January 16, 2008 Organization Securities

Montréal – The Autorité des marchés financiers (AMF) notes with optimism the application since January 1, 2006 of new administrative monetary penalties for late insider reports. “The new measures were implemented to penalize insiders who failed to meet their filing obligations. Now, nearly two years later, it is clear that the strategy has been successful, as the rate of late insider reporting has dropped 61%, from 8.6% in 2005 to 3.3% in 2007,” said Louis Morisset, Superintendent, Securities Markets.

On December 7, 2005, the Québec government approved a regulation for the application of administrative penalties against insiders or senior executives deemed to be insiders who fail to file their control or a change in control over securities of a reporting issuer in the prescribed time. Under this regulation, in force since January 1, 2006, insiders who fail to file a disclosure document are subject to a penalty of $100 per day. As well, the AMF publishes a list of late insider reports in its weekly Bulletin.

In the year prior to the application of the new penalties, late filings totalled 1,948 (8.6%) of the 22,550 transactions reported via the System for Electronic Disclosure by Insiders (SEDI) by insiders of reporting issuers for whom Québec is the principal regulator. After the new penalties came into effect in 2006, the rate fell by nearly half, to 4.9%, with 1,265 late filings out of a total of 26,002 transactions. In 2007, it fell further to 3.3%, with 838 late filings out of a total of 25,271 transactions.

“These administrative penalties are harsh—in fact, they are the toughest in the country—but we feel that the measures were necessary. Yet despite our sustained efforts to raise awareness in the past few years, too many insiders are still not complying with the regulation,” said Mr. Morisset. The AMF therefore intends to continue to remind insiders of their obligations and to take the appropriate steps with repeat offenders, in particular through penal proceedings. Mr. Morisset stressed that a person who files late insider reports commits a serious offence, since he deprives investors of information that could influence their investment decisions. “The purchase or sale of securities by senior officers of public companies is important information for market participants which must be provided within the specified time,” he added.

The AMF reminds insiders of their responsibility to report trading activity within 10 days of the transaction through SEDI at www.sedi.ca This link will open in a new window. Further information is available on the AMF website in the section for financial sector participants under Insiders.

The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec’s financial sector.

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