Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : YBM Magnex Intl Sees Revenue Growth 30-35%/Yr In MagnetOp -- Ignore unavailable to you. Want to Upgrade?

To: Ned Land who wrote (244)	8/19/1998 12:22:00 AM
From: Adrian du Plessis	Respond to of 314

OSC ups pressure on YBM Regulator undertakes formal probe of 'serious public allegations' By SANDRA RUBIN The Financial Post Wednesday, August 19, 1998 The Ontario Securities Commission has placed troubled YBM Magnex International Inc. under formal investigation, its chairman said yesterday. The news comes as investors grapple with the possibility YBM shares in which they have invested more than $635 million may not trade again. The Philadelphia-area magnet maker is struggling to find new auditors after Deloitte & Touche LLP resigned in June. It's also waiting to learn whether charges will be laid following an FBI raid of its offices May 13 in an organized crime probe. "There have been some serious public allegations made with respect to this company," OSC chairman David Brown said. "Our investigation followed as a result of those." It is rare for the regulator to confirm an investigation. Brown said it was too early to say how many staff members will be assigned to the inquiry or how long it will take. He also said the OSC hasn't decided whether it will seek a subpoena forcing Deloitte to hand over documents explaining its decision to quit as YBM's auditors without signing the 1997 financial statement. "Investors deserve better than this," said Houston lawyer Paul Yetter, who has been monitoring YBM for shareholders. "They deserve some answers, and soon. "It would start with why one of the world's largest accounting firms would do a turn-over-every-stone audit and then ignore the sorry mess they uncovered. You'd have to ask the same question of the Bay Street crowd as well." U.S.-based Deloitte has become something of a lightning rod for dismayed YBM shareholders. Its special high-risk re-audit of the company's 1996 results cleared the way for a $100-million share issue in November, allowing YBM to list on the Toronto Stock Exchange 300 index with a market capitalization of almost $1 billion by March. It wrote to the company five months later, expressing concerns about "entities and individuals involved with YBM" and spoke of concerns "of one or more illegal acts." YBM says it did not change business practices between 1996 and 1997. Deloitte isn't saying much. It declined to testify voluntarily at a OSC hearing scheduled for this month, fearing the evidence would be used against it in a possible class action suit. Its refusal gutted the regulator's case and helped lead to the decision to postpone a permanent cease-trade hearing. "What's the situation here with Deloitte?" asked one institutional shareholder caught with a big position. "Who is the OSC protecting? They should be going after Deloitte. The end shareholder the OSC's supposed to protect seems to be low man on the totem pole here." But Brown said investors almost certainly wouldn't get the details they're looking for at a permanent cease-trade hearing argued on the failure to file audited financials. A civil lawsuit, or a full OSC hearing, would be far more likely to delve into which Bay Street underwriters knew of allegations of Russian mob involvement and what Deloitte found that caused it to quit, he said.