The Autorité des marchés financiers (AMF) states in court filings that it believes former Caisse vice-president Justin Méthot divulged privileged information about the departure of Colabor chief executive Lionel Ettedgui before it was officially announced.Christinne Muschi/The Globe and Mail
Quebec’s securities watchdog is building an insider-trading case against a former executive at pension fund giant Caisse de dépôt et placement du Québec and several other individuals, alleging that they either leaked or acted on confidential information about developments at food distributor Colabor Group Inc.
The Autorité des marchés financiers (AMF) states in court filings that it believes former Caisse vice-president Justin Méthot divulged privileged information about the departure of Colabor chief executive Lionel Ettedgui before it was officially announced on Aug. 19, 2019, and that another person subsequently traded on that tip.
The regulator also alleges that Mr. Ettedgui told two acquaintances about his impending exit and that the individuals traded on the information, according to filings.
Mr. Méthot said in statement Thursday that he did nothing wrong. Mr. Ettedgui did not answer calls to his home and did not provide a response when contacted through his lawyer.
Court documents show that the regulator launched an investigation into the Colabor trades shortly after Mr. Ettedgui’s departure and conducted several searches of private homes and places of business over the following months, including the Montreal headquarters of the Caisse. AMF lawyers are now analyzing the results of the probe as they weigh whether to press charges, the documents state.
The revelations, first reported by Montreal’s La Presse newspaper, have sparked alarm among some political leaders in Quebec City, with Liberal Party finance critic Carlos Leitao saying this week that they are “troubling” for an organization with the credibility and reputation of the Caisse. The pension fund is among Quebec’s most powerful institutions and had assets of $420-billion at the end of 2021.
The AMF alleges in the court filings that Mr. Méthot passed information about Mr. Ettedgui’s coming resignation to Colabor’s former finance chief Jean-François Neault, who had by then left the food company to become CFO of renewable energy producer Innergex. The regulator alleges that Mr. Neault in turn passed on the tip to several other individuals, at least one of whom traded on the information.
Innergex announced late Thursday that Mr. Neault had left the company and that he will be replaced by another executive. In an interview with The Globe and Mail, Innergex chief executive Michel Letellier said Mr. Neault was fired after Innergex’s discovery of the AMF probe. Mr. Letellier said the company learned about it through the media just this week because a confidentiality order imposed by the AMF barred Mr. Neault from discussing the probe with other individuals under investigation as well as with his employer.
“We were a bit surprised” when we learned of the allegations, Mr. Letellier said, adding that Mr. Neault did good work as Innergex CFO.
“As a public company, however, we need to be transparent and to have a code of ethics that’s irreproachable. And it’s in that context that we had to put an end to his employment.”
Mr. Neault did not respond to a request for comment when contacted via his lawyer.
Caisse spokeswoman Kate Monfette said earlier this week that the pension fund manager itself was never the subject of AMF questioning and neither were its transactions, and added that Mr. Méthot has not been an employee of the pension fund for two years. She declined to answer specific questions about whether the Caisse launched its own probe into the matter or about the circumstances of Mr. Méthot’s departure.
Mr. Méthot was a 16-year veteran of the Caisse who was a vice-president with responsibilities for investments in Quebec companies before he left the organization in April, 2020, according to his LinkedIn profile. He issued a public statement Thursday saying he always carried out his duties with professionalism, rigour and “impeccable ethics,” including when it required him to handle highly sensitive information.
“Neither the Caisse nor I have any knowledge of, or involvement in, the alleged transactions,” Mr. Méthot said in his statement. “Consequently, neither the Caisse nor I benefited directly or indirectly from these transactions.”
The Caisse is a shareholder in Colabor, with an unspecified stake of at least 5 per cent, according to Colabor’s annual management circular filed last month. Under the terms of a subscription agreement struck between the Caisse and the company in 2013, the pension fund has the right to propose a director for election on the Colabor board as long as it stays at or above that 5-per-cent threshold.
AMF spokesman Sylvain Théberge declined to comment Thursday, saying only that the investigation continues. The regulator has not published any information about its probe.
What’s known about the AMF’s effort comes largely from court documents, namely its applications to the Quebec Superior Court to hold on to cellphones and other items it seized in the raids as it works on its investigation. The AMF also obtained search warrants but documents it filed to support its request for them have been sealed by the court.
“The investigation targets a former employee and not the Caisse itself,” said Fanny Beaudry-Campeau, spokeswoman for Quebec Finance Minister Eric Girard. “We have full confidence in the ability of the AMF to properly conduct its investigation and in the Caisse’s co-operation in it.” The Finance Ministry has legislative oversight over the Caisse.
The AMF has said it is among the provincial securities regulators with the strongest enforcement records but it failed to win a conviction or sanction of any sort in its last major insider-trading case. A judge in 2018 stayed insider-trading charges against David Baazov, the former chief executive of gambling company Amaya, and two other men, saying the AMF showed a “lack of rigour” in prosecuting the file.
The AMF lost because of what the judge characterized as a failure to meet its duties and obligations to offer timely disclosure of evidence and properly protect solicitor-client privilege. That in turn jeopardized the integrity of the legal process, the judge ruled.
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