The investigation into insider trading which began in 2003 and was levied at ATI's co-founder K.Y. Ho and his wife, Betty, has come to an end after the Ontario Securities commission has weighed the evidence and subsequently dismissed all charges.
The allegations surrounded the sale and charity donation of substantial shares in ATI during May 2000, shortly before the company announced a revenue shortfall for the third fiscal quarter. The investigation was launched in order to determine whether or not Ho and his wife benefited from prior knowledge of the revenue shortfall, avoiding a loss of USD 3 million on the sale price and reaping a substantially increased tax benefit from the charity donation.
Ho and his wife disposed of the shares between April 24th and May 2nd, 2000, but the company's third quarter financial results, which showed a marked shortfall in forecast revenues, were not publicly released until 24th May 2000. The OSC reviewed evidentiary support from staff and market analysts, who focused on the 'hockey stick' sales pattern, prolific in the high-tech industries.
Typically, according to the evidence put forward in the investigation, sales will remain flat, like the blade of a hockey stick, for a large part of the fiscal period. Towards the end of the sales quarter, sales will rise rapidly, like the shaft of a hockey stick. It was suggested that knowledge of the exact revenues was not known until a few days before the public announcement, when the loss was reported.
The OSC determined that neither Mr Ho, nor his wife were privy to information regarding the revenue loss at the time the shares were disposed of, and in fact, evidence shows that Mr Ho was, at the time, confident that the revenue forecasts for the third quarter of 2000 would indeed be met; negating any suggestion of improper trading.
In a brief statement following the decision, Ho stated: "My family and I are very pleased with this result. While I have the greatest respect for the work of the OSC staff, I have always strongly believed that the allegations of wrongdoing against me were entirely without merit."
"I acted at all times in accordance with the law and the internal policies of ATI when I donated ATI shares to charity in 2000. It has been a very long process and my family and I are happy that we can put this matter behind us," he added.