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Canadian Press
7/31/2006 2:24:21 PM

TORONTO (CP) - Eugene Melnyk, chairman of drugmaker Biovail Corp. and owner of the NHL's Ottawa Senators, faces Ontario Securities Commission allegations over share transactions conducted during the past decade through trusts in the Cayman Islands.

The commission's statement of allegations released Monday names Melnyk along with brokerage Watt Carmichael Inc. and three of its executives, including that firm's president Roger Rowan, who was a Biovail director between 1997 and 2005.

Melnyk, a Canadian citizen who has been a resident of Barbados since 1991, is accused of failing to file insider trading reports, failing to make other required disclosures and violating regulations covering control blocks of corporate shares.

As a result, "the disclosure contained in Biovail's circulars for 2002 to 2006, in a material respect and at the time and in light of the circumstances under which it was made, was misleading or untrue or did not state a fact that was required," the OSC alleges.

The commission has set a hearing date of Sept. 21.

Melnyk, who stepped aside as Biovail's CEO in October 2004 and as executive chairman last month, is said to have deposited four million Biovail shares, about 19 per cent of the company at the time, into four Cayman Islands trusts in 1996.

The statement of allegations says accounts were opened for the trusts at Watt Carmichael, a Toronto firm specializing in private-client wealth management, and one account was transferred to BMO Nesbitt Burns.
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