and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities
summary
The Ontario Teachers’ Pension Plan Board (OTPPB) violated Rule 105 of Regulation M by short-selling four securities during restricted periods before purchasing shares in their follow-on public offerings, netting $144,898 in illicit profits, and agreed to a SEC settlement requiring disgorgement, interest, and a civil penalty totaling $224,835.90 without admitting guilt.
paragraph
The Ontario Teachers’ Pension Plan Board (OTPPB) violated Rule 105 of Regulation M by short-selling equity securities in four follow-on public offerings between July 2010 and February 2011—BioMimetic Therapeutics, Pebblebrook Hotel Trust, BlackRock, and SS&C Technologies—and then purchasing shares in those same offerings, generating $144,898 in illicit profits. The SEC accepted OTPPB’s settlement offer, which required disgorgement of $144,898, $11,642.90 in prejudgment interest, and a $68,295 civil penalty, totaling $224,835.90. OTPPB consented to the cease-and-desist order without admitting or denying the findings, but acknowledged the SEC’s jurisdiction and the factual basis of the violations.
narrative
The Ontario Teachers’ Pension Plan Board (OTPPB), a Canadian pension manager administering over $129.5 billion in assets for Ontario teachers, violated Rule 105 of Regulation M by engaging in prohibited short-selling of four securities during restricted periods prior to their follow-on public offerings between July 2010 and February 2011. Specifically, OTPPB short-sold shares of BioMimetic Therapeutics (BMTI), Pebblebrook Hotel Trust (PEB), BlackRock (BLK), and SS&C Technologies, then purchased shares in those same offerings, pocketing $144,898 in illicit profits: $38,250 from BMTI, $750 from PEB, $104,898 from BLK, and $900 from SS&C Technologies. The SEC instituted cease-and-desist proceedings, and OTPPB consented to an order without admitting or denying guilt, though it acknowledged jurisdiction and the factual findings. As part of the settlement, OTPPB agreed to disgorge $144,898 in profits, pay $11,642.90 in prejudgment interest, and a $68,295 civil penalty, totaling $224,835.90 to be paid to the U.S. Treasury within 14 days. Rule 105 prohibits such conduct to prevent artificial manipulation of offering prices, regardless of intent, and OTPPB’s actions undermined market integrity by exploiting the price differential between short sales and offering prices. The SEC emphasized that the rule is prophylactic, and OTPPB’s violations, though not fraudulent in intent, still violated clear regulatory boundaries. The case underscores the SEC’s enforcement of market fairness rules even against large, institutional investors with global operations.
Classified market-manipulation(confidence 100%). EDGAR detection: forms SC 13D/G/13F· recall 53% / precision 9%. detection rule →
Statutes
17 C.F.R. § 242.105SECTION 21C OF THE SECURITIES EXCHANGE ACT
Parties
Securities and Exchange CommissionONTARIO TEACHERS’ PENSION PLAN BOARD
Keywords
otppbofferingrestricted periodsharesrespondentexchangecommissionsecurities exchangeshortsold shortproceedingssecuritiesperiodrestrictedorder
Extracted insights
Dollar amounts 17
- $129.50B $129.5 billion ≥$1B
- $1.00M $1,000,000 $1M–$10M
- $225K $224,835 $100K–$1M
- $145K $144,898 $100K–$1M
- $68K $68,295 $10K–$100K
- $62K $61,833 $10K–$100K
- $47K $47,296 $10K–$100K
- $44K $44,064 $10K–$100K
- $38K $38,250 $10K–$100K
- $34K $33,897 $10K–$100K
- $15K $14,536 $10K–$100K
- $12K $11,642 $10K–$100K
Entities 1
- agency Securities and Exchange Commission
Triples 11
- Ontario Teachers' Pension Plan Board violated Rule 105 of Regulation M of the Securities Exchange Act of 1934
- Ontario Teachers' Pension Plan Board bought offered shares from underwriter or broker or dealer participating in follow-on public offering
- Ontario Teachers' Pension Plan Board sold short same security during restricted period
- Rule 105 violations by Ontario Teachers' Pension Plan Board resulted in profits of $144,898
- Ontario Teachers' Pension Plan Board established 1990
- Ontario Teachers' Pension Plan Board headquartered in Toronto
- Ontario Teachers' Pension Plan has net assets of Cdn. $129.5 billion as of December 31, 2012
- Ontario Teachers' Pension Plan serves over 300,000 working and retired teachers in Province of Ontario
- Ontario Teachers' Pension Plan is Canada's largest single-profession pension plan
- Securities and Exchange Commission instituted cease-and-desist proceedings against Ontario Teachers' Pension Plan Board
- Ontario Teachers' Pension Plan Board violated Rule 105 on four occasions from July 2010 through February 2011
PDF
Text layers
Extracted body text (9,698c)
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 70407 / September 16, 2013
ADMINISTRATIVE PROCEEDING
File No. 3-15491
In the Matter of
ONTARIO TEACHERS’
PENSION PLAN BOARD,
Respondent.
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER AND CIVIL
PENALTY
I.
The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities
Exchange Act of 1934 (“Exchange Act”), against Ontario Teachers’ Pension Plan Board
(“OTPPB” or “Respondent”).
II.
In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the
purpose of these proceedings and any other proceedings brought by or on behalf of the
Commission, or to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over it and the subject matter of these
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making
Findings, and Imposing a Cease-and-Desist Order and Civil Penalty (“Order”), as set forth below.
2
III.
On the basis of this Order and Respondent’s Offer, the Commission finds
1
that:
Summary
1. These proceedings arise out of violations of Rule 105 of Regulation M of the
Exchange Act by OTPPB, a non-share corporation continued under the Teachers’ Pension Act
(Ontario). Rule 105 prohibits buying an equity security made available through a public offering,
conducted on a firm commitment basis, from an underwriter or broker or dealer participating in the
offering after having sold short the same security during the restricted period as defined therein.
2. On four occasions, from July 2010 through February 2011, OTPPB bought offered
shares from an underwriter or broker or dealer participating in a follow-on public offering after
having sold short the same security during the restricted period. These violations collectively
resulted in profits of $144,898.
Respondent
3. OTPPB, established in 1990 and headquartered in Toronto, is an independent
corporation with the purpose of administering the Ontario Teachers’ Pension Plan (the “Plan”) and
managing its investments for the benefit of the Plan’s beneficiaries. OTPPB pays pensions and
invests plan assets on behalf of over 300,000 working and retired teachers in the Province of
Ontario. The Plan is Canada’s largest single-profession pension plan with Cdn. $129.5 billion in
net assets as of December 31, 2012.
Legal Framework
4. Rule 105 makes it unlawful for a person to purchase equity securities from an
underwriter, broker, or dealer participating in a public offering if that person sold short the security
that is the subject of the offering during the restricted period defined in the rule, absent an
exception. 17 C.F.R. § 242.105; see Short Selling in Connection with a Public Offering, Rel. No.
34-56206, 72 Fed. Reg. 45094 (Aug. 10, 2007) (effective Oct. 9, 2007). The Rule 105 restricted
period is the shorter of the period: (1) beginning five business days before the pricing of the
offered securities and ending with such pricing; or (2) beginning with the initial filing of a
registration statement or notification on Exchange Act Form 1-A or Form 1-E and ending with
pricing.
5. “The goal of Rule 105 is to promote offering prices that are based upon open
market prices determined by supply and demand rather than artificial forces.” Final Rule: Short
Sales, Exchange Act Release No. 50103. Rule 105 is prophylactic and prohibits the conduct
irrespective of the short seller’s intent in effecting the short sale.
1
The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other person
or entity in this or any other proceeding.
3
OTPPB’s Violations of Rule 105 of Regulation M
6. On July 12, 2010, OTPPB sold short 31,900 shares of BioMimetic Therapeutics
Inc. (“BMTI”) during the restricted period at a price of $10.03 per share. On July 14, 2010, BMTI
announced the pricing of a follow-on offering of its common stock at $8.50 per share. OTPPB
received an allocation of 25,000 shares in that offering. The difference between OTPPB’s
proceeds from the restricted period short sales of BMTI shares and the price paid for the 25,000
shares received in the offering was $38,250.00. Thus, OTPPB’s participation in the BMTI offering
netted total profits of $38,250.00.
7. On July 21, 2010, OTPPB sold short 50,000 shares of Pebblebrook Hotel Trust
(“PEB”) during the restricted period at a price of $17.03 per share. On July 22, 2010, PEB
announced the pricing of a follow-on offering of its common stock at $17.00 per share. OTPPB
received an allocation of 25,000 shares in that offering. The difference between OTPPB’s
proceeds from the restricted period short sales of PEB shares and the price paid for the 25,000
shares received in the offering was $750. Thus, OTPPB’s participation in the PEB offering netted
total profits of $750.00.
8. On November 3, 2010, OTPPB sold short 9,600 shares of BlackRock Inc. (“BLK”)
during the restricted period at an average price of $167.9267 per share. On November 8, 2010,
BLK announced the pricing of a follow-on offering of its common stock at $163.00 per share.
OTPPB received an allocation of 15,000 shares in that offering. The difference between OTPPB’s
proceeds received from the restricted period short sales of BLK shares and the price paid for the
9,600 shares received in the offering was $47,296.32. Respondent also improperly obtained a
benefit of $14,536.80 by purchasing the remaining 5,400 shares at a discount from BLK’s market
price. Thus, OTPPB’s participation in the BLK offering netted total profits of $61,833.12.
9. On January 28, 2011, OTPPB sold short 40,192 shares of SS&C Technologies
Holdings (“SSNC”) during the restricted period at an average price of $18.4434 per share. On
February 3, 2011, SSNC announced the pricing of a follow-on offering of its common stock at
$17.60 per share. OTPPB received an allocation of 50,000 shares in that offering. The difference
between OTPPB’s proceeds from the restricted period short sales of SSNC shares and the price
paid for the shares received in the offering was $33,897.93. Respondent also improperly obtained
a benefit of $10,166.97 by purchasing the remaining 9,808 shares at a discount from SSNC’s
market price. Thus, OTPPB’s participation in the SSNC offering netted total profits of $44,064.90.
10. In total, OTPPB’s violations of Rule 105 resulted in profits of $144,898.
Violations
11. As a result of the conduct described above, OTPPB violated Rule 105 of Regulation
M under the Exchange Act.
4
OTPPB’s Remedial Efforts
12. In determining to accept the Offer, the Commission considered remedial acts
promptly undertaken by Respondent and cooperation afforded to Commission staff.
IV.
In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent OTPPB’s Offer.
Accordingly, it is hereby ORDERED that:
A. Pursuant to Section 21C of the Exchange Act, Respondent OTPPB cease and desist
from committing or causing any violations and any future violations of Rule 105 of Regulation M of
the Exchange Act;
B. OTPPB shall within fourteen (14) days of the entry of the Order, pay disgorgement
of $144,898, prejudgment interest of $11,642.90, and a civil money penalty in the amount of
$68,295 (for a total of $224,835.90) to the United States Treasury. If timely payment is not made,
additional interest shall accrue pursuant to SEC Rule of Practice 600. Payments must be made in
one of the following ways:
(1) Respondent may transmit payment electronically to the Commission, which will
provide detailed ACH transfer/Fedwire instructions upon request;
2
(2) Respondent may make direct payment from a bank account via Pay.gov through the
SEC website at http://www.sec.gov/about/offices/ofm.htm; or
(3) Respondent may pay by certified check, bank cashier’s check, or United States postal
money order, made payable to the Securities and Exchange Commission and hand-
delivered or mailed to:
Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
2
The minimum threshold for transmission of payment electronically is $1,000,000. For amounts below the
threshold, respondents must make payments pursuant to options (2) or (3) above.
5
Payments by check or money order must be accompanied by a cover letter identifying
OTPPB as a Respondent in these proceedings, and the file number of these proceedings; a copy of
the cover letter and check or money order must be sent to Gerald W. Hodgkins, Associate Director,
Division of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington,
DC 20549.
By the Commission.
Elizabeth M. Murphy
Secretary OCR text (9,873c · tika · 95% conf)
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 70407 / September 16, 2013
ADMINISTRATIVE PROCEEDING
File No. 3-15491
In the Matter of
ONTARIO TEACHERS’
PENSION PLAN BOARD,
Respondent.
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER AND CIVIL
PENALTY
I.
The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities
Exchange Act of 1934 (“Exchange Act”), against Ontario Teachers’ Pension Plan Board
(“OTPPB” or “Respondent”).
II.
In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the
purpose of these proceedings and any other proceedings brought by or on behalf of the
Commission, or to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over it and the subject matter of these
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making
Findings, and Imposing a Cease-and-Desist Order and Civil Penalty (“Order”), as set forth below.
2
III.
On the basis of this Order and Respondent’s Offer, the Commission finds1 that:
Summary
1. These proceedings arise out of violations of Rule 105 of Regulation M of the
Exchange Act by OTPPB, a non-share corporation continued under the Teachers’ Pension Act
(Ontario). Rule 105 prohibits buying an equity security made available through a public offering,
conducted on a firm commitment basis, from an underwriter or broker or dealer participating in the
offering after having sold short the same security during the restricted period as defined therein.
2. On four occasions, from July 2010 through February 2011, OTPPB bought offered
shares from an underwriter or broker or dealer participating in a follow-on public offering after
having sold short the same security during the restricted period. These violations collectively
resulted in profits of $144,898.
Respondent
3. OTPPB, established in 1990 and headquartered in Toronto, is an independent
corporation with the purpose of administering the Ontario Teachers’ Pension Plan (the “Plan”) and
managing its investments for the benefit of the Plan’s beneficiaries. OTPPB pays pensions and
invests plan assets on behalf of over 300,000 working and retired teachers in the Province of
Ontario. The Plan is Canada’s largest single-profession pension plan with Cdn. $129.5 billion in
net assets as of December 31, 2012.
Legal Framework
4. Rule 105 makes it unlawful for a person to purchase equity securities from an
underwriter, broker, or dealer participating in a public offering if that person sold short the security
that is the subject of the offering during the restricted period defined in the rule, absent an
exception. 17 C.F.R. § 242.105; see Short Selling in Connection with a Public Offering, Rel. No.
34-56206, 72 Fed. Reg. 45094 (Aug. 10, 2007) (effective Oct. 9, 2007). The Rule 105 restricted
period is the shorter of the period: (1) beginning five business days before the pricing of the
offered securities and ending with such pricing; or (2) beginning with the initial filing of a
registration statement or notification on Exchange Act Form 1-A or Form 1-E and ending with
pricing.
5. “The goal of Rule 105 is to promote offering prices that are based upon open
market prices determined by supply and demand rather than artificial forces.” Final Rule: Short
Sales, Exchange Act Release No. 50103. Rule 105 is prophylactic and prohibits the conduct
irrespective of the short seller’s intent in effecting the short sale.
1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other person
or entity in this or any other proceeding.
3
OTPPB’s Violations of Rule 105 of Regulation M
6. On July 12, 2010, OTPPB sold short 31,900 shares of BioMimetic Therapeutics
Inc. (“BMTI”) during the restricted period at a price of $10.03 per share. On July 14, 2010, BMTI
announced the pricing of a follow-on offering of its common stock at $8.50 per share. OTPPB
received an allocation of 25,000 shares in that offering. The difference between OTPPB’s
proceeds from the restricted period short sales of BMTI shares and the price paid for the 25,000
shares received in the offering was $38,250.00. Thus, OTPPB’s participation in the BMTI offering
netted total profits of $38,250.00.
7. On July 21, 2010, OTPPB sold short 50,000 shares of Pebblebrook Hotel Trust
(“PEB”) during the restricted period at a price of $17.03 per share. On July 22, 2010, PEB
announced the pricing of a follow-on offering of its common stock at $17.00 per share. OTPPB
received an allocation of 25,000 shares in that offering. The difference between OTPPB’s
proceeds from the restricted period short sales of PEB shares and the price paid for the 25,000
shares received in the offering was $750. Thus, OTPPB’s participation in the PEB offering netted
total profits of $750.00.
8. On November 3, 2010, OTPPB sold short 9,600 shares of BlackRock Inc. (“BLK”)
during the restricted period at an average price of $167.9267 per share. On November 8, 2010,
BLK announced the pricing of a follow-on offering of its common stock at $163.00 per share.
OTPPB received an allocation of 15,000 shares in that offering. The difference between OTPPB’s
proceeds received from the restricted period short sales of BLK shares and the price paid for the
9,600 shares received in the offering was $47,296.32. Respondent also improperly obtained a
benefit of $14,536.80 by purchasing the remaining 5,400 shares at a discount from BLK’s market
price. Thus, OTPPB’s participation in the BLK offering netted total profits of $61,833.12.
9. On January 28, 2011, OTPPB sold short 40,192 shares of SS&C Technologies
Holdings (“SSNC”) during the restricted period at an average price of $18.4434 per share. On
February 3, 2011, SSNC announced the pricing of a follow-on offering of its common stock at
$17.60 per share. OTPPB received an allocation of 50,000 shares in that offering. The difference
between OTPPB’s proceeds from the restricted period short sales of SSNC shares and the price
paid for the shares received in the offering was $33,897.93. Respondent also improperly obtained
a benefit of $10,166.97 by purchasing the remaining 9,808 shares at a discount from SSNC’s
market price. Thus, OTPPB’s participation in the SSNC offering netted total profits of $44,064.90.
10. In total, OTPPB’s violations of Rule 105 resulted in profits of $144,898.
Violations
11. As a result of the conduct described above, OTPPB violated Rule 105 of Regulation
M under the Exchange Act.
4
OTPPB’s Remedial Efforts
12. In determining to accept the Offer, the Commission considered remedial acts
promptly undertaken by Respondent and cooperation afforded to Commission staff.
IV.
In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent OTPPB’s Offer.
Accordingly, it is hereby ORDERED that:
A. Pursuant to Section 21C of the Exchange Act, Respondent OTPPB cease and desist
from committing or causing any violations and any future violations of Rule 105 of Regulation M of
the Exchange Act;
B. OTPPB shall within fourteen (14) days of the entry of the Order, pay disgorgement
of $144,898, prejudgment interest of $11,642.90, and a civil money penalty in the amount of
$68,295 (for a total of $224,835.90) to the United States Treasury. If timely payment is not made,
additional interest shall accrue pursuant to SEC Rule of Practice 600. Payments must be made in
one of the following ways:
(1) Respondent may transmit payment electronically to the Commission, which will
provide detailed ACH transfer/Fedwire instructions upon request;2
(2) Respondent may make direct payment from a bank account via Pay.gov through the
SEC website at http://www.sec.gov/about/offices/ofm.htm; or
(3) Respondent may pay by certified check, bank cashier’s check, or United States postal
money order, made payable to the Securities and Exchange Commission and hand-
delivered or mailed to:
Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
2 The minimum threshold for transmission of payment electronically is $1,000,000. For amounts below the
threshold, respondents must make payments pursuant to options (2) or (3) above.
5
Payments by check or money order must be accompanied by a cover letter identifying
OTPPB as a Respondent in these proceedings, and the file number of these proceedings; a copy of
the cover letter and check or money order must be sent to Gerald W. Hodgkins, Associate Director,
Division of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington,
DC 20549.
By the Commission.
Elizabeth M. Murphy
Secretary