By Danica Bennewies
Happy Friday! Here at the CBLB we like to kick the weekend off with the latest installment of Friday Finds. This is the weekly series where we share five of the top corporate and securities law news stories that have dominated our conversations, and the headlines, recently. This week, stories from Aimia Inc., Barrick Gold Corp., and FINRA grabbed our attention. Keep reading to get caught up on these stories, and more.
Last week we talked about Aimia Inc.’s disgruntled shareholders. This week, the Canadian loyalty-plan provider’s problems have continued to grow. On Monday, Aimia appointed two new directors to its board. This came as a surprise to shareholders, given that the annual general meeting, where directors are typically elected to the board, was held only three weeks earlier. In fact, Mittleman Brothers LLC, Aimia’s largest shareholder, said it was only given a few hours’ notice of the new director appointments. Following the appointments, Mittleman denounced Aimia’s secrecy and criticized the company for going back on its promise to reduce board size. On top of the issues with its shareholders, Aimia is also facing trouble with one of its lead airline partners. Grupo Aeromexico, Mexico’s leading airline, is threatening to end its relationship with Aimia, pointing to “irregularities and potential breaches of relevant contractual arrangements”. Losing Aeromexico would have a majorimpact on Aimia, as the loyalty program that Aimia provides Aeromexico accounts for a significant portion of Aimia’s business.
It’s been awhile since we talked about Barrick Gold Corp.’s attempt to takeover Acacia Mining PLC, however this week saw some progress on this deal. The two mining firms have been going back and forth on the terms of the deal for months, and today they were finally able to reach an agreement. Originally, Barrick offered Acacia US$287-million to acquire the remaining 36.1% of Acacia stock (or 0.153 Barrick shares for each Acacia share). While Barrick initially insisted that this was its final offer, the agreement reached today saw an approximately 10% increase in price, for a total of US$428-million (or 0.168 of Barrick stock per Acacia share). Along with the sweetened deal price, the deal also includes potential special dividend payouts to Acacia shareholders. However, reaching an agreement doesn’t mean things will now be smooth sailing for Barrick. Acacia is facing a number of issues with the Tanzanian government, including being accused of US$200-billion in tax fraud and banned from exporting gold concentrate. With the takeover deal in place, Barrick will now have to work on tackling these problems.
Let’s move to this week’s regulatory news now. On Thursday, the Office of the Superintendent of Financial Institutions (OSFI) released proposed changes to its guidelines for the management of liquidity risks for banks. The suggested changes are aimed at ensuring that the rules are up to date and relevant, particularly given the evolution of market practices and the increasing scale and complexity of these financial institutions. The amendments also come out of recent supervisory assessments conducted by the OSFI, where the self-regulatory organization found that the liquidity risk management practices at certain banks were lacking. The proposed revisions are intended to add clarity to the existing rules and ensure that all banks are following the guidelines. The OSFI will be accepting feedback on the revisions until early September, with January 1, 2020 as the target date to implement the updated guidelines.
In enforcement news, over the past two weeks the Toronto police identified and charged two men involved in an alleged Ponzi scheme. Last week, police laid 18 charges against John James Illidge. Police then followed up this week by charging a second man, Vincent Phillips, on Wednesday. Phillips faces 18 charges as well, including charges for fraud, theft, and money laundering. According to police, a man identifying himself as Illidge contacted investors over social media and raised a total of nearly $1-million. This money was then allegedly invested in companies that he owned, as well as used for personal purposes, such as car payments and food and department store purchases. According to police allegations, In order to convince investors that the operation was legitimate the men also issued small payments to investors so that they believed they were making a profit. While the charges have been laid, they have yet to be proven in court.
Moving to US regulatory news now, the Financial Industry Regulatory Authority (FINRA) has been fighting back against mutual fund overcharging. Over the past few years, FINRA has reached settlements with 56 brokerage firms regarding overcharging allegations. The firms allegedly overcharged clients by neglecting to waive sales charges for eligible clients and failing to properly supervise their waiver practices. According to a statement issued on Wednesday, these settlements resulted in US$89-million in restitution for close to 110,000 charitable and retirement accounts. FINRA’s settlement efforts began back in 2015 with 10 firms that self-reported to FINRA that their reps failed to consider applicable sales charge waivers. Since then, 35 firms have self-reported similar issues, while 11 others were sanctioned following compliance exams. In her statement, Susan Schroeder, the executive vice president of FINRA’s enforcement division, said that “[e]nsuring that harmed customers are made whole is our highest priority”.
That’s a wrap on this week’s Friday Finds! As always, thanks for joining us, and be sure to come back to the CBLB next week for another round-up of the top corporate and securities law news stories.