthy or educated man and has no experience in the stock market or with other  
investing. Dale Holtby had discussed investing in stocks never with Tracy  
Kaufman and "maybe" once or twice with Arnold Kaufman. The Kaufmans knew  
very little, if anything, about Eveready. Yet, what was said in this telephone  
discussion was sufficiently motivating that the Kaufmans almost immediately –  
on 26 March 2009 took the unprecedented step of opening a trading account.  
According to Tracy Kaufman, the purpose was to purchase Eveready Shares;  
according to Arnold Kaufman, they had no specific investment in mind. The  
Kaufmans then borrowed money from their line of credit to make their purchases  
of Eveready Shares. Their approximately $7500 investment in Eveready Shares  
was their first ever investment in a stock. And their investment in Eveready was a  
well-timed investment, one that put them in a position to benefit financially from  
favourable market reaction to the Proposed Acquisition, once generally disclosed.  
These facts are strongly supportive of a reasonable inference that Dale Holtby  
provided more information to the Kaufmans than any of them admitted that  
Dale Holtby recommended or encouraged the Kaufmans to purchase Eveready  
Shares.  
In their Investigative Interviews the Kaufmans said that, after their telephone  
discussion with Dale Holtby, Arnold Kaufman asked a friend with investment  
experience, Dr. Ling, for his thoughts about Eveready as an investment. Dr. Ling  
apparently told the Kaufmans that he thought Eveready would be a good  
investment, and so, the Kaufmans said, they purchased Eveready Shares. Tracy  
Kaufman did not know what Dr. Ling said to Arnold Kaufman, other than that  
Eveready looked pretty good. Arnold Kaufman did not know what research  
Dr. Ling had done, only that it was a good company because of "a bunch of  
financial stuff that I didn't quite understand". These facts do not rule out an  
inference that Dale Holtby provided more information to the Kaufmans than any  
of them admitted. As noted by Staff, Dr. Ling's role, if any, in the Kaufmans'  
decision to purchase Eveready Shares is irrelevant in determining whether Dale  
Holtby recommended or encouraged the Kaufmans to purchase Eveready Shares.  
To reiterate, if one, who has been informed of non-public material information or  
been recommended or encouraged to purchase securities, has another legitimate  
reason to purchase the securities (or does not purchase at all), this legitimate  
reason does not negate the illegal informing or recommending or encouraging.  
[598] In conclusion, having considered the evidence as a whole, we infer it is more likely than  
not that Dale Holtby recommended or encouraged the Kaufmans to purchase Eveready Shares  
when Dale Holtby, a person in a special relationship with Eveready, had knowledge of the  
Proposed Acquisition before it was generally disclosed in the 29 April 2009 News Release,  
contrary to section 147(3.1) of the Act. In our view, in all the circumstances this is the most  
likely explanation for the Kaufmans' purchases of Eveready Shares in March and April 2009.  
We so find. This allegation of illegal recommending or encouraging is sustained.  
(c)  
Summary of Conclusions  
[599] Based on the foregoing, we find that Dale Holtby:  
by purchasing Eveready Shares through Shepert's Account in March and April  
2009, breached section 147(2) of the Act;  
informed Shepert of the non-public Proposed Acquisition contrary to  
section 147(3); and  
recommended or encouraged the Kaufmans to purchase Eveready Shares contrary  
to section 147(3.1).  
6.  
Did Shepert Engage in Illegal Insider Trading of Eveready Shares?  
[600] To find that Shepert illegally purchased Eveready Shares, as alleged, we must find that,  
when he purchased Eveready Shares, he was in a special relationship with Eveready and had  
knowledge of the non-public Proposed Acquisition.  
[601] We found that Dale Holtby informed Shepert of the non-public Proposed Acquisition on  
or before 25 March 2009. Thus, from, at the latest, 25 March 2009 until the issuance of the  
29 April 2009 News Release, Shepert had knowledge of the non-public Proposed Acquisition.  
We so find.  
[602] Shepert learned of the non-public Proposed Acquisition from Dale Holtby, who we found  
was a person in a special relationship with Eveready in March and April 2009. Shepert knew  
that Dale Holtby's brother was Bert Holtby and that Bert Holtby had a connection with Eveready.  
Shepert acknowledged that Dale Holtby asked Shepert to "buy shares for him in his brother's  
company" and that Shepert then purchased Eveready Shares. Shepert must have thought that  
Bert Holtby had enough of a connection with Eveready to ask Bert Holtby at the March  
Barbeque "what's happening with your company?" Shepert testified that Bert Holtby told him he  
could not talk about Eveready because he was in a "blackout". When asked whether he was  
"aware that senior management and directors of companies were routinely blacked-out or  
prohibited from trading when they knew important matters that perhaps the public didn't",  
Shepert said that, while he could not answer yes, he assumed this to be accurate from "reading  
about things of that nature in newspapers". Shepert also testified that he conducted research into  
any company in which he was interested and did so by accessing the company's public  
information on the Internet the company's website, SEDAR and other publications. Shepert  
testified that, among the information he would review, would be who was on the company's  
board and "names that I've been familiar with that have formed one company and built it up, sold  
it". However, concerning Eveready specifically, Shepert told us that that he did a "little bit, but  
not very much" research on Eveready. We reiterate that Bert Holtby was a director of Eveready  
throughout the Relevant Period, and this was public information readily available to those, such  
as Shepert, who accessed information about Eveready online.  
[603] Having considered the totality of the evidence, we think it more likely than not that  
Shepert knew or ought reasonably to have known that Bert Holtby was a director of Eveready.  
We so find. We further think it reasonable to infer from the evidence as a whole that Shepert –  
who had just attended the March 2009 Barbeque with Dale Holtby and Bert Holtby, shortly after  
which Dale Holtby asked Shepert to purchase shares in his brother's (Bert Holtby's) company for  
him knew or ought reasonably to have known that Bert Holtby whom he knew or ought  
reasonably to have known was a director of Eveready was the source of Dale Holtby's  
information about the Proposed Acquisition and thus that Dale Holtby's information came from a  
person in a special relationship with Eveready. In the result, Shepert, having learned of the  
Proposed Acquisition from Dale Holtby, a person he knew or ought reasonably to have known  
was in a special relationship with Eveready in March and April 2009, was a person in a special  
relationship with Eveready within the meaning of section 9(e) of the Act. We so find.  
[604] It is clear from the evidence, as discussed above, that Shepert purchased Eveready Shares  
in March and April 2009 on his own behalf and on behalf of his family members. It is also clear  
from the evidence that Shepert's purchases of Eveready Shares were made when he had  
knowledge of the non-public Proposed Acquisition.  
[605] In conclusion, having considered the totality of the evidence, we find that Shepert, a  
person in a special relationship with Eveready with knowledge of the non-public Proposed  
Acquisition, purchased Eveready Shares, contrary to section 147(2) of the Act. This allegation  
of illegal insider trading is sustained.  
7.  
Did Landsiedel Engage in Illegal Insider Trading of Eveready Shares?  
[606] To find that Landsiedel illegally purchased Eveready Shares, as alleged, we must find  
that, when he purchased Eveready Shares, he was in a special relationship with Eveready and  
had knowledge of the non-public Proposed Acquisition.  
[607] We did not find that Bert Holtby, Landsiedel's only contact at Eveready, informed  
Landsiedel of the non-public Proposed Acquisition, but rather that Bert Holtby recommended or  
encouraged Landsiedel to purchase Eveready Shares. It follows that, when Landsiedel purchased  
Eveready Shares in March 2009, he did not have knowledge of the non-public Proposed  
Acquisition. Accordingly, we find that Landsiedel did not breach section 147(2) of the Act by  
making these purchases of Eveready Shares. This allegation of illegal insider trading fails.  
8.  
Allegations against Burdeyney  
(a) Did Burdeyney Engage in Illegal Insider Trading of Eveready Shares?  
[608] To find that Burdeyney illegally purchased Eveready Shares, as alleged, we must find  
that, when he purchased Eveready Shares, he was in a special relationship with Eveready and  
had knowledge of the non-public Proposed Acquisition.  
[609] We found that Bert Holtby informed Burdeyney of the non-public Proposed Acquisition  
by, at the latest, 27 February 2009. Thus, from at least 27 February 2009 until the issuance of  
the 29 April 2009 News Release, Burdeyney had knowledge of the non-public Proposed  
Acquisition. We so find.  
[610] Burdeyney learned of the non-public Proposed Acquisition from Bert Holtby who, as a  
director of Eveready, was a person in a special relationship with Eveready. It is clear from the  
evidence that, at that time, Burdeyney knew that Bert Holtby was a director and thus knew or  
ought reasonably to have known that Bert Holtby was a person in a special relationship with  
Eveready. In the result, under section 9(e) of the Act, Burdeyney was a person in a special  
relationship with Eveready. We so find.  
[611] It is clear from the evidence discussed above that Burdeyney purchased Eveready Shares  
in April 2009 in the Burdeyney TFSA. It is also clear from the evidence that Burdeyney made  
these purchases of Eveready Shares when he had knowledge of the non-public Proposed  
Acquisition.  
And it is irrelevant whether those purchases were prompted by other  
considerations, as they may well have been, at least in part.  
[612] In conclusion, having considered the totality of the evidence, we find that Burdeyney, a  
person in a special relationship with Eveready with knowledge of the non-public Proposed  
Acquisition, purchased Eveready Shares, contrary to section 147(2) of the Act. This allegation  
of illegal insider trading is sustained.  
(b)  
Did Burdeyney Engage in Illegal Informing, or Recommending or  
Encouraging?  
(i)  
Gayle Walton  
[613] Staff alleged that Burdeyney informed Gayle Walton of the Proposed Acquisition before  
it was generally disclosed in the 29 April 2009 News Release contrary to section 147(3) of the  
Act, or alternatively that he recommended or encouraged her to purchase Eveready Shares  
contrary to section 147(3.1).  
[614] We found that Bert Holtby informed Burdeyney of the non-public Proposed Acquisition  
by, at the latest, 27 February 2009, and that from at least 27 February 2009 until the issuance of  
the 29 April 2009 News Release Burdeyney had knowledge of the non-public Proposed  
Acquisition. For the reasons earlier set out, we find that Burdeyney informed Gayle Walton by,  
at the latest, 27 February 2009 of the non-public Proposed Acquisition.  
[615] Burdeyney learned of the non-public Proposed Acquisition from Bert Holtby, and we  
found that Burdeyney was a person in a special relationship with Eveready.  
[616] Accordingly, we find that Burdeyney, a person in a special relationship with Eveready,  
informed Gayle Walton of the Proposed Acquisition before it was generally disclosed in the  
29 April 2009 News Release, contrary to section 147(3) of the Act. This allegation of illegal  
informing is sustained.  
(ii)  
Jaschke  
[617] Staff alleged that Burdeyney informed Jaschke of the Proposed Acquisition before it was  
generally disclosed in the 29 April 2009 News Release contrary to section 147(3) of the Act, or  
alternatively that Burdeyney recommended or encouraged Jaschke to purchase Eveready Shares  
contrary to section 147(3.1). Staff argued that the conduct of other members of Burdeyney's  
firm, specifically that of Gayle Walton and Jaschke, is "eye catching", and supports the inference  
that given all the circumstances it is more likely than not that Burdeyney so informed Gayle  
Walton and Jaschke, or recommended or encouraged them to purchase Eveready Shares.  
[618] Both Burdeyney and Jaschke denied that Burdeyney informed Jaschke of the non-public  
Proposed Acquisition, or recommended or encouraged Jaschke to purchase Eveready Shares in  
March and April 2009. Jaschke argued that, unlike the evidence surrounding Gayle Walton (the  
other accountant at InVision), there was no direct evidence of his having received any  
information from Burdeyney about Eveready before Jaschke's purchases of Eveready Shares.  
Both Burdeyney and Jaschke argued that there is ample evidence from which we can infer it  
equally or more likely that Jaschke was not informed by Burdeyney.  
[619] Jaschke's purchases of Eveready Shares in the Relevant Period raise suspicions.  
However, having considered Burdeyney's and Jaschke's denials and Jaschke's explanations for  
his purchases in light of all other evidence, we are not satisfied we can reasonably infer it is more  
likely than not that Burdeyney either informed Jaschke of the non-public Proposed Acquisition  
or recommended or encouraged Jaschke to purchase Eveready Shares. We make particular note  
of the following evidence and the inferences and conclusions drawn from that evidence:  
Burdeyney and Jaschke were co-workers at InVision and worked in the same  
office. Jaschke was an associate at InVision and a former partner of Burdeyney.  
There is no evidence of anything more than a professional working relationship  
between Burdeyney and Jaschke. Such facts would not typically be supportive of  
a reasonable inference that Burdeyney informed Jaschke of the non-public  
Proposed Acquisition, or recommended or encouraged Jaschke to purchase  
Eveready Shares.  
Unlike the circumstances involving Gayle Walton and although they worked in  
the same office, there is no evidence of any communication whatsoever between  
Burdeyney and Jaschke about Eveready before Jaschke purchased Eveready  
Shares in March and April 2009. The closest evidence of contact is the 21 April  
2009 review by Jaschke of Bert Holtby's income tax return that had been prepared  
by Burdeyney.  
This task was apparently undertaken by Jaschke with no  
consultation or communications with either Bert Holtby or Burdeyney. Such facts  
would not typically be supportive of a reasonable inference that Burdeyney  
informed Jaschke of the non-public Proposed Acquisition, or recommended or  
encouraged Jaschke to purchase Eveready Shares. Moreover, there is no evidence  
of Burdeyney informing anyone at InVision other than Gayle Walton of the non-  
public Proposed Acquisition. Even assuming that Burdeyney's informing Gayle  
Walton of the Proposed Acquisition in late February 2009 could give rise to a  
reasonable inference that Burdeyney similarly informed Jaschke or recommended  
or encouraged Jaschke to purchase Eveready Shares, the sufficiently different  
timing of Jaschke's purchases of Eveready Shares in late March 2009 and then in  
late April would not be supportive of any such inference.  
Prior to his purchase of 400 Eveready Shares on 27 March 2009, Jaschke had  
never purchased Eveready securities, although he testified that he had followed  
Eveready since approximately 2005. His March and April 2009 Eveready Share  
purchases (the April purchases were made the day before the issuance of the  
29 April 2009 News Release) were also well-timed, ones that put him in a  
position to benefit financially from favourable market reaction to the Proposed  
Acquisition, once generally disclosed. Such facts could be supportive of a  
reasonable inference that Burdeyney informed Jaschke of the non-public  
Proposed Acquisition, or recommended or encouraged Jaschke to purchase  
Eveready Shares.  
Jaschke purchased a total of 2400 Eveready Shares on two days one month apart –  
on 27 March and 28 April 2009 bringing his total investment in Eveready to  
approximately $8000, not an unusual type or size of investment for Jaschke. Such  
facts would not typically be supportive of a reasonable inference that Burdeyney  
informed Jaschke of the non-public Proposed Acquisition, or recommended or  
encouraged Jaschke to purchase Eveready Shares.  
On 28 April 2009 Jaschke purchased 1600 Eveready Shares in the Jaschke Margin  
Account (for which he had sufficient margin, perhaps used all available margin –  
the evidence is not clear) and 400 additional Eveready Shares in the Jaschke  
Direct Trading Account. He testified that he purchased the 400 Eveready Shares  
through the Jaschke Direct Trading Account because he ultimately wanted to have  
an "even" number of Eveready Shares 2000 in one account (the Jaschke  
Margin Account initially) and he believed he could not transfer the 400 Eveready  
Shares from the Jaschke TFSA. This explanation is, in our view, suspect, but in  
light of the relatively small dollar amount involved not implausible. Such facts  
may or may not be supportive of a reasonable inference that Burdeyney informed  
Jaschke of the non-public Proposed Acquisition, or recommended or encouraged  
Jaschke to purchase Eveready Shares.  
Jaschke did not conduct any specific research on Eveready prior to his March  
2009 Eveready Share purchase other than what he would have read about it in the  
Globe Investor. He explained that he made this purchase of approximately $1100  
because he knew that the Share trading price was lower than past prices, he had  
seen references to a client's investment in Eveready which had caught his interest,  
and, although he was looking for income trusts with a good return, he selected  
Eveready over income trust Westshore due to newspaper suggestions of coal mine  
strikes. Again, we find this explanation unusual but in light of the relatively small  
dollar amount involved not implausible. Such facts may or may not be supportive  
of a reasonable inference that Burdeyney informed Jaschke of the non-public  
Proposed Acquisition, or recommended or encouraged Jaschke to purchase  
Eveready Shares.  
Jaschke's explanations for purchasing additional Eveready Shares at the end of  
April 2009 because he had taken note of the references to Eveready investments  
in Bert Holtby's income tax return that he had just reviewed and because his  
March Eveready investment had increased by approximately 25% are, in our  
view, not implausible.  
Such facts would not typically be supportive of a  
reasonable inference that Burdeyney informed Jaschke of the non-public  
Proposed Acquisition, or recommended or encouraged Jaschke to purchase  
Eveready Shares.  
Singh, the broker who processed Jaschke's April purchases of Eveready Shares,  
testified that Jaschke seemed "surprised" about and "unaware" of the Proposed  
Acquisition when she called to tell him about the 29 April 2009 News Release  
and the substantial increase in value of his Eveready Shares. Such facts would  
not typically be supportive of a reasonable inference that Burdeyney informed  
Jaschke of the non-public Proposed Acquisition, or recommended or encouraged  
Jaschke to purchase Eveready Shares.  
[620] In short, contrary to Staff's suggestion, we do not think it a natural inference to conclude  
that, because Burdeyney had informed Gayle Walton of the non-public Proposed Acquisition  
prior to Jaschke's Eveready Share purchases and "given the proximity between Jaschke and  
Burdeyney, and Jaschke's Eveready purchases in March and April 2009", Burdeyney also  
informed Jaschke of the non-public Proposed Acquisition. In our view, to make such an  
inference reasonable, more evidence for example, of contact or communication or of a close  
personal or business relationship involving relatively frequent communication about investing or  
other topics would be required. And we note that, while Jaschke's purchases of Eveready  
Shares were certainly well-timed, they were relatively small and not unprecedented purchases.  
[621] In the result, we are unable to infer from the evidence as a whole that Burdeyney  
informed Jaschke of the non-public Proposed Acquisition or recommended or encouraged him to  
purchase Eveready Shares in March and April 2009. These allegations fail.  
(c)  
Summary of Conclusions  
[622] Based on the foregoing, we find that Burdeyney:  
by purchasing Eveready Shares in April 2009, breached section 147(2) of the Act;  
and  
informed Gayle Walton of the non-public Proposed Acquisition contrary to  
section 147(3).  
[623] We do not find that Burdeyney informed Jaschke of the non-public Proposed Acquisition  
contrary to section 147(3) of the Act, or recommended or encouraged Jaschke to purchase  
Eveready Shares contrary to section 147(3.1).  
9.  
Did Gayle Walton Recommend or Encourage Thane Walton to Purchase  
Eveready Shares?  
[624] Staff alleged that Gayle Walton recommended or encouraged her husband Thane Walton  
to purchase Eveready Shares in March 2009 when she, a person in a special relationship with  
Eveready, had knowledge of the non-public Proposed Acquisition.  
[625] We found that Burdeyney informed Gayle Walton by, at the latest, 27 February 2009 of  
the non-public Proposed Acquisition. Thus, from at least 27 February 2009 until the issuance of  
the 29 April 2009 News Release, Gayle Walton had knowledge of the non-public Proposed  
Acquisition. We so find.  
[626] Gayle Walton knew that Bert Holtby was a long-time client of InVision, and more  
specifically a long-time client of Burdeyney. Gayle Walton also knew that InVision had never  
been the accountant for Eveready. Gayle Walton testified that Burdeyney had told her years  
earlier that Bert Holtby was a director or trustee of Eveready and that as far she knew Bert  
Holtby continued to hold that position in 2009 she had never been told that Bert Holtby had  
resigned. Gayle Walton learned of the non-public Proposed Acquisition from Burdeyney, who  
we found was a person in a special relationship with Eveready. Gayle Walton must have  
believed that the information received from Burdeyney was reliable enough sourced from  
someone who had a real connection with Eveready to pass it on to her husband. In all the  
circumstances we think it more likely than not that Gayle Walton knew or ought reasonably to  
have known that Burdeyney was a person in a special relationship with Eveready because she  
knew or ought reasonably to have known that Bert Holtby whom she knew or ought reasonably  
to have known was a director of Eveready was the source of Burdeyney's knowledge of the  
non-public Proposed Acquisition. We so find. In the result, under section 9(e) of the Act, Gayle  
Walton also was a person in a special relationship with Eveready. We so find.  
[627] We next decide whether Gayle Walton recommended or encouraged her husband Thane  
Walton to purchase Eveready Shares before the Proposed Acquisition was generally disclosed.  
Gayle Walton denied having so recommended or encouraged Thane Walton. She did, however,  
admit to passing on to Thane Walton the comment made to her by Burdeyney on or soon after  
27 February 2009 Burdeyney's making of which comment, we found, to have been his  
informing Gayle Walton of the non-public Proposed Acquisition.  
[628] Having considered her denial in light of all other evidence, we do not find it believable –  
it is not in harmony with the preponderance of the evidence as a whole. Rather, having  
considered the evidence in its entirety, we infer it is more likely than not that Gayle Walton  
recommended or encouraged her husband to purchase Eveready Shares when she, a person in a  
special relationship with Eveready, had knowledge of the non-public Proposed Acquisition. To  
that end, we make particular note of the following:  
Contrary to Gayle Walton's testimony that Thane Walton was the one who made  
their family investment decisions, it is clear from her evidence in totality that she  
did play some role in those decisions.  
We think it implausible that Gayle Walton, having learned of the non-public  
Proposed Acquisition from Burdeyney, information that she viewed reliable and  
significant enough to pass on to her husband, did not in any way recommend or  
encourage him to purchase Eveready Shares. Indeed, we find that, in merely  
passing on such information to her husband, Gayle Walton recommended and  
encouraged her husband to purchase Eveready Shares. And, in any event, we  
think it a reasonable and logical inference in all the circumstances that Gayle  
Walton, when passing on such information, said more to recommend and  
encourage him to purchase Eveready Shares. Notably, that is exactly what Thane  
Walton did and forthwith, making well-timed purchases that put the Waltons in a  
position to benefit financially from favourable market reaction to the Proposed  
Acquisition, once generally disclosed. Three days after Gayle Walton learned of  
the non-public Proposed Acquisition from Burdeyney, Thane Walton began  
purchasing Eveready Shares. He purchased a total of 11 000 Eveready Shares for  
$25 234, which gave the Waltons a position in Eveready that was considerably  
greater in value than the Eveready position they sold in December 2008 (8774  
Eveready Units sold for $8264.32 albeit with a book value of $51 880.39).  
We agree with Staff that Gayle Walton's explanation for the Waltons' March 2009  
repurchase of Eveready securities that she and her husband had planned to  
repurchase Eveready securities but could not do so earlier than 60 days after the  
sale of all of their Eveready Units at the end of December 2008 is not credible.  
First, Gayle Walton testified that she and her husband sold their Eveready Units to  
create a capital loss intended to offset an anticipated capital gain from Thane  
Walton's exercise of Galleon options. However, as it turned out, there was no  
capital gain to be offset. Second, Gayle Walton testified that they did not  
repurchase Eveready securities earlier because she mistakenly believed that the  
stop-loss tax rules prohibited them from repurchasing Eveready securities for 60  
days following, rather than surrounding, the transaction. In fact, under the  
"superficial loss" or stop-loss rules, the Waltons could have repurchased Eveready  
securities 30 days after they had sold them at the end of January 2009. Instead,  
they did not make any purchases of Eveready Shares until after Gayle Walton  
learned of the non-public Proposed Acquisition from Burdeyney. It defies belief  
that Gayle Walton, an accounting professional with knowledge of or easy access  
to guidance about tax rules (and, in particular, access to plainly-worded guidance  
about the stop-loss rules), would have been so mistaken on both issues.  
It may be that Thane Walton had reasons for purchasing Eveready Shares in  
March 2009 in addition to or other than Gayle Walton's recommendation or  
encouragement.  
In his Investigative Interview, Thane Walton said that he  
purchased Eveready Shares because "they were just so undervalued, it was  
incredible" and the "price was so cheap". However, as noted by Staff, any illegal  
recommending or encouraging is not negated by other reasons, and any  
recommending or encouraging need not be acted on to be illegal, although we do  
not doubt, in all the circumstances, that Thane Walton did act on his wife's  
recommendation or encouragement.  
[629] In conclusion, having considered the totality of the evidence, we infer it is more likely  
than not that Gayle Walton recommended or encouraged Thane Walton to purchase Eveready  
Shares when she, a person in a special relationship with Eveready, had knowledge of the  
Proposed Acquisition before it was generally disclosed in the 29 April 2009 News Release,  
contrary to section 147(3.1) of the Act. We so find. This allegation of illegal recommending or  
encouraging is sustained.  
10.  
Did Jaschke Engage in Illegal Insider Trading of Eveready Shares?  
[630] To find that Jaschke illegally purchased Eveready Shares, as alleged, we must find that,  
when he purchased Eveready Shares, he was in a special relationship with Eveready and had  
knowledge of the non-public Proposed Acquisition.  
[631] We did not find that Burdeyney informed Jaschke of the non-public Proposed  
Acquisition. It follows that, when Jaschke purchased Eveready Shares in March and April 2009,  
he did not have knowledge of the non-public Proposed Acquisition. Accordingly, we find that  
Jaschke did not breach section 147(2) of the Act by making these purchases of Eveready Shares.  
This allegation of illegal insider trading fails.  
11.  
Did Randy Kowalchuk Engage in Illegal Insider Trading of Eveready  
Shares?  
[632] To find that Randy Kowalchuk illegally purchased Eveready Shares, as alleged, we must  
find that, when he purchased Eveready Shares, he was in a special relationship with Eveready  
and had knowledge of the non-public Proposed Acquisition.  
[633] There is no dispute that Randy Kowalchuk purchased Eveready Shares in the Randy  
Kowalchuk TFSA in March 2009, through the Laura Kowalchuk TFSA on 13 April 2009 and  
through the Laura Kowalchuk RRSP Account on 14 and 15 April 2009.  
[634] Having regard to the NOH in its entirety and in particular Staff's allegation that Richard  
Kowalchuk informed Randy Kowalchuk of the non-public Proposed Acquisition on or about  
13 April 2009, we agree with Randy Kowalchuk that Staff have apparently abandoned any  
allegation that he made his March 2009 Eveready Share purchase with knowledge of the non-  
public Proposed Acquisition. In the result, we first determine whether Randy Kowalchuk had  
knowledge of the non-public Proposed Acquisition when he purchased Eveready Shares in April  
2009.  
[635] The basis of Staff's position was clearly that the evidence gives rise to a reasonable  
inference that it is more likely than not that Richard Kowalchuk informed his brother Randy  
Kowalchuk of the non-public Proposed Acquisition before 13 April 2009. Randy Kowalchuk  
argued that the evidence adduced is inconsistent with such an inference. He pointed to certain of  
Richard Kowalchuk's testimony, Randy Kowalchuk's evidence denying that he was so informed  
by his brother, and Randy Kowalchuk's explanations described by him as plausible, reasonable  
and cogent for his Eveready Share purchases.  
[636] Randy Kowalchuk did indeed deny being informed of the non-public Proposed  
Acquisition by Richard Kowalchuk before making the impugned April 2009 Eveready Share  
purchases.  
In Richard Kowalchuk's evidence his Investigative Interviews, the Richard  
Kowalchuk Settlement Agreement and his testimony Richard Kowalchuk admitted informing  
his brother of the non-public Proposed Acquisition, but there are inconsistencies in his evidence  
as to when he did so. More particularly, Richard Kowalchuk's testimony as to when he so  
informed his brother was at times evasive or conveniently forgetful.  
evidence, some of it direct evidence.  
There is conflicting  
[637] As discussed above, we think it not at all unexpected that Richard Kowalchuk would  
attempt to present his evidence in such a manner that it might provide assistance to his brother in  
answering the allegations against him. Ultimately, however, we do not find Randy Kowalchuk's  
denial or Richard Kowalchuk's equivocation on timing believable or in harmony with the  
preponderance of the evidence as a whole. We make particular note of the following evidence  
and inferences and conclusions drawn from that evidence:  
For the reasons earlier set out, we found that Richard Kowalchuk had knowledge  
of the non-public Proposed Acquisition by, at the latest, 19 March 2009.  
Richard Kowalchuk admitted that he informed his brother of the non-public  
Proposed Acquisition, but there are inconsistencies in his evidence as to when he  
so informed his brother:  
Richard Kowalchuk eventually testified that he did inform his brother of  
the Proposed Acquisition, saying that "[a]t that point in time" by at least  
21 April 2009 Randy Kowalchuk "already knew that he was going to be  
bought out". Consistent with this testimony, in the Richard Kowalchuk  
Settlement Agreement, Richard Kowalchuk admitted to informing Randy  
Kowalchuk of the Proposed Acquisition in the latter part of April 2009  
(and prior to 29 April).  
Asked in his first Investigative Interview whether Bert Holtby had  
informed him of the Proposed Acquisition around his brother's 11 March  
2009 Eveready Share purchase, Richard Kowalchuk responded, "if I knew  
at that point in time, I'm sure I would have told [Randy Kowalchuk]" –  
"[t]hat there would be an acquisition". In the same Investigative Interview  
Richard Kowalchuk said that, at the time of Randy Kowalchuk's April  
2009 Eveready Share purchases, "Randy, he would have known that  
[Eveready was] being bought out".  
Consistent with the latter point,  
Richard Kowalchuk in his second Investigative Interview said that,  
although he could not recall the conversation when he first informed his  
brother of the Proposed Acquisition, he "would have had it [that  
conversation] in April", before Randy Kowalchuk made his April  
Eveready Share purchases.  
According to Richard Kowalchuk's testimony, his response in the 21 April  
2009 email chain with Randy Kowalchuk was written to obfuscate any  
suggestion that he and his brother had knowledge of the Proposed  
Acquisition.  
Randy Kowalchuk in his testimony denied having any  
discussions with Richard Kowalchuk about cover-up emails. It may be  
that there was no collusion between the brothers but it does not necessarily  
follow that Richard Kowalchuk did not attempt a "cover-up". And, if  
there were nothing to hide, why would Richard Kowalchuk write  
something intended to do just that? We agree with Staff that it is less  
probable than not that Richard Kowalchuk would give evidence that he  
informed his brother if he had not, or would concoct a story about  
"covering their tracks". Notably, any such subterfuge would have been  
unnecessary had Randy Kowalchuk not been informed of the Proposed  
Acquisition prior to making his April 2009 Eveready Share purchases.  
Richard Kowalchuk and Randy Kowalchuk were brothers with a close  
relationship, who, although they lived in different provinces, spoke frequently via  
telephone. Because of their close familial relationship, we do not doubt that  
Richard Kowalchuk trusted his brother enough to feel secure in sharing  
information of the non-public Proposed Acquisition with him, information that  
Richard Kowalchuk knew would benefit his brother and sister-in-law financially.  
This would be consistent with Richard Kowalchuk informing Randy Kowalchuk  
of the non-public Proposed Acquisition prior to Eveready Share purchases being  
made by Randy Kowalchuk.  
Richard Kowalchuk admitted in the Richard Kowalchuk Settlement Agreement to  
informing others clients of the non-public Proposed Acquisition with a view  
to benefiting 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.  
At the end of March 2009 the Laura Kowalchuk RRSP Account had a cash  
balance of slightly more than $1100. Transactions in that account in March  
included the purchase of units in a short-term bond fund for $27 000 and the  
purchase of Crescent Point securities for a total cost of slightly more than  
$10 000. These non-Eveready transactions suggest that, consistent with the  
preponderance of Richard Kowalchuk's evidence, he had not informed Randy  
Kowalchuk of the non-public Proposed Acquisition when Randy Kowalchuk  
made his March 2009 Eveready Share purchase.  
On 13 April 2009 (settling on 16 April) Randy Kowalchuk sold for approximately  
$13 500 the Crescent Point securities he had just purchased less than four weeks  
earlier and that had paid a small dividend. He testified that he sold these  
securities because they had appreciated by some 30% in value. He used much of  
that money to purchase 5000 Eveready Shares through that account on 14 and  
15 April 2009. The Laura Kowalchuk RRSP Account had an existing Eveready  
position of 2000 Shares which had declined in value from $11 400 on 30 January  
2009 to $4840 as at 31 March 2009. In sum, Randy Kowalchuk exchanged  
Crescent Point securities that had appreciated in value and were paying a dividend  
for Eveready securities that had depreciated in value and with a recently  
suspended dividend. Such facts would be consistent with Richard Kowalchuk  
informing Randy Kowalchuk of the non-public Proposed Acquisition by, at the  
latest, 13 April 2009.  
Before placing each of his orders to purchase Eveready Shares in April 2009,  
Randy Kowalchuk was in communication with Richard Kowalchuk a person  
who had knowledge of the non-public Proposed Acquisition. This would be  
consistent with Richard Kowalchuk informing Randy Kowalchuk of the non-  
public Proposed Acquisition by, at the latest, 13 April 2009.  
Randy Kowalchuk's April 2009 Eveready Share purchases were well-timed, ones  
that put him in a position to benefit financially from favourable market reaction to  
the Proposed Acquisition, once generally disclosed. This would be consistent  
with Richard Kowalchuk informing Randy Kowalchuk of the non-public  
Proposed Acquisition by, at the latest, 13 April 2009.  
According to Randy Kowalchuk, Eveready's announcement that its line of credit  
had been extended and his "puppy syndrome" were the dominant reasons for his  
14 and 15 April 2009 Eveready Share purchases, and his explanation for his  
13 April Eveready Share purchase (occurring the day before the line-of-credit  
announcement) was that there was money in the account. Randy Kowalchuk had  
purchased Eveready Shares prior to April 2009, had made other purchases of  
securities in similar companies, with similar volume and value, and had made  
serial purchases of the same security over short periods.  
While Randy  
Kowalchuk's explanations may not be implausible on their face and in light of his  
trading history, we do not believe them, or that they fully explain the April  
purchases, when considered in light of all other evidence.  
[638] In conclusion, having considered the totality of the evidence, we find it more likely than  
not that Richard Kowalchuk informed Randy Kowalchuk of the non-public Proposed Acquisition  
by, at the latest, 13 April 2009. Thus, we find that Randy Kowalchuk purchased Eveready  
Shares through the Laura Kowalchuk TFSA and the Laura Kowalchuk RRSP with knowledge of  
the non-public Proposed Acquisition.  
[639] We next determine whether Randy Kowalchuk was a person in a special relationship with  
Eveready when he purchased Eveready Shares in April 2009 with knowledge of the non-public  
Proposed Acquisition.  
[640] Randy Kowalchuk admitted he knew in April 2009 and had known for many years that  
Bert Holtby was a director of Eveready. Randy Kowalchuk said that, when he first purchased  
Eveready securities in May 2008, he was "certainly aware" Bert Holtby was "a director or  
trustee" of Eveready. Randy Kowalchuk's last personal contact with Bert Holtby appears to have  
been at the Political Fundraiser in May 2008. In a 21 May 2008 email to Randy Kowalchuk  
regarding the Political Fundraiser, Richard Kowalchuk identified Bert Holtby as a director of  
Eveready. Randy Kowalchuk also knew that Richard Kowalchuk and Bert Holtby were  
acquainted and that in 2008 and 2009 Bert Holtby was a client of Richard Kowalchuk. In his  
second Investigative Interview Richard Kowalchuk said that Randy Kowalchuk would not have  
asked for the source of Richard Kowalchuk's knowledge of the Proposed Acquisition because  
Randy Kowalchuk knew of Richard Kowalchuk's relationship with Bert Holtby and knew Bert  
Holtby was a director of Eveready so that Randy Kowalchuk "would have the assumption that I  
would have known from [Bert Holtby]".  
[641] Having considered the evidence as a whole, we infer it is more likely than not that Randy  
Kowalchuk knew or ought reasonably to have known that Richard Kowalchuk had learned of the  
non-public Proposed Acquisition from Bert Holtby, who, as a director of Eveready, was in a  
special relationship with Eveready. Thus, under section 9(e) of the Act, Richard Kowalchuk was  
also a person in a special relationship with Eveready. In the result, Randy Kowalchuk having  
learned of the non-public Proposed Acquisition from Richard Kowalchuk, a person whom he  
knew or ought reasonably to have known was in a special relationship with Eveready was also  
a person in a special relationship with Eveready within the meaning of section 9(e). We so find.  
[642] In conclusion, having considered the totality of the evidence, we find that Randy  
Kowalchuk, a person in a special relationship with Eveready with knowledge of the non-public  
Proposed Acquisition, purchased Eveready Shares, contrary to section 147(2) of the Act. This  
allegation of illegal insider trading is sustained.  
12.  
Did Tanner Engage in Illegal Insider Trading of Eveready Shares?  
[643] To find that Tanner illegally purchased Eveready Shares, as alleged, we must find that,  
when he purchased Eveready Shares, he was in a special relationship with Eveready and had  
knowledge of the non-public Proposed Acquisition.  
[644] There is no dispute that Tanner purchased Eveready Shares on 23 and 27 April 2009,  
before the Proposed Acquisition was generally disclosed in the 29 April 2009 News Release.  
We first determine whether Tanner was in a special relationship with Eveready when he made  
these Eveready Share purchases.  
[645] Richard Kowalchuk had been Tanner's long-time investment advisor. Their relationship  
was a business one. Almost all of their dealings were conducted via telephone. They had only  
met in person on four occasions, the fourth and final time being the Canmore Breakfast Meeting.  
Tanner testified that, although on occasion he made his own investment decisions, most of his  
investment decisions were made in reliance on investment advice and recommendations he  
received from Richard Kowalchuk. Tanner had previously purchased Eveready securities  
following recommendations made by Richard Kowalchuk but had not owned any Eveready  
securities since May 2006.  
[646] It is clear from the evidence that Richard Kowalchuk telephoned Tanner on 23 April  
2009 to solicit Tanner's interest in purchasing Eveready Shares as a potential investment.  
Richard Kowalchuk testified that, although he could not recall the entire conversation, he did  
inform Tanner that Eveready was "going to go up in value". Tanner recalled Richard Kowalchuk  
informing him that Eveready was a "possible takeover target". Tanner further testified that he  
did not consider Richard Kowalchuk's information unusual; Tanner told us that other brokers had  
provided him with similar advice a prediction that a particular stock's price might increase or a  
particular issuer might be a potential takeover candidate. Richard Kowalchuk testified that  
Tanner told him that if "I really liked it to buy it". Following those instructions, Richard  
Kowalchuk purchased 11 200 Eveready Shares for Tanner. We received no evidence of any  
mention of Bert Holtby in this conversation or of any inquiries as to where Richard Kowalchuk  
had sourced his information about a possible takeover of Eveready.  
[647] Richard Kowalchuk testified that, at the Canmore Breakfast Meeting, the subject of  
Eveready came up and he told Tanner that "it's a good time to be buying this stock, and I really  
think it's going to go" because "I thought [Eveready] would be bought out." In response to that  
advice, Tanner instructed Richard Kowalchuk to purchase 10 000 additional Eveready Shares for  
him. Again, we received no evidence of any mention of Bert Holtby or of any inquiries as to  
where Richard Kowalchuk had sourced the information he had conveyed about Eveready.  
[648] It is clear, indeed it is not disputed, that Tanner was given information and a  
recommendation to purchase Eveready Shares from his long-time investment advisor Richard  
Kowalchuk. And, when Richard Kowalchuk had his April 2009 communications with Tanner  
about Eveready, Richard Kowalchuk having learned of the non-public Proposed Acquisition  
was, as we found, a person in a special relationship with Eveready. At issue, then, is whether at  
the time Tanner knew or ought reasonably to have known that Richard Kowalchuk had sourced  
his information about Eveready from Bert Holtby? Having considered the totality of the  
evidence, we are not satisfied that we can reasonably so conclude.  
[649] We find Tanner's testimony credible. Tanner testified that there were no references to  
Bert Holtby or his relationship with Eveready in Tanner's two conversations with Richard  
Kowalchuk in April 2009, and we discern no reason to disbelieve this testimony. We also have  
no reason to disbelieve Tanner's testimony that he had not associated Bert Holtby with Eveready  
either at the time of his April 2009 Eveready Share purchases or at any time in 2009. In the  
circumstances of a client (such as Tanner) being solicited by his broker of many years (such as  
Richard Kowalchuk) to purchase securities in an issuer that the client knows his broker has  
previously followed, we think it unlikely that the client would suspect, let alone have reason to  
believe or know, that his broker's advice and recommendations had their basis in illegal insider  
information.  
[650] We also think it plausible, as Tanner testified, that he had no recollection of Bert Holtby  
a man Tanner met only once one year earlier at the Political Fundraiser, who along with others  
had been identified (Bert Holtby was described as a director of Eveready) in two May 2008  
emails circulated in advance of the event, and who was one of another group that flew back on  
Tanner's plane as arranged by Tanner's contact Richard Kowalchuk. The evidence is that Tanner  
had no specific discussions with Bert Holtby at the Political Fundraiser, that Tanner did not  
discuss Bert Holtby with either Randy Kowalchuk or Richard Kowalchuk at the event, that  
Tanner never discussed Bert Holtby with Richard Kowalchuk after the event, and that that  
Tanner had no relationship or continuing relationship or contact with Bert Holtby. In his  
Investigative Interview, Tanner said that he did not know who Bert Holtby was. Concerning  
this, Tanner testified that he does not have a good recollection of persons' names unless he does  
business with them. When his memory was refreshed by the May 2008 emails, he admitted that  
he recalled Bert Holtby attending the Political Fundraiser, that he was a director of Eveready,  
and that Richard Kowalchuk who had invited Bert Holtby to the event had some sort of  
relationship with Bert Holtby. In our view, it does not necessarily follow that, because Tanner  
recalled these facts after having his memory refreshed, he had a similar recollection or  
understanding when Richard Kowalchuk solicited him to purchase Eveready Shares in April  
2009 and informed him that Eveready was a possible take-over target.  
[651] Having determined that the evidence does not suffice for us to infer it is more likely than  
not that Tanner knew or ought reasonably to have known that Bert Holtby was the source of  
Richard Kowalchuk's information about Eveready, we cannot find that Tanner was a person in a  
special relationship with Eveready when he purchased Eveready Shares in April 2009.  
Accordingly, we find that Tanner did not breach section 147(2) of the Act by making these  
purchases of Eveready Shares. This allegation of illegal insider trading fails.  
D.  
Alleged Concealing or Withholding of Information  
1. Allegation and Law  
[652] Staff alleged that Bert Holtby concealed or withheld information reasonably required for  
an investigation under the Act, or attempted to do so, contrary to section 93.4 of the Act.  
[653] Section 93.4(1) of the Act states:  
A person . . . shall not, and shall not attempt to, . . . conceal or withhold any information . . .  
reasonably required for [an] . . . investigation under this Act.  
[654] As this Commission stated in Re Fletcher, 2012 ABASC 222 at para. 108:  
To find a contravention of section 93.4(1) of the Act, we need not find that there was an  
obstruction of the investigation (although this may well be a relevant consideration at any required  
sanction hearing). Rather, to find such a contravention, we must determine first whether [a  
respondent] concealed or withheld, or attempted to conceal or withhold, information and, second,  
whether that information was reasonably required for an investigation under the Act.  
[655] In finding that the second element is proved, we need not find that the respondent  
reasonably knew that the information was reasonably required for an investigation under the Act  
(Fletcher at para. 113).  
2.  
Did Bert Holtby Conceal or Withhold Information?  
(a) Parties' Positions  
[656] Staff submitted that Bert Holtby's attempts to conceal or withhold from Staff his  
involvement in the Douglas Account and its true purpose more particularly, information of an  
Eveready director trading in Eveready securities through a nominee account, and information  
about the involvement in the account of Richard Kowalchuk, a registrant and investment advisor  
at the time was deliberate and was information reasonably required for their investigation into  
suspected illegal insider trading of Eveready Shares.  
[657] Bert Holtby submitted that he should not be found to have attempted to obstruct Staff.  
Bert Holtby admitted that he erred in his Investigative Interview in his description of  
Kowalchuk's deposit of $40 000 into the Douglas Account and of his own third deposit of  
$50 000, but contended that his explanations for those oversights are believable and probable and  
that his statements were not an attempt to deliberately mislead Staff in their investigation. Bert  
Holtby further noted that in his Investigative Interview he acknowledged that Richard  
Kowalchuk may have been an investor in the Douglas Account and so had not misled Staff in  
that regard.  
(b)  
Finding  
[658] It is clear from the totality of the evidence, which led us to find that Bert Holtby together  
with Douglas and Richard Kowalchuk were the owners of the Douglas Account and that the  
Douglas Account was used to purchase and sell Eveready securities as principally directed by  
Bert Holtby, that Bert Holtby was not truthful and candid in his answers regarding the Douglas  
Account in his Investigative Interview. In our view, Bert Holtby's lack of candour when being  
questioned by Staff investigators about the Douglas Account was a deliberate attempt to conceal  
or withhold information from Staff about his involvement in the Douglas Account and  
specifically his involvement in the illegal purchases of Eveready securities in the Douglas  
Account.  
[659] Staff were investigating suspected illegal insider trading of Eveready Shares, and a focal  
point of Staff's investigation was the purchasing and selling of Eveready Shares by one of  
Eveready's directors, Bert Holtby. We are satisfied that information that Bert Holtby was  
involved in the Douglas Account, an account through which Eveready securities had been  
purchased prior to the public announcement of the Proposed Acquisition, was information  
"reasonably required" for Staff's investigation.  
[660] We accordingly find that the elements of a contravention of section 93.4(1) of the Act  
have been proved.  
Thus, we find that Staff have proved that Bert Holtby breached  
section 93.4(1). This allegation is sustained.  
E.  
Alleged Conduct Contrary to the Public Interest  
1. Parties' Positions  
[661] Staff emphasized the serious nature of illegal insider trading and alleged each of the  
Respondents acted contrary to the public interest. Staff argued that, to the extent we find that  
any of the Respondents illegally insider traded, informed, or recommended or encouraged in  
contravention of the Act, or that Bert Holtby misled Staff in their investigation in contravention  
of the Act, such conduct would also be grounds to find they acted contrary to the public interest.  
Staff also argued that, even if we find that a Respondent's actions were not a "technical" breach  
of the Act, we have the jurisdiction to find that the Respondent's actions nevertheless "directly  
engage the fundamental principles of securities regulation and the purposes of the Act" and thus  
that the Respondent engaged in conduct contrary to the public interest.  
[662] Some of the Respondents argued that, if we find that a Respondent did not breach the  
Act, these are not the circumstances in which the Commission should exercise its public interest  
jurisdiction to find that such Respondent acted contrary to the public interest.  
2.  
Illegal Insider Trading, Informing, and Recommending or Encouraging Are  
Serious Capital Market Misconduct  
[663] Illegal insider trading, informing, and recommending or encouraging are among the most  
serious of capital-market misconduct. Such misconduct not only is patently unfair to legitimate  
investors but also can have far-reaching effects by seriously undermining investor confidence in  
the fairness of our capital market.  
[664] The regulatory objective of the illegal insider trading, informing, and recommending or  
encouraging provisions contained in Alberta securities laws is to protect investors by ensuring  
that no informational advantage is given to those who have a relationship with a reporting issuer  
and that all investors are given the same opportunity to assess material information in making  
their investment decisions, thereby enhancing public confidence in the Alberta capital market as  
a manifestly fair, efficient and effective capital market. Thus, section 147 of the Act imposes on  
individuals, who by reason of their relationship with a reporting issuer acquire non-public  
material information, statutory prohibitions not to purchase or sell the reporting issuer's securities  
before such information is made public, and not to disclose such information to others. Once the  
material information is generally disclosed, the prohibitions fall away and the "insider" is, like  
any other market participant, free to purchase and sell the reporting issuer's securities.  
[665] Other Canadian securities regulatory authorities have also commented on the seriousness  
with which they view illegal insider trading and "tipping". In Re Woods (1995), 18 OSCB 4625,  
the OSC articulated the public interest policy basis for dealing severely with such misconduct:  
The prohibition on "insider trading", i.e., trading in securities of a reporting issuer with the  
knowledge of a material fact or material change with respect to the reporting issuer which has not  
generally been disclosed, is a significant component of the schemes of investor protection and of  
the fostering of fair and efficient capital markets and confidence in them, that are the cornerstones  
of the Act. It would be grossly unfair to permit a person who obtains undisclosed material  
information with respect to a reporting issuer, because of his relationship with the issuer, to trade  
with the informational advantage this gives him or her. To quote the striking analogy used by  
Farley J.:  
It is not just a question of the house in a casino situation moving the odds in a  
card game or the dealer counting cards, it is akin to the dealer being able to play  
with marked cards.  
As Farley J. went on to say:  
. . . when one actually trades with the benefit of insider information, then the  
seller is not an innocent and lucky winner. Rather the insider trader is a  
rapacious thief.  
As well, such activity, if countenanced, would detract from the credibility of our capital markets  
and lead to the undermining of investor confidence in those markets. . . .  
[666] In Bennett, in finding that illegal insider trading and informing "caused serious prejudice  
to the public interest", the BCSC posited (at para. 657): "[h]ow can the public have confidence  
in our markets and buy and sell securities satisfied that there is a level playing field for both  
buyers and sellers?"  
[667] In the result given the seriousness with which securities regulatory authorities view  
illegal insider trading, informing, and recommending or encouraging a finding that an  
individual has engaged in such misconduct is a clear ground on which to base a finding that the  
individual also engaged in conduct contrary to the public interest. We therefore find that, in  
breaching one or more of sections 147(2), (3) and (3.1) of the Act, Bert Holtby, Dale Holtby,  
Shepert, Burdeyney, Gayle Walton and Randy Kowalchuk also acted contrary to the public  
interest.  
[668] Bert Holtby used a nominee account the Douglas Account to trade during Eveready-  
imposed blackout periods and to engage in illegal insider trading. Bert Holtby also attempted to  
conceal or withhold information reasonably required for Staff's investigation. This behaviour,  
with its hallmarks of deception, is also conduct contrary to the public interest. We so find.  
[669] While it is clear that we have the public interest jurisdiction to find that conduct is  
contrary to the public interest regardless of whether there has been a finding of a contravention  
of Alberta securities laws, we are mindful that we are to be cautious and exercise restraint in  
such circumstances (Fletcher at paras. 96-98).  
[670] There may be circumstances in which the conduct of a respondent, while not found to  
have breached a specific provision of Alberta securities law, warrants a finding of conduct  
contrary to the public interest because it was so egregious or otherwise "engages the animating  
principles" of the Act (Re Biovail Corporation (2010), 33 SSCB 8914 at para. 382, as cited in  
Fletcher at para. 97). However, in respect of Landsiedel, Jaschke and Tanner, we are not  
satisfied that such circumstances exist so as to warrant the exceptional exercise of our public  
interest jurisdiction. In the result, we decline to exercise our public interest jurisdiction in this  
regard. We dismiss the allegation of conduct contrary to the public interest against Landsiedel,  
Jaschke and Tanner.  
3.  
Summary of Conclusions  
[671] For the foregoing reasons, we find that each of the Six Respondents Bert Holtby, Dale  
Holtby, Shepert, Burdeyney, Gayle Walton and Randy Kowalchuk acted contrary to the public  
interest.  
IV.  
CONCLUSION AND NEXT STEPS  
[672] We found that:  
Bert Holtby, Dale Holtby, Shepert, Burdeyney and Randy Kowalchuk engaged in  
illegal insider trading contrary to section 147(2) of the Act;  
Bert Holtby, Dale Holtby and Burdeyney engaged in illegal informing contrary to  
section 147(3);  
Bert Holtby, Dale Holtby and Gayle Walton illegally recommended or  
encouraged others to purchase Eveready Shares contrary to section 147(3.1);  
Bert Holtby concealed or withheld information reasonably required for an  
investigation under the Act, or attempted to do so, contrary to section 93.4(1); and  
in so doing, the Six Respondents acted contrary to the public interest.  
[673] Having so found, this proceeding will now move to a second phase for the purpose of  
determining what, if any, sanction and costs orders ought to be made against the Six  
Respondents.  
[674] We direct that Staff provide to the panel (through the Commission Registrar) and to the  
Six Respondents any written submissions that Staff wish to make on the issue of appropriate  
orders by 16:00 on Monday 11 March 2013.  
[675] The Six Respondents may respond in writing to Staff's written submissions. Any such  
written submissions by the Six Respondents must be provided to the panel (through the  
Registrar) and to Staff by 16:00 on Wednesday 10 April 2013.  
[676] Staff may reply in writing to any such written submissions by the Six Respondents, such  
reply to be provided to the panel (through the Registrar) and to the Six Respondents by 16:00 on  
Friday 19 April 2013.  
[677] If any of these parties wishes to make supplementary oral submissions or to adduce  
evidence on the issue of appropriate orders, the panel will hold an in-person hearing session on a  
date to be arranged through the Registrar, such arrangements to be settled by 16:00 on  
Thursday 25 April 2013. A party requesting such an in-person hearing session must so advise  
the Registrar by 16:00 on Tuesday 23 April 2013, indicating whether that party proposes to  
adduce evidence (via witnesses or otherwise) and the amount of hearing time that party expects  
to require. (If a requesting party does propose to adduce evidence, under section 2.3 of  
Rule 15-501 Rules of Practice and Procedure for Commission Proceedings we direct that party  
to provide to the other parties by at least five business days before the in-person hearing  
session: (i) the names of all proposed witnesses; (ii) summaries of the proposed witnesses'  
anticipated evidence; and (iii) copies of all documents intended to be entered as evidence.) Even  
if no party requests such an in-person hearing session, one may be required by the panel. The  
Registrar will inform the parties as to whether an in-person hearing session will proceed.  
11 February 2013  
For the Commission:  
"original signed by"  
Glenda A. Campbell, QC  
"original signed by"  
Richard A. Shaw, QC  
"original signed by"  
Fred R.N. Snell, FCA  


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