By The Book: CSA tweaks cease trade order rules

(March 28, 2008) The Canadian Securities Administrators (CSA) announced Friday that it is seeking comments on proposed changes to cease trade orders.

The CSA says the National Policy 12-203 Cease Trade Orders for Continuous Disclosure Defaults will attempt to streamline existing CSA practices relating to cease trade orders (CTOs) and provide guidance for issuers on when regulators will issue a general CTO or a management cease trade order (MCTO) in response to a serious continuous disclosure default.

The policy describes the criteria that regulators consider when assessing whether to issue a general CTO or an MCTO. It will also outline what information an issuer should include in an application to regulators for an MCTO as an alternative to a general CTO.

In addition, the policy reminds issuers of the insider trading prohibitions under securities legislation and says that issuers in default should closely monitor and generally restrict trading by management and other insiders who may have access to material undisclosed information.

“Cease trade orders are an effective regulatory tool that send a clear message to issuers who do not comply with filing and other continuous disclosure requirements,” says Jean St-Gelais, chair of the CSA and CEO of the Autorité des marchés financiers (Québec). “A CTO is helpful in preserving the integrity of the capital markets for investors and other market participants.”

Proposed National Policy 12-203 and the related notice and request for comment are available on several CSA member websites. The comment period closes May 27, 2008.

p>(03/28/08)

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