(August 2) – The Ontario Securities Commission’s corporate disclosure survey reveals that retail investors are second-class citizens in corporate Canada.
The survey, conducted by the OSC’s Continuous Disclosure team last year, shows that selective disclosure is still the order of the day, and retail isn’t the side getting the inside dope.
Only 19% of companies invite retail investors to listen in on quarterly conference calls, and only 18% broadcast their quarterly conference call via Internet or by other means. Yet 81% of companies have one-on-one meetings with analysts and 98% typically comment in some form on draft analyst reports.
This survey is part of an OSC initiative to examine the practice of selective disclosure in the marketplace. The OSC concludes that, “the extent and nature of corporate disclosure policies and practices of issuers are not sufficient to reduce the potential for selective disclosure”.
“We have become increasingly concerned about selective disclosure and the potential impact of this practice on market integrity,” said John Hughes, manager of the continuous disclosure team. “Selective disclosure creates opportunities for insider trading. It undermines retail investors’ confidence in the market by creating a perception that analysts and institutional investors have access to information that is not available to other investors.”
In the fall the OSC plans to publish for comment a policy statement on selective disclosure. It will stress the importance of having a written disclosure policy, and limit the number of authorized company spokespersons. It will also call for opening up access to conference calls and using advances in technology to achieve better dissemination of information. The commission says its goal in proposing the policy is to encourage companies to aim for best practice in their disclosure regime.
-IE Staff