VANCOUVER, Oct. 30 /CNW/ - The British Columbia Securities Commission is
proposing a new rule for issuers quoted in the U.S. over-the-counter markets
and new conditions of registration for investment dealers that trade in these
On Oct. 29, 2007, the BCSC published for comment a proposed rule that
would give the commission better legal tools to improve disclosure of OTC
issuers based in B.C., and to discourage the manufacture and sale of shell
companies that may be used for abusive purposes. The BCSC is also proposing
new conditions to increase investment dealers' accountability for their
trading activities in securities quoted in the U.S. OTC markets, such as the
OTC Bulletin Board and Pink Sheets.
A disproportionate number of players in the U.S. OTC markets who engage
in abusive activities have visible connections to B.C. Their activities damage
the reputation of the province's capital markets, harming the interests of
legitimate issuers, investment dealers, and other market participants.
Certain aspects of the proposed rule British Columbia Instrument 51-509
Issuers Quoted on the U.S. Over-the-Counter Markets and proposed Conditions of
Registration for Investment Dealers that Trade in the U.S.
Over-the-Counter-Markets are part of the commission's plan to disrupt, stop,
and prevent abusive junior market activity taking place in the province.
The proposed rule will apply to OTC issuers with significant connections
to B.C. that are not cross-listed on another, more senior exchange. Under the
- OTC issuers would be subject to new disclosure requirements similar
to those that apply to reporting issuers
- insiders of OTC issuers would have to file insider reports and
personal information forms
- OTC issuers could not use foreign disclosure exemptions, and
restrictions would be put on exemptions
Under the proposed conditions of registration:
- all registered investment dealers with B.C. offices that trade in OTC
securities will be required to have a risk and compliance system in
- dealers will have to follow recording and reporting conditions, and
they would be prohibited from trading securities until the beneficial
owner is known to them
- the deposit of any OTC issuer securities would be prohibited until
the Ultimate Designated Person (UDP) approves the deposit
The BCSC invites comment on these materials and will consider all
comments received by Dec. 31, 2007. BC Notice 2007/24 provides more background
on the commission's proposed response to U.S. OTC market abuses with
connections to B.C.
The B.C. Securities Commission is the independent provincial government
agency responsible for regulating trading in securities within the province.
You may view the full proposal by visiting the Securities Law and Policy:
Requests for Comment on our website www.bcsc.bc.ca. If you have questions,
contact Ken Gracey, Media Relations, 604-899-6577.
Learn how to avoid investment fraud at the BCSC's investor education
For further information:
For further information: Ken Gracey, (604) 899-6577, or (B.C. & Alberta)