Michael DeGroote stemming from allegations of insider trading.

Mr. DeGroote, who is still embroiled in an expensive squabble with Mrs. Marion McMillan over his right to buy Perot's Island, is a co-defendant in a class action suit.

Other defendants are his associate, Mr. Henri Herbots; Seakist Overseas Ltd., Canadian investment dealer Midland Walwyn Capital, Inc. and former Midland broker Mr. Keith Walker, according to a report in The Spectator newspaper in Canada.

The action has been brought by New York law firm Wolf Haldenstein Adler Freeman and Herz.

The suit involves almost Cdn$17 million in profits made by Seakist in 1991 from short-selling three million class B shares of Laidlaw, Inc., which Mr.

DeGroote founded.

It is based on the same allegations the Ontario Securities Commission made against the group in April.

That case was settled when Mr. DeGroote, Mr. Herbots and Seakist paid Cdn$23 million but did not admit to any wrongdoing.

Mr. DeGroote resigned as an officer and director of Laidlaw in December, 1990, after selling control of the company to Canadian Pacific two years earlier for Cdn$500 million, according to The Spectator.

Laidlaw's earnings plunged in early 1991, shocking shareholders who believed the waste management sector was recession-proof, said the report.

In the April case, the Ontario Securities Commission alleged that Seakist, which was directed by Mr. Herbots, sold Laidlaw stock short using Mr.

DeGroote's money and inside knowledge as a former Laidlaw officer that the company was doing much worse than the public knew.

Investors sell stock short when they expect its price to fall.

Seakist made a profit of Cdn$16.5 million when Laidlaw's share price dropped sharply.

Mr. DeGroote had lent Seakist Cdn$27 million to run the short-selling effort.

Both Mr. DeGroote and Mr. Herbots said they did not have or use inside information.

In their settlement with the commission, Mr. DeGroote, Mr. Herbots and Seakist lost their trading privileges in Ontario for five years.

Last year, Mr. Wolf Haldenstein, acting for the same clients, gained a Cdn$7.65 million US settlement from Laidlaw, claiming the company issued false and misleading settlements.

Laidlaw denied any wrongdoing and said it settled the suit to avoid a protracted legal battle.