‘Twas the night before Christmas, when all through the house, not a creature was stirring, except for Canadian corporate lawyers making securities filings.
That’s just not the way the holidays are supposed to go – those lawyers should be in their kerchiefs and caps, just like the rest of us. But a change in the way Canadian securities regulators run their computer systems has made it possible for companies to file their required documents at all hours, any day, every day.
You can say that change helps investors because it allows for faster disclosure. I say it makes it even easier for companies to bury bad news when no one is looking.
The Canadian Securities Administrators (CSA), the umbrella group for provincial regulators, expanded filing hours this year when it introduced “SEDAR+,” a new version of its long-time System for Electronic Document Analysis and Retrieval. This is where companies file their financial statements, proxy circulars and other documents required by the regulators to keep shareholders informed.
That also includes copies of news releases and material change reports – documents that let investors know something important has just happened at the company.
The expanded hours mean Canadian filers have more opportunities to file than U.S. companies do with the Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval system, or EDGAR. The EDGAR window is open Monday through Friday from 6 a.m. to 10 p.m. Washington, D.C., time except federal holidays. To get a same-day time stamp for most documents, they must be filed by 5:30 p.m.
“Issuers expressed concern in the past about the limited operating hours of the legacy SEDAR system,” which were 7 a.m. to 11 p.m. Toronto time, CSA spokesperson Ilana Kelemen said in an e-mail to The Globe and Mail. “Now, information that is known on a weekend or holiday can be disclosed immediately rather than held until the next business day.”
According to a search of SEDAR+ filings performed on the Stockwatch website, companies submitted 47 filings from Saturday, Dec. 23, to Tuesday, Dec. 26, with 14 of them coming from three companies on Christmas Day. From Saturday, Dec. 30, to Monday, Jan. 1, companies made 52 filings, half of them from 12 companies on New Year’s Day.
The bulk of the filings are innocuous. Royal Bank of Canada RY-T made four routine filings for one of its investment vehicles on Boxing Day. Zymeworks Inc., a Vancouver company that trades on the Nasdaq, put out a news release on Dec. 26, which was not a holiday in the U.S. Fairfax Financial Holdings Ltd. also issued a news release that day, announcing the closing of a deal to buy a Kuwaiti insurer. (Royal Bank declined to comment, while Zymeworks and Fairfax did not reply to e-mails on the matter.)
However, some of the filings involve news best little-seen, from the company’s perspective.
Parkland Fuel Corp. PKI-T put out a news release on Sunday, Dec. 31, that was then filed Jan. 1. It announced the departure that day of two directors nominated by long-time shareholder Simpson Oil Ltd. The two had just been re-elected to the board in the spring. “Parkland is in discussions with Simpson about its shareholding in the company,” the release read.
The shares dropped 3.25 per cent on Jan. 2, the first day of trading after the announcement. “We (and other public companies) are obligated to disclose in a timely manner, which in this instance was Dec. 31,” Parkland spokesperson Simon Scott said in an e-mailed response, adding that it was the company’s outside service provider that made the filing on New Year’s Day.
Green Mining Innovation Inc., a teeny-tiny Quebec City company with properties in Quebec and Newfoundland and Labrador, announced through a news release on Sunday, Dec. 24, filed in SEDAR+ the same day, that chief financial officer Daniel Bélisle had left the company “following discussions on the vision and management of the company.”
Mr. Bélisle departed on Dec. 6 – 18 days earlier – the TSX-Venture-listed company said. Quebec securities law says companies must disclose material events within 10 days. The company’s shares dropped 4.3 per cent on Dec. 27, the first day of trading after the announcement. That represents a decline from 11.5 cents per share to 11 cents per share.
The company’s chief executive officer, André Gagné, did not respond to requests for comment.
Mr. Bélisle’s departure would not have been so concerning were it not for the fact the next CFO at Green Mining Innovation will be its fifth since December, 2021.
Long-time CFO Ercan Ugur retired that month. His interim replacement, Jonathan Federico, served until some time after the company filed its proxy circular in May, 2023. David Crevier, then the chairman of the board, replaced him as interim CFO and certified the company’s financial statements in August.
Mr. Bélisle joined the company on Sept. 26, which by my count means he was in the position for 72 days.
In response to my suggestion of a downside to the new hours, Ms. Kelemen of the CSA says “filing on a weekend or evening does not bury filings, it makes those filings available earlier, so investors are better prepared for when markets are open.”
Fair enough. But I’m not the only one who believes companies disclose bad news when fewer people are looking.
Michelle Leder is a U.S. journalist who has made a career out of reading EDGAR filings, sniffing out things companies don’t want to put in news releases and revealing them via her footnoted website. Ms. Leder now has a premium subscription product, a newsletter that focuses on SEC filings made after markets close at the end of the week. It’s called “Friday Night Dump.”
In Canada, however, the dump can now go on all weekend long.