By Danica Bennewies
Welcome back to another Friday Finds! In this weekly series on the CBLB, we share five of the corporate and securities law news stories from the past week that dominated the headlines, as well as our conversations. Let’s jump right in to this week’s stories.
As you may know, November was Financial Literacy Month, and the Ontario Securities Commission (OSC) has been busy with initiatives to increase Canadians’ financial literacy. As part of these activities, the OSC’s Investor Office released its National Investor Research Survey on Wednesday. The study surveyed a sample of over 2000 Canadians over the month of October, and the findings highlight the benefits of investor knowledge. Based on three standardized questions, the study differentiated respondents into “high” and “low” knowledge groups. Older, higher-income investors were more likely to be in the high knowledge group, while younger and lower-income investors were among the least knowledgeable. Furthermore, those in the high knowledge group reported feeling more in control of and having less stress over their finances, and were more likely to have started saving for retirement. If you’re interested in reading the full findings of the study, you can find the report here. The OSC also released the 2018 Ontario Exempt Market Report this week, which details activities in the “exempt market” – the section of Canada’s capital markets where securities can be sold without requiring a full, lengthy prospectus. The report shows that the total quantity of capital raised in the exempt market increased by 27% in 2017, with 98% of this capital coming from institutional investors. You can read the full report on the OSC website.
In other Canadian regulatory stories, the Supreme Court’s recent decision to uphold the constitutionality of the proposed Cooperative Capital Markets Regulator (CCMR) has been a major discussion point both in the news and on the blog (in case you missed it, you can get caught up here). Many people are skeptical of how such a national securities regulator will be structured, particularly if some provinces refuse to join. If you’re interested in hearing more about this topic from experts in the industry, the Capital Markets Institute at the Rotman School of Management is hosting a panel discussion next Tuesday, moderated by Anita Anand. The panel will include Chief Regulator of the Capital Markets Regulatory Authority, Kevan Cowan, as well as partners from Osler, Hoskin & Harcourt LLP. If you’re interested in attending, you can sign up on Rotman’s event page.
In industry news, Campbell Soup and activist hedge fund Third Point reached a truce over a long-standing proxy contest this week. The proxy contest has been ongoing since August, when Third Point first disclosed its roughly 7% stake in Campbell. Originally, Third Point was pushing for sale of the company, as the CEO had recently left following “unacceptable” earnings results. However, the hedge fund faced an uphill battle, given that the descendants of Campbell’s founder owned approximately 41% of the company and had a history of banding together to protect the company. The proxy contest was finally settled on Monday, with Campbell agreeing to add two of Third Point’s nominees to its board and giving Third Point input on a planned third director as well as in the search for a new CEO.
Ensign Energy says it will take control of Trinidad Drilling Ltd, after acquiring 56.38% of Trinidad shares on Tuesday, increasing its stake to 66.18%. You may recall a couple weeks ago we discussed a friendly all-share takeover bid for Trinidad by Precision Drilling Corp, which bested Ensign’s $470-million offer. At that time, Precision’s offer equated to $1.91 per Trinidad share, while Ensign was offering $1.68 per share. However, with the recent market downturn, Precision’s stock price has fallen, giving Ensign the upper hand. Ensign moved up the expiration of its bid, ensuring that its cash offer would be higher than Precision’s all-stock offer and effectively ending the bidding war. Precision has since announced that it has terminated its takeover. Following Ensign’s success, Trinidad’s CEO, CFO, and COO have stepped down and the entire board of directors have agreed to resign. The executives and board will be replaced with Ensign appointees.
Lastly, in the US, the Securities and Exchange Commission (SEC) brought charges against professional boxer Floyd Mayweather Jr and music producer DJ Khaled this week, for failing to disclose money they were paid to promote investments in Initial Coin Offerings (ICOs). This is a high-profile case, not only because of those involved, but because it is the SEC’s first charges brought involving ICOs. Both celebrities used social media to promote the ICOs to their followers, insinuating that they expected to make large amounts of money. The main issuer in common between the two was Centra Tech Inc. Following these charges, the SEC highlighted the importance of full disclosure and warned investors to be cautious of investment advice given on social media. Both Mayweather and DJ Khaled have agreed to pay disgorgement, penalties, and interest, and also agreed to short-term bans on promoting any securities.
That’s all of the stories we have this week, we’ll see you back next time for another round-up of Top Five Friday Finds. Have a great weekend!