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The CSA is Selling Advanced Access to SEDAR filings

The security commissions of BC, Alberta, Ontario and Quebec, acting collectively as the CSA, are selling advanced access to SEDAR filings, while delaying public access to the same documents.

This is wrong.

The CSA purports to, “promote confidence in the transparent operation of capital markets in Canada”, and to “…[mandate the] full disclosure of information material to investment decisions.” [1]

Public companies in Canada are required by law to file key disclosure documents such as financial statements and 43-101 technical reports on SEDAR. The filings should be released on a fair and equal basis.

Instead, the company that operates SEDAR on behalf of the CSA makes the filings available immediately to resellers like Bloomberg and DisclosureNet and then waits until the following day before making the documents available to the public. The delay in posting new filings to the SEDAR website is unnecessary. It serves only to increase the revenue the CSA receives from the sale of this data.

To make matters worse, the CSA is not being transparent. We couldn't find a single reference on either the SEDAR or CSA websites that describes the advanced sale of SEDAR filings. We discovered the practice when inquiring about becoming a reseller ourselves.

It is hypocritical of the CSA to claim to, “...ensure investors have fair access to market … information …” [1] while ignoring the spirit of security law that aims to provide a level playing field for all investors.

Unfortunately, it’s not the only example of the CSA failing to follow its publicly-stated objectives. According to the CSA, SEDAR was developed to “… allow for the public dissemination of Canadian securities information collected in the securities filing process…”.[2] But, SEDAR deliberately prevents Google, Yahoo and other search engines from indexing public company filings. [3]

If the CSA were truly interested in the broad and timely dissemination of Canadian securities information, it would allow search engines to index the site. Indexing would provide numerous public benefits including the ability to search for words or phrases within disclosures - instead of simply looking up documents by company name.

Corebox has attempted to get an explanation from the CSA. Our email, sent October 19th, that questions the operation of SEDAR and subsequent phone calls have all been ignored.[4]

We raise this issue for two reasons. First, many public companies go to great lengths to ensure that they disclose information to investors equally. It's not appropriate for the regulator to be negating these good efforts. Second, and more important, the markets rely on investors' goodwill. The CSA should follow their publicly-stated objectives and avoid practices which risk undermining confidence in the regulator.

We call on the CSA to allow internet search engines to index the site, and release SEDAR filings to the public at the same time the documents are made available to its resellers.

Corebox is a provider of interactive analytical tools which help mining investors understand drill results. Our displays, which are available free of charge to the public on Corebox’s website, are graphical representations of drill results disclosed by mining companies.

Footnotes:

  1. CSA's publicly-stated mission:

    "To give Canada a securities regulatory system that protects investors from unfair, improper or fraudulent practices and fosters fair, efficient and vibrant capital markets, by developing a national system of harmonized securities regulation, policy and practice.

    The three objectives of securities regulation are:

    1. The protection of investors We are here to protect investors from fraudulent, manipulative or misleading practices. We do this by:
      • mandating full disclosure of information material to investment decisions
      • educating investors about the risks and responsibilities of investing
      • authorizing persons who provide investment services to the public and
      • supervising market intermediaries.
    2. Fair, efficient and transparent markets
      We are here to ensure investors have fair access to market facilities and market or price information through regulation that can detect, deter and penalize market manipulation and unfair trading practices.
    3. The reduction of systemic risk
      We aim to reduce the risk of failure of market intermediaries and when it cannot be avoided, we then seek to reduce the impact on investors and other market participants.

    In pursuing these three objectives, securities regulators try to protect investors while supporting efficient capital markets."
    Source: http://www.securities-administrators.ca/our-mission.aspx

  2. SEDAR’s stated purpose:

    "The System for Electronic Document Analysis and Retrieval (SEDAR), is the system that public companies and investment funds use to file public securities documents and information with the Canadian Securities Administrators (CSA). The website, www.sedar.com is the official site that provides public access to public company and investment fund profiles and SEDAR public securities filings, together with the latest news about SEDAR.

    The objective for making this information public is to enhance investor awareness of the business and affairs of public companies and investment funds and to promote confidence in the transparent operation of capital markets in Canada. Achieving this objective relies heavily on the provision of accurate information on market participants.

    CDS INC. has operated this website on behalf of the CSA since 1997. SEDAR’s purpose is to:

    1. facilitate the electronic filing of securities information as required by the securities regulatory agencies in Canada;
    2. allow for the public dissemination of Canadian securities information collected in the securities filing process; and
    3. provide electronic communication between electronic filers, agents and the Canadian securities regulatory agencies"

    Source: http://www.securities-administrators.ca/industry_resources.aspx?id=49

  3. SEDAR blocks internet search engines from indexing the site using the site’s terms of use which states:
    “You may not use: … (b) any robot, spider or other automatic device, software program or manual process to monitor, copy or interfere with any web pages or the content contained thereon on the Web Site…” and;
    “You acknowledge and agree that you are authorized ... to use the Web Site and the Content for your own personal and non-commercial use only;”
    Source: http://www.sedar.com/terms_of_use_en.htm

    Also, SEDAR's website administrator has uploaded a special file to indicate the site should not be indexed by search engines. The file is designed to be read by computers, but it’s easy to discern its intent. SEDAR’s file says simply disallow all indexing:

    Source: http://www.sedar.com/robots.txt | How to read robots.txt files [Wikipedia]

    SEDAR enforces its terms of use and robots.txt file using a “captcha” code. These numbers and letters are presented in a way that makes them difficult for computers to read. SEDAR filings cannot be read unless the captcha code is entered correctly.

  4. Email sent to the Canadian Securities Administrators (CSA) October 19, 2009. Receipt confirmed by phone. (Two typos in the orginal email have been corrected for readability)

    "Hello,

    I'm writing to inquire whether the Canadian Security Administrators (CSA) has reviewed and approved the business practices of CDS Inc, the company that runs SEDAR.

    Specifically, has the CSA approved CDS Inc.'s practice of prohibiting search engines like Google and Yahoo from indexing public company documents on SEDAR? This practice appears at odds with one of the primary goals of the service as stated on SEDAR's home page: “… allow for the public dissemination of Canadian securities information collected in the securities filing process; …”. Indexing by internet search engines is arguably the best way of getting public company documents disseminated.

    Further, has the CSA approved CDS Inc.'s practice of making public company documents available immediately to their paid subscribers, like Bloomberg, while delaying the public release of the same documents on SEDAR until the following day. The documents filed on SEDAR disclose information that can include material facts. The practice appears to distort the principles of a fair market whereby all market participants have equal access such documents.

    Thanks in advance for your response.

    --
    Jonathan Longe | Corebox.net

    300 - 1055 West Hastings St. | Vancouver BC V6E 2E9 | CANADA
    P: 604-879-9776 | F: 604-628-5246
    http://www.corebox.net"