Transamerica Life Canada fired three employees, suspended 17 others and placed 36 under review as a result of inappropriate employee trading activity in the NN Information Technology Fund that cost shareholders $4 million to $6 million, said Barry Francis, Transamerica spokesman. Trans-america, which acquired NNLife and its funds from ING Canada in April, discovered the scheme in June.
NN Information Technology Fund is managed in Luxembourg but invests in U.S. Nasdaq stocks. Employees took advantage of the six-hour time difference between Toronto and Luxembourg to make trades for the fund based on the closing Nasdaq prices in the afternoon, hours after the daily closing price had been fixed at the end of the business day in Luxembourg. If the stock prices rose during the day, the Transamerica employees could buy at the fixed price, knowing that the value of stocks held by the fund had increased. If the stock prices dropped, they could sell shares and avoid taking a loss, Mr. Francis said.