March 23, 2007
Room for Improvement
It looks like it is almost twice as likely for Canadian public company mergers to have insider trading than for US public companies. From an article today in the Globe and Mail, this was reported:
"Aberrant trading patterns preceded 33 of the 52 Canadian mergers valued at more than $200-million last year, says a study by Measuredmarkets Inc. for Bloomberg News. Those patterns could indicate insider trading.
"Insider trading goes on all the time," says Stephen Jarislowsky, chief executive officer of Montreal-based Jarislowsky Fraser Ltd., which manages about $63-billion. "There's no real surveillance."
The rate of unusual trading found in Canada -- 63 per cent -- was higher than in the United States, where a Measuredmarkets study last year flagged 41 per cent of comparable mergers. The London-based Financial Services Authority said on March 7 that insider trading may have preceded almost 25 per cent of U.K. merger announcements in 2005...
Michael Watson, enforcement director at the Ontario Securities Commission, disagrees, saying his commission "routinely monitors trading and reviews instances of unusual trading." He says it has investigated 254 cases so far this fiscal year, which ends March 31.
By comparison, the U.S. Securities and Exchange Commission started 914 investigations in fiscal year 2006 and imposed $3.3-billion (U.S.) in fines, its report says.
The value of U.S. markets is 10 times greater than Canada's markets, though. The Standard & Poor's/TSX composite index, Canada's benchmark, is valued at about $1.6-trillion (Canadian)."
So something does not make sense here. Sounds like there is room for improvement in Canada. But one point needs to be made. Canada has thirteen (13) securities regulators! The US has one. So guess who has the easier time in doing this type of monitoring.
This sounds like just one more reason to have one securities regulator in Canada. Does every province and territory need its own regulatory body?
"Aberrant trading patterns preceded 33 of the 52 Canadian mergers valued at more than $200-million last year, says a study by Measuredmarkets Inc. for Bloomberg News. Those patterns could indicate insider trading.
"Insider trading goes on all the time," says Stephen Jarislowsky, chief executive officer of Montreal-based Jarislowsky Fraser Ltd., which manages about $63-billion. "There's no real surveillance."
The rate of unusual trading found in Canada -- 63 per cent -- was higher than in the United States, where a Measuredmarkets study last year flagged 41 per cent of comparable mergers. The London-based Financial Services Authority said on March 7 that insider trading may have preceded almost 25 per cent of U.K. merger announcements in 2005...
Michael Watson, enforcement director at the Ontario Securities Commission, disagrees, saying his commission "routinely monitors trading and reviews instances of unusual trading." He says it has investigated 254 cases so far this fiscal year, which ends March 31.
By comparison, the U.S. Securities and Exchange Commission started 914 investigations in fiscal year 2006 and imposed $3.3-billion (U.S.) in fines, its report says.
The value of U.S. markets is 10 times greater than Canada's markets, though. The Standard & Poor's/TSX composite index, Canada's benchmark, is valued at about $1.6-trillion (Canadian)."
So something does not make sense here. Sounds like there is room for improvement in Canada. But one point needs to be made. Canada has thirteen (13) securities regulators! The US has one. So guess who has the easier time in doing this type of monitoring.
This sounds like just one more reason to have one securities regulator in Canada. Does every province and territory need its own regulatory body?
