2010-09-09 22:01 ET – Street Wireby Mike Caswell
Hidden buyers in private placements may be visible to the public for the first time in seven years, if a plan by the B.C. Securities Commission goes ahead. The regulator announced on Thursday that it would be seeking public comment on its proposed disclosure procedure whereby the names of all placees would be publicly available.
The proposal marks a reversal of the BCSC’s policy of hiding the names of individual private placement subscribers. Today, even a freedom of information request will only receive the names of corporate placees, not individuals. In April, 2003, then-chairman Doug Hyndman ordered the commission to stop making the data available, citing the privacy of investors. Since then, the only names released have been those of insiders and brokerage employees (and corporate placees to freedom of information requests). Mr. Hyndman’s change was a significant loss of information for the public, as it stripped investors of the ability to discover who was backing many “dicey deals,” says Gordon Robertson, a market follower.
Many of the buyers in private placements are offshore entities, but ascertaining the true ownership of shares bought by those entities will still not be possible. In its proposal, the BCSC will, however, require the name of a contact person for institutional buyers. This part of the policy change would be of marginal benefit to investors because in the case of offshore banking companies, for example, the name of a contact person, an employee, does not reveal the name of the buyer represented by the institution. On the other hand, information as to the beneficial owners has never been available and was not available under the previous disclosure regime of before seven years ago.
The Stockwatch editor sees the return of the data as good news for the investing public in B.C. He says: “In the past, investors have pored over these records and as a result have been able to determine the quality of individuals financing the company, whether good, bad or indifferent. While this is often a case of one man’s meat is another man’s poison, the point is the investor has the information and that is what is important. You know — full, true and plain disclosure.”
It is not entirely clear why the BCSC has changed its mind about the policy now, after seven years. According to Martin Eady, the commission’s director of corporate finance, staff received instructions from chairman Brenda Leong to take another look at the policy. Ms. Leong has received much criticism, particularly from The Vancouver Sun’s David Baines, for keeping the data hidden. It has been one of his long-term campaigns on behalf of B.C. investors.
The BCSC will address the ostensible reduction in privacy by keeping the addresses of investors out of the forms. “We believe that’s the proper balance,” says Mr. Eady.
So far the proposal remains just that, a proposal. It still must go through a process that includes feedback from supporters and opponents. One supporter is the Stockwatch editor. “Should this proposal be enacted, it will amount to the official end of what I have always thought of as the BCSC’s cockroach policy. ‘Cockroach’ because of the insects’ dislike of light,” he says. “If those cockroaches scurry off to other jurisdictions that will keep their presence a secret, that is a win for B.C.”Assuming the policy goes ahead, the data should be available early in the new year. “Investors who support the idea should tell the commission of their support and explain why it is important to them,” says Stockwatch’s editor. They may respond to the policy by sending an e-mail to Leslie Rose at the BCSC. Her e-mail is firstname.lastname@example.org. The deadline for submissions is Nov. 9, 2010.
Help shine a light on cockroaches
This humble corner of cyberspace wants to make the scam-ridden Canadian markets a better place for retail investors to operate and, what with the way people keep coming back to read the blog, it’s pretty clear that there’s a lot of people who want the same in interwebnetpipesland.
So this post addresses you, fellow scumball fighters, because its time for you to take 15 minutes out of your life and write a mail to help the cause. Here below is the paste-out of this report over at Stockwatch (it’s important you read the whole thing, so apologies to Stockwatch for repeating the whole article) and at the end there’s an e-mail address that asks for your feedback on the plan to force juniors into disclosure on this issue.
WRITE THAT MAIL, PLEASE
Seriously, write it. Tell the BCSC that this is a great idea. Tell them why. Tell them your fed up with the uneven playing field. Tell them the scamsters and cockroaches have to be exterminated. Applaud them for this initiative. Write what you want in the way you want, but make the effort, people. This is the kind of thing that will really matter in the long run and, if successful, will encourage the authorities to clamp down further on the shady side of Vancouver finances. So read the following, enjoy, note the bit I’ve highlighted in red at the bottom and then do something about it. Thank you for your attention.