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FAIR Canada Newsletter
June 2012 |
Listed Company Scandals Will be Repeated |
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Financial scandals such as Sino-Forest, YBM Magnex and others will continue to occur in Canada. Lessons were not learned from the YBM Magnex fraud and TSX China listings fiascos of the 1990s. Lessons that are not learned are invariably repeated. The TSX and TSX-V continued to promote emerging market listings throughout the past decade without proper consideration of the risks to Canadian investors and market integrity. In the past year, Canadian investors have suffered multi-billion-dollar losses from investments in Sino-Forest and numerous other China listings on the TSX and TSX-V. Even with the emerging market listings scandal at its height, the TSX has continued to promote listing in Canada to Chinese emerging companies.
More than a decade has elapsed since the TSX demutualized and become a for-profit entity. The TSX and regulators did not address the conflict of interest in listing regulation then and, 12 years later, they are continuing to defer action. The new draft Recognition Orders for Maple, TSX and TSX-V would appear to be the perfect opportunity to correct a long standing regulatory gap. It is unfortunate that regulators have not seized this opportunity to fulfill their responsibility to protect investors by ensuring that the exchanges appropriately manage inherent conflicts of interest.
Click here to read about FAIR Canada and other stakeholders' submissions on the Draft Recognition Orders and our recommendations. |
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Regulators Consider Widening Exemptions: Widespread Compliance Deficiencies and Fraud Must be Addressed
Recent Canadian Securities Administrators ("CSA") and OSC notices indicate that securities regulators in some jurisdictions, including Ontario, are considering expanding the type of prospectus exemptions they will offer while, at the same time, reviewing the accredited investor ("AI") and minimum amount ("MA") exemptions. The OSC is considering the offering memorandum exemption, the "friends and family" prospectus exemption and exemptions that have been implemented in other jurisdictions, such as exemptions contained in the United States' Jumpstart our Business Startups Act (or the JOBS Act).
Click here to read more about the risks to investors in the exempt market. |
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OBSI Proposes New Governance Framework
FAIR Canada is pleased that OBSI is moving forward with the implementation of the strategic recommendations set out in the Khoury Report (the independent review conducted by the Navigator Company in 2011).
FAIR Canada supports the proposed reform to a unitary board where all directors are involved in all Board decisions. FAIR Canada believes that more emphasis should be given to knowledge and experience in "consumer and investors issues" and recommends that OBSI have at least three directors who represent consumer or investors on its Board (as recommended in the Khoury Report).
Click here to read the rest of the article. |
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Should Governments and Regulators Require "Say on Pay"?
Stephen Jarislowsky, FAIR Canada Director and Chairman of Jarislowsky Fraser Ltd., together with FAIR Canada Executive Director Ermanno Pascutto, spoke to BNN on June 11, 2012 about executive compensation. Mr. Jarislowsky noted during the interview that executive compensation has gone out of sight and has not contributed to improved performance. He believes that executive compensation has worsened over the last ten years, and that there are no "star CEOs". Mr. Jarislowsky noted that he advocates for the elimination of stock options and for the simplification of remuneration disclosure in general.
Click here to read the rest of the article.
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