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In the wake of the not guilty verdict in the trial of Bre-X chief geologist, John Feldherhof, for insider trading, the COMPAS panel of CEOs and business leaders was asked for its thoughts on the gigantic fraud.
Overwhelming majorities believe that Canada would be far better off emulating tougher U.S. laws:
- To an extraordinary degree, panelists feel that it was a “tragedy” that banks and brokers profited from transactions and underwriting fees without having legal responsibility for insuring that the advice they gave about the firm was well-founded;
- In the same spirit, an overwhelming majority feel that Canada should follow U.S. legal practice and allow investors to “sue banks and brokers for damages if their advice turns out to have been a misrepresentation; banks and brokers should not get away with saying they were hoodwinked too;”
- Panelists believe that our inability to mete out justice undermines the attractiveness of our country as a place to invest;
- While believing that weak securities laws impeded our regulators, panelists nonetheless do not believe that the Ontario Securities Commission did the best job it could under the circumstances; and
- A number of panelists single out the TSX for condemnation in their volunteered comments, saying that the Exchange’s listing of Bre-X obliged index-driven funds to invest in the fraudulent firms and misled investors into thinking that the company was solid despite the absence of any real history of production.
These are the key findings from the current web-survey of the panel of CEOs and business leaders undertaken for the Financial Post under sponsorship of BDO Dunwoody LLP.
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