Mega Brands insiders sued over trades

The Canadian Press

September 22, 2008 at 4:44 PM EDT

TORONTO — — A lawsuit has been filed against executives of toy maker Mega Brands Inc. [MB-T], alleging they sold shares around several recent troubling events for the company.

The suit follows an announcement by the company that a special committee of its board "concluded that no action should be taken by the company in response to allegations," which had been brought to its attention earlier.

Former principals of Rose Art Industries Inc., which was acquired by Montreal-based Mega Brands in 2005, have accused the Mega Brands officers of "having collectively sold 1,604,500 company shares in December, 2005, and/or the fall of 2006 (in most cases after exercising company options)" with knowledge of confidential information that could affect the company stock price.

"We are extremely disappointed with Mega Brands' decision not to take any action against the insiders and by the lack of particulars provided by the company in its recent press release as to why the company concluded that no action should be taken," said Lawrence Rosen, who is named as one of the applicants.

MEGA Brands

Specifically, the suit alleges that the trading took place after the officers learned that a 21-month-old boy had died after eating magnets from a construction toy sold by Mega Brands "and before the death was made public."

It also alleges the men made trades after becoming "aware of serious distribution failures" after Rose Art was integrated into Mega Brands and before that was made public.

The suit names chief executive officer Marc Bertrand, chairman Victor Bertrand Sr., chief operating officer Vic Bertrand, chief financial officer Alain Tanguay, general counsel Brahm Segal, and executive vice-president Sylvain Duval.