Canadian Securities Administrators Issue Update on Actions Related to Global Credit and Liquidity Issues

    MONTREAL, Dec. 20 /CNW/ - The Canadian Securities Administrators (CSA)
today provided an update on its activities related to global credit and
liquidity issues, including its review of Canadian reporting issuer
disclosure, the potential impact on investment funds and its involvement in
international action plans.
    "This issue has affected financial markets around the globe
simultaneously," said Jean St-Gelais, Chair of the CSA and President and Chief
Executive Officer of the Autorité des marchés financiers (Québec). "None of us
is immune to its impact. That is why it is crucial that there be a
co-ordinated effort both internationally and here at home to review the issues
and evaluate the policy implications."
    The CSA has established a committee that will focus actions by Canadian
securities regulators in respect of global credit and liquidity issues. As
part of its activities, the CSA has initiated targeted reviews of continuous
disclosure by reporting issuers identified as holders of non-bank sponsored
asset-backed commercial paper (ABCP).
    Current information is that fewer than 100 public companies in Canadian
markets hold significant amounts of non-bank sponsored ABCP. The reviews are
focussing on the reasonableness of assessments of the fair value of ABCP
holdings as well as disclosure and presentation in financial statements and
management's discussion and analysis (MD&A). Areas of importance include:

    -   how issuers are accounting for these investments;
    -   whether or not issuers have taken valuation write-downs when
    -   appropriate classification of these assets on balance sheets; and
    -   adequacy of MD&A disclosure about both the impact of ABCP holdings on
        an issuer's ability to meet short-term cash needs and any broader
        business impact of current credit market conditions.

    If continuous disclosure filings are materially deficient or fail to meet
relevant accounting and disclosure requirements, reporting issuers will be
expected to restate and re-file their disclosure documents.
    "Compliance with accounting and disclosure requirements is critical in a
situation such as this and we, as regulators, are carefully reviewing issuers'
disclosures," said Jean St-Gelais.
    Staff of the Canadian Accounting Standards Board issued a Financial
Reporting Commentary on October 29, 2007 on how certain aspects of generally
accepted accounting principles (GAAP) apply to non-bank sponsored ABCP held by
investors. "Our rules require compliance with GAAP," added Jean St-Gelais.
    Members of the CSA sent questionnaires to managers of public mutual
funds, exchange traded funds, labour sponsored investment funds, scholarship
plans and closed-end funds requesting data regarding investments in ABCP. Our
review of the findings focussed on valuation and disclosure of those
investments. The CSA is conducting targeted reviews of investment funds' ABCP
disclosure in their financial statements and Management Reports of Fund
    The CSA's activities described above are complemented by the efforts of
the Investment Dealers Association of Canada, which is investigating whether
proper standards of registrant behaviour were followed in the distribution of
ABCP to retail clients.
    As credit and liquidity issues are a global phenomenon, the CSA continues
to work closely with the international community, including participating in
the task forces established by the International Organization of Securities
Commissions. These task forces are examining the role of credit rating
agencies, as well as broader issues such as transparency of underlying assets.
Both task forces are expected to have developed proposals and action plans
early in the new year. Working meetings of the Task Forces are taking place in
January and February 2008.

    The CSA, the council of the securities regulators of Canada's provinces
and territories, co-ordinates and harmonizes regulation for the Canadian
capital markets.

For further information:

For further information: Wendy Dey, Ontario Securities Commission, (416)
593-8120; Ainsley Cunningham, Manitoba Securities Commission, (204) 945-4733;
Frédéric Alberro, Autorité des marchés financiers, (514) 940-2176; Jane
Gillies, New Brunswick Securities Commission, (506) 643-7745; Andrew Poon,
British Columbia Securities Commission, (604) 899-6880; Nicholas A. Pittas,
Nova Scotia Securities Commission, (902) 424-6859; Tamera Van Brunt, Alberta
Securities Commission, (403) 297-2664; Barbara Shourounis, Saskatchewan
Financial Services Commission, (306) 787-5842; Marc Gallant, Department of the
Attorney General, Prince Edward Island, (902) 368-4552; Doug Connolly,
Financial Services Regulation Div., Newfoundland and Labrador, (709) 729-2594;
Bette Boyd, Yukon Securities Registry, (867) 667-5225; Jennifer MacIsaac,
Nunavut Securities Registry, (867) 975-6591; Donald MacDougall, Securities
Registry, Northwest Territories, (867) 920-8984

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