Canadian Venture Exchange -
CDNX responds quickly to disclosure concerns
Canadian Venture Exchange
CDNX
Shares issued 0
1899-12-30 close $0
Wednesday Dec 8 1999
HARMONIZATION NEEDS SOME FINE TUNING
by Stockwatch Business Reporter
The new Canadian Venture Exchange (CDNX) has responded quickly to
concerns that its system of disclosing details of corporate transactions was at odds
with its claims of transparency. Newsletter writer John Kaiser raised the concerns
in an editorial asking whether the new CDNX marked the "restoration of a
traditional predator-prey system."
Mr. Kaiser's complaints centred on how the CDNX was providing issuer
information regarding financings, options, warrants, property acquisitions, and so
on. Mr. Kaiser told a Stockwatch reporter that there was some resistance among
the brokerage community to the style of disclosure pioneered by the Vancouver
Stock Exchange and clearly favoured by him. "Some brokers blamed this
disclosure for the VSE's lack of success," Mr. Kaiser said. He suggested that,
bowing to pressure from brokers and promoters, the CDNX was doing the
equivalent of burying the information in an obscure physical filing system where it
would be extremely difficult to access. "It's the complete opposite of the Internet
reality," Mr. Kaiser said.
Whatever that reality, Mr. Kaiser used it to circulate his editorial and enlist the aid
of Internet chat site participants. "The discouraging implication is that the new
CDNX is nothing but a clone of the ASE, and that the merger was contrived by
the brokerage industry as a way of getting back the business that fled to the OTC
Bulletin Board," Mr. Kaiser wrote. He urged other investors to contact the
CDNX, thoughtfully providing a list of 20 names and E-mail addresses. Internet
chat sites buzzed and the cause was widely taken up. Mr. Kaiser remarked that
there probably was some over-kill. "It shows how entrenched this information
culture is," he said.
Mr. Kaiser's complaints were underpinned by even deeper concerns over the
ability of regulatory agencies to protect investors. He suggests that no regulator
can provide complete protection but they can broaden the scope of public scrutiny
and increase the likelihood that questionable transactions will be caught at an early
stage. He argues that debacles like Cartaway, Timbuktu, or YBM Magnex
"would have been nipped in the bud by VSE style disclosure." If that nipping was
not administered by the regulators themselves, Mr. Kaiser suggests that individual
investors, a researcher like himself, a reporter like David Baines, or a news
service like Canada Stockwatch would apply the shears.
In his editorial, Mr. Kaiser suggested that Gerry Romanzin, former executive
vice-president of the Alberta Stock Exchange (ASE) was apparently responsible
for the decision to abandon the VSE-style of disclosure. According to Mr.
Romanzin, the whole issue was actually inadvertent and was not at all related to
resistance from the brokerage community. "The fundamental objective was to take
the best elements of the two Web sites (ASE and VSE) and make them available
to the public," Mr. Romanzin said. During the harmonization process, there was an
attempt to simplify the notices system. Mr. Romanzin pointed out that the ASE
had 18 notice types while the VSE had 144 notice types. He left instructions to
find some balance between the two before being away from the office for a couple
of weeks. The result apparently did not satisfy Mr. Kaiser and a number of other
people.
According to Mr. Romanzin, the CDNX became aware of the concerns about the
notices system on Tuesday, Nov. 30. "We spoke to John on Wednesday and
made the changes Wednesday evening," Mr. Romanzin said. Those changes
involved returning to the VSE style of disclosure. "There was no conscious effort
to reduce the information available," Mr. Romanzin said, pointing out that the
changes were instituted as soon as it became clear that investors found that style
of disclosure useful. The swiftness of the CDNX response surprised even Mr.
Kaiser, who is once again hopeful that the new exchange will become a force in
the global venture market, drawing business from other exchanges and increasing
investor confidence because of its disclosure policies.
Mr. Romanzin candidly acknowledged that there will be some fine tuning in the
continuing harmonization process. "We encourage feedback," he said, adding that
the CDNX would respond to any legitimate concerns.
(c) Copyright 1999 Canjex Publishing Ltd. canada |
