Regulators have dismissed allegations of insider trading against a Hong Kong-based analyst who was fired after selling off shares in a company headquartered in Vancouver.
B.C. Securities Commission (BCSC) alleged in July 2014 that Hon Seng (Victor) Lum sold his shares in Baja Mining Corp. (TSX-V: BAJ) after discovering cost overruns in Mexico’s El Boleo copper mine were much greater than expected.
But on July 16, a BCSC panel determined it had “not established on the balance of probabilities that Victor Lum had knowledge of material information that had not generally been disclosed prior to the sale of Baja shares."
Lum was employed by MK Hong Kong in May 2012 to analyze natural resource investments for his parent company when he travelled to Mexico to review the troubled mining project.
The BCSC alleged Lum discovered costs overruns had jumped from US$246 million to US$395 million, and he began urging his sister via text message to sell off Baja shares.
“…Sell the baja shares tonite,” Lum wrote in a May 2012 text message, “…so that half of our position is sold.”
Regulators alleged Lum’s sister, May Lum, sold the shares through a brokerage account in Singapore of a British Virgin Island company she controlled, allowing her brother to hide his connection to the trades.
In April 2012, Baja stocks were trading at $0.95 but had fallen to $0.14 after Baja publicly announced cost overruns would reach nearly US$400 million.
The BCSC alleged the Lums avoided losses of $8,500 by selling their shares.
One of the conditions of Lum’s employment prevented him from trading in companies he was evaluating.
His employer fired him in November 2012.
