Vancouver Stock Exchange to Get Cleanup
Mark Clayton, writer of The Christian Science Monitor, The Christian Science Monitor
AT long last, the 97-year-old Vancouver Stock Exchange appears set to get the cleanup many say it desperately needs.
The British Columbia government last week announced that it would pass new legislation in the spring to clean up the exchange. It will do this by tightening rules and strengthening regulators with new resources to fight fraud.
But James Matkin, author of the government's investigative report on the exchange, isn't fully endorsing the action taken. He calls for further reforms.
Tarnished by a long history of stock swindles and scams that bilked millions from investors, the Vancouver Stock Exchange (VSE) was dubbed the "scam capital of the world" by Forbes magazine in 1989. The label stuck. In response, last year, the British Columbia government appointed Mr. Matkin, a respected lawyer, to delve into the mess and recommend changes.
Matkin's January report was a blockbuster, suggesting a total overhaul of the exchange and its regulator, the British Columbia Securities Commission. His key recommendation: Convert the toothless BCSC into a hard-biting regulator like the United States Securities and Exchange Commission. "We strongly agree with Mr. Matkin that the abuses in the system cannot continue," said Finance Minister Elizabeth Cull, at an Oct. 6 press conference announcing the reforms. "We need renewed public confidence in the VSE and in securities regulation in B.C."
Changes Ms. Cull announced include:
* Giving the BCSC more independence. It will have its own budget and will enact its own legally binding regulations, making it the first securities commission in Canada with that ability.
* Raising the number of BCSC commissioners from nine to 11, allowing the current chairman to focus on policy and planning.
* Enabling investors to file class-action law suits to recoup losses due to misleading press releases, other false disclosures, or manipulations.
* Requiring detailed "prospectus level" information of reverse takeovers, a maneuver in which shares of an inactive company are aquired and operations restarted, usually in an area unrelated to its prior activity.
* Making brokers guarantee that they have conducted "due diligence" with regard to the reverse takeovers they are promoting. …