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Mutual fund CEO reaches deal with OSC

Toronto mutual fund executive Michael Kovacs has reached a settlement with the Ontario Securities Commission, acknowledging he wrongly traded units of one of his firm's mutual funds from his personal brokerage account.

Mr. Kovacs, chief executive officer of Harvest Portfolio Group Inc., agreed to pay penalties and costs totalling $15,000 and hire a new chief compliance officer for his firm who will preclear any personal trading he does for one year.

The OSC case involves an announcement in 2011 by one of the firm's mutual funds, the Harvest Canadian Income and Growth Fund, that it would buy back almost 600,000 of its units and warrants representing 10 per cent of the public float of its outstanding securities in a transaction known as normal course issuer bid. Mr. Kovacs was in charge of giving trading instructions for the share purchases to traders overseeing the account at Dundee Securities.

In the agreement, he acknowledged he used his own personal trading account at RBC Direct Investing Inc. between August and November, 2011, on "repeated occasions" to enter bids and purchase units of the Harvest fund, which may have facilitated the issuer bid purchases because he entered bids that improved pricing in the units by narrowing the pricing spread for the securities.

© 2007 The Globe and Mail. All rights reserved.

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