whacked with the biggest penalty in Canadian financial history.

The 59-year-old business tycoon agreed to pay a $23 million fine for what amounted to insider trading.

The penalty followed Ontario Securities Commission (OSC) allegations that Mr.

DeGroote and associates used inside knowledge to make a multi-million dollar profit on share sales.

The "settlement agreement'' was reached at a Commission hearing yesterday in which Mr. DeGroote's lawyer said the Canadian businessman committed an "error in judgment.'' The lawyer, Mr. James Baillie, maintained Mr. DeGroote did not do anything illegal. But to enter into a lengthy battle against the allegations would entail "prolonged public agony'' for his client.

"Mr. DeGroote has accepted the settlement and its impact on him because he wishes to put this inquiry behind him, but also because he understands why you might conclude his conduct was not in the public interest even though he strongly feels it was not illegal,'' he said.

Mr. DeGroote moved to Bermuda from Canada in 1990. He is currently embroiled in a long-running Supreme Court battle with an American millionairess over the ownership of Perot's Island in Riddell's Bay.

The OSC settlement will see Mr. DeGroote, Seakist Overseas Ltd. and his long-time business associate Mr. Henri Herbots of Belgium pay a $23 million settlement. Of that total, $17 million will be used to create a fund to pay anyone who lost money in the 1991 share sale that netted Seakist a $16.5 million profit.

Another $500,000 is to be used to set up and administer the fund and $5 million is to be paid to Commission, which monitors Ontario's securities business. In addition, Mr. DeGroote, Mr. Herbots and Seakist were forbidden from trading on the Ontario exchange for five years. Mr. Keith Walter, who brokered the deal, agreed to retire and surrender his business licence.

Mr. DeGroote's spokesman yesterday said he could not say how much Mr. DeGroote will personally pay toward the overall settlement. His lawyer said Seakist "carries a major portion of the direct burden'' of it.

The Commission allegations followed a year-long investigation into the activities surrounding the 1991 share sale.

Its staff maintained that Mr. DeGroote, Mr. Herbots and Seakist -- a Channel Islands company controlled by Mr. Herbots -- used inside information to short sell shares in a company Mr. DeGroote once ran called Laidlaw Inc.

Selling short occurs when an investor borrows shares from a brokerage firm and sells them in the market with the intention of buying them back later at a lower price.

Mr. DeGroote loaned Mr. Herbots' Seakist $27 million to finance the short sell.

Seakist used the money to short sell three million Laidlaw shares between January 31 and March 13, 1991. Commission documents say that at the time, Mr.

DeGroote was "aware'' that Laidlaw's 1990 earnings were poor and that there were problems with one of its related companies in which he served as a director.

When news of Laidlaw's poor results were announced publicly on March 13, 1991, Laidlaw's shares dropped nearly $4. When Seakist moved to close its short position on Laidlaw, it made a $16.5 million profit.