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SOURCE British Columbia Securities Commission
VANCOUVER, June 20, 2014 /CNW/ - The British Columbia Securities Commission has released a report on its Private Placement Review Program (PPRP), which monitors private companies that raise money in the private placement market. The PPRP has been active since 2010, prior to which there was no formal compliance review program of its kind in Canada.
The report indicates that, for the past several years, more money has been raised in B.C.'s private placement market than in the public markets – from 2010 to 2013, companies reported that they raised $45 billion in BC's private placement market versus $25 billion in the public market. The amount raised in BC's private placement market over this period rises to $79 billion when you include companies from outside of BC.
"The private placement market is critically important to the economic well-being of our province, and the BCSC has demonstrated leadership in regulating this market," said Brenda Leong, Chair and CEO of the BCSC. "In overseeing this market, we want to ensure that companies are playing by the rules, and that investors understand the risks and receive the information they need to make informed investment decisions. If we find evidence of misconduct, we will investigate and take appropriate enforcement action."
The PPRP monitors private placements, reviews selected companies, enforces the rules, and educates market participants. Some of the private placement securities sold to retail investors are high-risk and illiquid, and can result in significant losses.
Since 2010, 2,400 private companies filed exempt distribution reports with the BCSC. After performing a preliminary analysis of all of those reports, staff completed 284 in-depth reviews. Actions taken include:
Additionally, the PPRP has led the BCSC to develop two key initiatives to enhance the surveillance of B.C.'s private placement market, and help companies to stay compliant with capital raising rules:
Overall, the PPRP revealed that most companies intend to comply with the rules. However, staff found that companies have a poor understanding of the exemptions, do not keep adequate records of their private placements, and use professional advisors who do not have specialized knowledge of the securities industry and the private placement market.
The BCSC's monitoring and regulation of the private placement market through the PPRP, together with its continuing education and outreach efforts, should help to raise the level of understanding and compliance in the private placement market.
About the British Columbia Securities Commission (www.bcsc.bc.ca)
The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:
Learn how to protect yourself and become a more informed investor at www.investright.org
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