VANCOUVER, June 25 /CNW/ - In a speech to the Vancouver Board of Trade
today, British Columbia Securities Commission Chair, Doug Hyndman, announced a
new program that aims to disrupt, stop, and prevent locally-based abusive
junior market activity taking place in the U.S. over-the-counter markets.
"It is for the sake of the majority that we must deal with the bad apples
who can spoil it for everyone," said Hyndman. "Our goal is to make B.C. the
most transparent, toughest jurisdiction anywhere for OTC trading."
Unfortunately, a disproportionate number of U.S. OTC players 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.
The plan to disrupt, stop, and prevent abusive junior market activity has
five key points:
- Improve disclosure and compliance by B.C. OTC issuers
- Discourage the manufacture and sale of U.S. OTC shell companies for
- Disrupt abusive promotions
- Hold dealers responsible for their trading activities in the U.S. OTC
- Discourage the participation by lawyers, accountants, geologists and
other professionals who facilitate abusive market practices
Much of the BCSC plan focuses on "BC OTC" issuers. These are issuers that
have significant connections to B.C. and whose securities are quoted on U.S.
OTC markets, but exclude issuers whose securities also trade on a more senior
The U.S. OTC markets consist of securities quoted on the OTC Bulletin
Board (OTCBB) or the Pink Sheets. These markets are legal and home to
legitimate businesses, but are vulnerable to abuse because of low regulatory
scrutiny and issuer requirements are not onerous.
Currently, there are approximately 500 OTCBB and 200 Pink Sheet companies
that have some kind of B.C. connection - often professionals providing their
services to these companies. Some of these companies are B.C.-based, but often
head offices are elsewhere, Nevada and Florida, for example.
Here are some highlights of the initiatives in the BCSC plan to deal with
disreputable B.C.-based individuals and companies working on the U.S. OTC
- B.C. OTC companies must comply with timely and continuous disclosure
- Directors and officers will have to file personal information forms
- Focused enforcement action will aim to disrupt the manufacture of
B.C. shell companies, which are used as vehicles to falsely promote
- Resale restrictions will be imposed on B.C. residents who buy B.C.
OTC issuer shares prior to it going public
- B.C.-based investment dealers actively trading on in the U.S. OTC
market will have to comply with new conditions of registration
- SpamWatch, which began in May 2007, targets B.C. OTC companies that
are part of a spam campaign - to date, the BCSC has issued five
three-day halt orders
- Companies targeted by spam and those that have been halt-traded are
posted at www.InvestRight.org, the BCSC investor education website
- Referrals will be made to professional self-regulatory associations
for disciplinary purposes when appropriate
After publishing detailed policy proposals on this new program, the BCSC
will consult with the public and industry. A notice outlining the plan and all
of the initiatives is available at www.bcsc.bc.ca.
"We don't expect to eliminate completely all B.C.-based abuses of U.S.
OTC markets, but if as a result of these initiatives, B.C.'s share of abusive
U.S. OTC market activity is no longer disproportionate, that will be a
significant success," said Hyndman. "It will also be a first step to the
ultimate goal of reducing our share of this activity to a disproportionately
The B.C. Securities Commission is the independent provincial government
agency responsible for regulating trading in securities within the province.
If you have questions, contact Ken Gracey, Media Relations, 604-899-6577.
For further information:
For further information: Ken Gracey, (604) 899-6577 or (B.C. & Alberta)