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The OSC is prosecuting the pair under the quasi-criminal provisions of Ontario’s Securities Act, which means their cases will be tried before a judge in the Ontario Court of Justice.Melissa Tait/The Globe and Mail

Two employees of one of the world’s largest newswire services, who allegedly made more than 1,500 stock trades just before various pieces of market-moving news were released, were charged Friday with insider trading and fraud by Ontario’s securities regulator.

John Natividad and Harpreet Saini allegedly made hundreds of thousands of dollars in profits trading on inside information contained in draft news releases that were to be distributed by GlobeNewswire, their employer at the time. Both men, who are based in Toronto, were working as system developers at the newswire between 2018 and 2021, which is when they engaged in the alleged scheme, the Ontario Securities Commission said Friday.

The OSC is prosecuting the pair under the quasi-criminal provisions of Ontario’s Securities Act, which means their cases will be tried before a judge in the Ontario Court of Justice. Most breaches of securities law are argued in front of the regulator’s Capital Markets Tribunal, which is less punitive and does not have the power to issue jail sentences.

Separately, the top market enforcement watchdog in the United States launched a lawsuit against both men on Friday in New Jersey. The U.S. Securities and Exchange Commission is seeking a disgorgement of their profits, as well as penalties.

The SEC alleges Mr. Saini made trading profits of more than US$865,000, and that Mr. Natividad’s profits totalled more than US$657,000. Nearly all of the alleged trades were executed on American stock exchanges, which is one of the reasons the U.S. regulator is asserting jurisdiction in the case.

For its quasi-criminal case, the OSC has lower estimates of those alleged profits: US$280,000 for Mr. Natividad and US$674,000 for Mr. Saini. JP Vecsi, a spokesperson for the OSC, explained that the regulator’s estimates are lower because its case focuses on a smaller number of trades than the SEC’s case.

Because the OSC is prosecuting the men quasi-criminally in court, it has a higher legal standard to meet when proving insider trading. The SEC’s case against the pair is a civil proceeding.

The Globe and Mail first reported in April that the OSC had launched an investigation into pair, and that it had gone to court to extend a freezing order on Mr. Saini’s trading accounts.

None of the allegations have been proven in court. James Camp, a lawyer for Mr. Saini, declined to comment, as did Damien Frost, the lawyer representing Mr. Natividad.

GlobeNewswire is owned by the Nebraska-based telecommunications company Intrado Corporation. Dave Pleiss, Intrado’s vice-president of investor and public relations, said the company co-operated fully with regulators. Mr. Saini was fired in 2022 as a result of the allegations, and Mr. Natividad was fired in 2021, the SEC lawsuit states.

“We take action in an expeditious manner upon discovering that an employee may have engaged in criminal behaviour or material misconduct, up to and including termination as allowed by applicable law,” Mr. Pleiss said.