In a recent decision, AMF v. Beauchamp, Délisle J. of the Quebec Court, Criminal and Penal Chamber, refused to follow the request of the Quebec securities regulator, the Autorité des marchés financiers (AMF), that a prison term be added to the sentence of an accused in an insider trading case.
Background to the Decision
Francis Beauchamp (Beauchamp) pleaded guilty to nine counts of insider trading. He had received privileged information (as defined in the Quebec Securities Act (QSA)) relating to four separate acquisitions from the spouse of the then assistant to the Chief Financial Officer of BCE Inc., Ms. Morier. Beauchamp had personally traded while in possession of said privileged information, making profits in excess of $275,000. He had shared the privileged information with his parents who had themselves also traded.
Earlier, the tipper, her spouse and her parents also pleaded guilty to related charges of insider trading and were all condemned to pay a monetary fine, without any imprisonment. While the AMF and Beauchamp agreed on the terms of the fine to be paid by Beauchamp following his guilty plea (i.e. $500,000), the AMF requested from the Court that imprisonment be added to his sentence.
The Court’s Analysis
The only question to be adjudicated by Justice Délisle was whether or not a prison sentence should be imposed on Beauchamp, in addition to the fine that he had agreed to pay, when the tipper Ms. Morier, her spouse and her parents had not been sentenced to any imprisonment. In other words, should the principle of parity in sentencing of similar offenders for similar offences committed in similar circumstances be applied or not?
In support of its request, the AMF sought to downplay both the guilty plea of Beauchamp – by arguing that it had come late in the day, 11 days before the start of the trial on the merits – and his collaboration with the AMF – by arguing that the information received from Beauchamp only confirmed or corroborated information already in the hands of the prosecutor. Moreover, the AMF argued that Justice Délisle was not privy to the plea bargains between the AMF and each of the tipper, her spouse and her parents and was thus not in a position to determine whether similar offences had been committed in similar circumstances.
Justice Délisle refused the AMF’s request and only sentenced Beauchamp to the $500,000 fine agreed upon.
Justice Délisle found that Beauchamp’s guilty plea had come sufficiently early so as to avoid any witness being called at trial, mentioning that the guilty pleas of the tipper and of her spouse only came 18 months after the notice of infraction had been served, and not at the first occasion.
Justice Délisle refused to minimize the collaboration of Beauchamp, stating that when Beauchamp accepted to answer the questions of the AMF investigator, he had no knowledge of the evidence already assembled by the AMF. The fact that his answers only confirmed or corroborated evidence already in the hands of the prosecutor could thus not be held against him.
Finally, Justice Délisle wrote that the AMF “had voluntarily held back the details of the plea bargains” of the tipper, her spouse and her parents “in the hopes of convincing him to impose a more severe sentence on” Beauchamp. While clearly not appreciative of this lack of transparency on the part of the regulator, he referred to a reported judgment involving the tipper, her spouse and her parents containing sufficient information for him to determine that the principle of parity in the sentencing had to be applied.
In addition to a fine, the Quebec securities regulator can request imprisonment against only one of several individuals accused of breaching the QSA and in support of such request, can attempt to downplay the importance of both a guilty plea based on its late timing and of the accused’s collaboration with the AMF’s investigation.
To defeat such a request, the terms pursuant to which a co-accused has already pleaded guilty to a breach of the QSA and the sentence imposed on him/her could prove to be very relevant, in light of the principle of parity in sentencing of similar offenders for similar offences committed in similar circumstances.