British Columbia Securities Commission

British Columbia Securities Commission

October 30, 2007 16:58 ET

BCSC Seeks Comment on Proposals Related to U.S. OTC Issuers and Dealers

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 30, 2007) - The British Columbia Securities Commission is proposing a new rule for issuers quoted in the U.S. over-the-counter markets and new conditions of registration for investment dealers that trade in these markets.

On Oct. 29, 2007, the BCSC published for comment a proposed rule that would give the commission better legal tools to improve disclosure of OTC issuers based in B.C., and to discourage the manufacture and sale of shell companies that may be used for abusive purposes. The BCSC is also proposing new conditions to increase investment dealers' accountability for their trading activities in securities quoted in the U.S. OTC markets, such as the OTC Bulletin Board and Pink Sheets.

A disproportionate number of players in the U.S. OTC markets who engage in abusive activities have visible connections to B.C. Their activities damage the reputation of the province's capital markets, harming the interests of legitimate issuers, investment dealers, and other market participants.

Certain aspects of the proposed rule British Columbia Instrument 51-509 Issuers Quoted on the U.S. Over-the-Counter Markets and proposed Conditions of Registration for Investment Dealers that Trade in the U.S. Over-the-Counter-Markets are part of the commission's plan to disrupt, stop, and prevent abusive junior market activity taking place in the province.

The proposed rule will apply to OTC issuers with significant connections to B.C. that are not cross-listed on another, more senior exchange. Under the proposed rule:

- OTC issuers would be subject to new disclosure requirements similar to those that apply to reporting issuers

- insiders of OTC issuers would have to file insider reports and personal information forms

- OTC issuers could not use foreign disclosure exemptions, and restrictions would be put on exemptions

Under the proposed conditions of registration:

- all registered investment dealers with B.C. offices that trade in OTC securities will be required to have a risk and compliance system in place

- dealers will have to follow recording and reporting conditions, and they would be prohibited from trading securities until the beneficial owner is known to them

- the deposit of any OTC issuer securities would be prohibited until the Ultimate Designated Person (UDP) approves the deposit

The BCSC invites comment on these materials and will consider all comments received by Dec. 31, 2007. BC Notice 2007/24 provides more background on the commission's proposed response to U.S. OTC market abuses with connections to B.C.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the full proposal by visiting the Securities Law and Policy: Requests for Comment on our website If you have questions, contact Ken Gracey, Media Relations, 604-899-6577.

Learn how to avoid investment fraud at the BCSC's investor education website:

Contact Information

  • British Columbia Securities Commission
    Ken Gracey
    Media Relations
    (604) 899-6577 or (B.C. & Alberta) 1-800-373-6393