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April 25, 1997
Bre-X debacle prompts TSE survey of Wall Street
TORONTO (CP) - The Toronto Stock Exchange - criticized for its handling of the Bre-X
Minerals debacle and embarrassed by recent computer crashes - is trying to find out what
Wall Street thinks about what happened.
A spokeswoman confirmed Thursday the exchange has hired a U.S. firm to survey
members of the New York investment community.
"It's important for us to understand how the financial community is reacting to some
recent reports," said Catherine Falzone, the exchange's director of marketing and
communications.
"We view it as good public relations practice to get their opinions unfiltered by the
media," Falzone said in an interview.
Some say the Bre-X fiasco has tarnished Canada's mining industry, securities
regulators and the investment community and wonder whether there are enough
safeguards in place to protect investors.
Media reports have also raised questions about decisions by the TSE after
Calgary-based Bre-X revealed serious doubts had been raised about whether its
Indonesian gold deposit actually exists.
Some Bre-X shareholders have lashed out at exchange officials for allowing trading to
start up again after last month's bombshell announcement. Some have threatened to sue
Canada's biggest exchange.
The Financial Post reported today that six Bay Street brokerages were asked Thursday
not to destroy taped telephone conversations their advisers had with clients about Bre-X in
the past 90 days.
The request was faxed by a shareholders group that contends Bre-X investors may have
been misled by brokers, the Post said.
Bre-X shares lost more than 80 per cent of their value in panic selling and some
investors saw their life savings vanish.
The selloff also caused problems for the TSE's computer system, which couldn't keep up
with the huge volume of buy and sell orders on Bre-X shares. The entire system crashed
and the exchange was repeatedly forced to pull the plug on Bre-X trading before the
problem was solved.
Falzone declined to reveal what questions are being asked in the survey.
One of those surveyed, however, said he was told the poll was confidential and was
asked a wide range of questions, including:
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What do you think about the Bre-X fiasco?
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Should the exchange have stopped the stock for as long as it did?
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Should trading have resumed despite protests by Bre-X?
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Do you trust the market?
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What could the TSE do to make you feel the same way you used to about it?
"I think they've been unfairly criticized," said the New York stock market watcher, who
asked not to be named.
However, he acknowledged many others on Wall Street feel differently.
Falzone, who said she didn't know how many people are being interviewed, said the
survey "isn't anything unusual."
"We do this from time to time," she said. Asked when the last survey was done, she
said: "Probably what we're prepared to say right now is occasionally we go out ... to talk to
the financial community in other markets."
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