New rules proposed for executive filings - CANADA - 19 Dec 2008

NSIDER TRADER REPORTING

New rules proposed for executive filings

Canadian
companies will be required to expose executives who file their insider
trading reports late by publishing their names in annual shareholder
proxy circulars, according to proposed new rules unveiled yesterday by
securities regulators.

The Canadian Securities Administrators (CSA), an umbrella group for
provincial securities commissions, is also proposing new rules to
shorten the deadline for filing insider trading reports to five days,
from the current 10.

The United States requires reports to be filed within two business
days after a transaction. Britain gives insiders five business days,
while Canada is proposing five calendar days.

Doug Hyndman, chairman of the British Columbia Securities
Commission, said the reforms were spurred by concerns that rules
require too many people to file reports of their insider trading in
company shares. The proposed reforms include shortening the list of
people who are required to file, focusing more narrowly on those with
the "greatest influence" over a company.

Canada requires more people to file reports than many other
countries, which makes it hard for investors to spot trading activity
by key insiders, Mr. Hyndman said. "There was a pretty strong feeling
that just created a lot of noise in the system and involved a pretty
significant filing burden," he explained. "And it provided information
that wasn't terribly useful to investors."

The CSA is also proposing a new requirement that companies publish
the names of any insiders who filed insider trading reports late during
the prior year. The disclosure would be included in proxy circulars,
similar to a U.S. rule already in place.

The disclosure would give companies an incentive to ensure their
insiders file their reports on time, Mr. Hyndman said. "It provides
further motivation for companies to take ownership of this issue."

Stephen Griggs, executive director of the Canadian Coalition for
Good Governance, a powerful group representing institutional
shareholders, said investors will welcome a shorter filing deadline
because insider trading reports are important information.

But he said it won't matter if there continue to be few penalties or
repercussions for people who file late. "Whether it's five days or 10
days, the key is to make sure that the regulators are actively
enforcing those rules," Mr. Griggs said.

"There's no point in tightening up the rules if there is no consequence to a failure to meet the five-day rule."

The reform package does not propose any changes to late filing fees,
which are imposed inconsistently across Canada. Some provinces charge
no fees for late filing, while others charge varying amounts that have
been criticized for being too small to provide any deterrent.

Mr. Hyndman said the CSA is assessing introducing a uniform late
filing fee, but is not proposing any changes yet. Regulators can always
launch an enforcement case against an individual who egregiously
breaches insider filing rules, he said, so there is power to enforce
the standards.