APRIL
2008
BCSC REVIEWS TECHNICAL MINING DISCLOSURE IN PROSPECTUS FILINGS
In early 2008, the British Columbia Securities Commission (BCSC) completed a study of recent mining prospectus filings to determine to what extent the filings complied with mining disclosure as required by National Instrument 43-101 (NI 43-101). In conducting the review, the BCSC:
Technical Report Assessment The BCSC reviewed the following, which they consider do not need technical expertise to review:
The BCSC found the following problem areas:
The BCSC has determined to improve compliance through the following methods:
If you have any questions about how to ensure that your mining disclosure documents are compliant with current rules, contact any member of Clark Wilson LLP’s Corporate Finance / Securities Group.
SEC PROPOSED NEW "NAKED SHORT SELLING" RULE
On March 7, 2008 the Securities and Exchange Commission (SEC) proposed to take additional steps to better safeguard investors and protect the integrity of the markets during short selling transactions by proposing a rule that would specify that abusive “naked” short selling is a fraud. In a naked short sale, the seller does not borrow or arrange to borrow the securities in time to make delivery to the buyer within the standard three day settlement period for trades. As a result, the seller fails to deliver stock to the buyer when delivery is due. This is known as a “failure to deliver.” Sellers sometimes intentionally fail to deliver securities to the buyer as part of a scheme to manipulate the price of a security, or possibly to avoid borrowing costs associated with short sales. Under Regulation SHO, the executing or order-entry broker-dealer is responsible for determining whether there are reasonable grounds to believe that a security can be borrowed so that it can be delivered on the date delivery is due on a short sale, and whether a seller owns the security being sold and can reasonably expect that the security will be in the physical possession or control of the broker-dealer no later than settlement date for a long sale. However, a broker-dealer relying on a customer that makes misrepresentations about its locate source or ownership of shares may not receive shares when delivery is due. For example, sellers may be making misrepresentations to their broker-dealers about their locate sources or ownership of shares for securities that are very difficult or expensive to borrow. Such sellers may know that they cannot deliver securities by settlement date due to, for example, a limited number of shares being available to borrow or purchase, or they may not intend to obtain shares for timely delivery because the cost of borrowing or purchasing may be high. This result undermines the SEC’s goal of addressing concerns related to “naked” short selling and extended fails to deliver. The SEC proposed a new rule, Rule 10b-21, that would highlight the specific liability of parties who deceive others, such as broker-dealers and purchasers, about their intention or ability to deliver securities in time for settlement and that fail to deliver securities by settlement date. “This rule proposal will help protect and enhance the operation, integrity and stability of the markets in the clearance and settlement system, and also puts market participants on notice that the Commission will continue targeting abuses in this area,” said Erik Sirri, Director of the SEC’s Division of Trading and Markets. The comment period for the proposal will end 60 days from the date of publication of the proposed rule in the Federal Register. If you have any questions about short sales, contact any member of Clark Wilson LLP’s Corporate Finance / Securities Group.
STEWART MUGLICH JOINS CLARK WILSON LLP'S CORPORATE FINANCE / SECURITIES GROUP
Stewart's practice will encompass most areas of corporate finance and securities law including corporate acquisitions, divestitures, reorganizations, private transactions, public and private offerings and other financings. He will also provide strategic advice on both proxy contests and hostile and negotiated takeover bids, cross-border offerings and acquisitions. Stewart received a B.A. in 1986 from Simon Fraser University and an LL.B. in 1989 from the University of British Columbia. He also received an LL.M. in International Business and Trade Law and an M.B.A. in Corporate Finance from Fordham University in New York in 1991 and 1992, respectively. Stewart was called to the British Columbia Bar in 1990 and admitted to practice at the New York State Bar in 1991. Stewart can be reached at 604.891.7701 or by email at slm@cwilson.com.
CLARK WILSON LLP'S CORPORATE FINANCE / SECURITIES LAW GROUP
Clark Wilson LLP’s Corporate Finance/ Securities Law Group
assists companies listed on Canadian and U.S. stock exchanges and
over-the-counter trading markets, including NASDAQ, Amex, TSX and
the OTC Bulletin Board. Our attorneys are qualified to practice in
various Canadian and United States jurisdictions. We are experienced
in Canadian, United States and cross-border transactions; U.S. and
Canadian regulatory filing and SEC registrations; reverse takeovers;
and mergers and acquisitions. For more information, contact Bernard
Pinsky or any member of our Corporate Finance/ Securities Law
Group.
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