Breach of Contract or Insider Trading?

A complicated case being heard in Toronto courts boils down to basic breach of contract issues – or so the respondents are arguing.

The high profile insider trading case involves charges by the Ontario Securities Commission (OSC) against Jowdat Waheed and his partner Bruce Walter. Waheed worked as a consultant for Baffinland Iron Mines Corporation for a period of time. Shortly after his contract ended, he and Mr. Walters launched a hostile takeover bid for the mining company.

The OSC alleges that Waheed kept and used confidential company information, giving him and his partner an edge over the rest of the market in their takeover bid. His lawyers allege that he did not use confidential information, only made educated guesses based on experience, in effect, as to merger talks that were underway between Baffinland and another company.

His lawyers argue that the case if anything is a civil matter of breach of contract (one that Baffinland has not pursued) and not an insider trading violation warranting an OSC trial.

Confidentiality Clause

Virtually all employment contracts will include a confidentiality clause to protect the company’s interests. It will mean that you cannot disclose or use any confidential information you have access to as a result of your employment, typically for a specified period of time after you stop working for them. “Confidential information” in this context means files, documents, memos – anything other than that which any member of the public could otherwise obtain from available documentation like websites and public filings.

It’s obviously a measure designed to protect an employer’s interests from being exploited and even damaged by the actions of unscrupulous people. However, the case raises some interesting points.

  • At what point, for example, does access to confidential information intersect with the ability of a savvy ex-employee to simply guess what’s coming next?
  • If an employee is restricted from using the information they’ve learned from a work assignment, how long should that restriction take effect? How long is reasonable? If you’ve been building up experience in contacts within a specific industry, for example, shouldn’t you be able to use that valuable knowledge for your own benefit?

Prevention is the Best Remedy

Our experienced breach of contract lawyers can advise you on how to negotiate any aspect of your all-important employment contract and advise you on the implications and potential implications of every clause.

Before you sign on the dotted line – if you’re in the process or thinking of entering into an employment contract, then contact our experienced breach of contract lawyers for advice. Clarity on the issues covered by a contract is your key to understanding your rights.

Legal Remedies

An employment contract should work both ways. The employer’s interests should be covered – but yours should be too. If you feel your employer has neglected to follow through on their side of the obligations in any way, you owe it to yourself to get the best advice.

You only have a limited time to take action in a breach of contract case. If you think your rights under a contractual agreement are being disregarded contact Petrillo Law today for a free consultation with an experienced contract lawyer. We look forward to hearing from you.

Get the Legal Representation You Need

Know your rights. Contact the breach of contract and disability lawyers at Petrillo Law today by calling (905) 949-9433.  We look forward to hearing from you.

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