Biovail Corp. founder Eugene Melnyk borrowed more than $100 million U.S. from a group of Cayman Islands trusts at the centre of allegations that he broke securities laws -- charges the owner of the Ottawa Senators of the National Hockey League settled by paying $1 million Cdn to Ontario's market regulator last month.
In a written statement of reasons issued by the Ontario Securities Commission yesterday, the watchdog said that Mr. Melnyk should have known that borrowing the money could "reasonably be expected to trigger sales by the trusts of Biovail securities."
The OSC said he failed to report almost $1.3 billion worth of Biovail shares traded in the offshore accounts, whose beneficiaries included his wife and children.
Mr. Melnyk claimed he knew nothing about the transactions -- which are being investigated by the U.S. Securities and Exchange Commission -- until months after four million Biovail shares were transferred offshore in 1996.