Sunday 20th September 2020

Resource Clips

What’s the juniors’ problem?

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While the group has previously spoken about the cost of compliance, this meeting largely addressed restrictions to financing.

As founder of B&D Capital and also co-founder of the VCMA, Mosher was one of several attendees who criticized “archaic” accredited investor rules. “Basically 96% of Canadians are not allowed to invest on an equal stance along with the other 4%.”

Not that the organization cares, he maintained.

“If you take a look at the boards of IIROC, there is no Venture representation on there. It is big banks. In fact the chairman of the industry side is actually a representative of Merrill Lynch of Canada. It’s not even a Canadian bank. And there she is chairing this organization that just put through a set of rules that have been placed on our investment advisers, Canada-wide, with words like ‘suitability,’ ‘risk-tolerance,’ ‘product knowledge,’ etc. The place is not only a liability on the brokers and the brokerage firms, the independents out there that the banks want to put out of business, but they put fiduciary duty on these brokers. Even if you’re worth a billion dollars and you’re 65 years old, you want to speculate and you have speculated your whole life, it’s ‘unsuitable compliance.’”

Even if you’re worth a billion dollars and you’re 65 years old, you want to speculate and you have speculated your whole life, it’s ‘unsuitable compliance.’—Don Mosher, co-founder of
the Venture Capital
Markets Association

After IIROC replaced the Investment Dealers Association of Canada, Mosher said, the organization lost 20% of its membership “and they’re dropping out on a monthly basis.” Investment is being channelled into banks, he argued. “All they want to sell is proprietary products created by the banks. They couldn’t give a damn about Venture markets…. If [junior companies are] not replacing the equities that matured on the big board and they wipe us out, where’s the job creation, where’s the company creation, and where’s the future in Canada going to be?”

Discussion included lively back-and-forth between panel members and audience. But it also showed the VCMA has yet to sharpen its focus. Disagreement continued about whether regulatory problems are federal or provincial and whether IIROC or the securities commissions are more culpable.

One attendee urged the founders to spell out exactly what the group stands for. “We’re spinning our wheels here unless we have a simple little document coming from the front table saying, ‘This is what we’re proposing.’”

In response panellist Ron MacDonald, executive chairperson of American Vanadium TSXV:AVC, said people in the sector “don’t talk to each other as often as we should…. It would be a little arrogant of us at the front table or anywhere to say these are the only issues.”

Maybe, but the VCMA has been around for a while. The group held panel discussions at the World Resource Investment Conference in Vancouver last May and the Toronto Resource Investment Conference in September.

And while panellists spoke of lobbying politicians and reaching out to media and the public, much of their message was cloaked in jargon and shop talk. Although Martin said “some” media had been invited to the event, the VCMA didn’t seem to distribute an announcement outside of a post on its own website.

The group is now raising money, asking as little as $5 each from individuals. Noting the CNSX publicity surge after Ned Goodman joined, Martin wants to “get some big names behind us.” The VCMA also wants businesses to fund chairs of regulatory studies at Canadian universities.

Other speakers at the BCSC event were BCSC CEO/chairperson Brenda Leong, BCSC director of corporate finance Peter Brady, TSX Venture president John McCoach, Scotiabank VP and economics and commodity market specialist Patricia Mohr and Aequitas Exchange chief compliance officer Randee Pavalow.

In addition CNSX Markets CEO Richard Carleton spoke from the audience at the BCSC conference and from the podium at the VCMA event.

Read more about Ned Goodman joining the CNSX.

Read more about the Venture Capital Markets Association.

Read about efforts to create a single Canadian securities regulator.

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