“Gatekeepers” are new focus in emerging markets enforcement

In light of the recent news about the Ontario Securities Commission’s allegations of fraud against Sino-Forest Corporation, it’s worth taking a closer look at the OSC’s Emerging Markets Issuer Review . The report, released in March, was based on an extensive review last summer. As enforcement director Tom Atkinson told an audience at McCarthy Tétrault earlier this month, emerging markets is a priority area for the division. And the scope has expanded from simply dealing with companies and their management. 

… Now we investigate the other outside layers, the gatekeepers, the directors, the underwriters, that sort of thing, he said.

Atkinson echoed the division’s new focus on gatekeepers in a news release about the Sino-Forest allegations on Tuesday, noting,

…Our investigation is continuing into this matter, including an examination of the role of the gatekeepers.

The Emerging Markets Issuer Review includes an expectation that EM issuers and their gatekeepers take immediate steps to improve their deficient practices.

TMX Group is slated to publish an additional guidance for EM issuers, following its own parallel review. That guidance will focus on “additional detail regarding senior management and director qualifications, corporate governance matters, and disclosure and financial reporting expectations,” according to an announcement in late March.

Lexpert will be following these developments.