Pezim vows to fight B.C. trading ban

Murray Pezim is back in Vancouver preparing to 0000,0509 appeal a decision by the British Columbia Securities Commission to ban him from trading on the Vancouver Stock Exchange for a 1-year period. The commission found that Pezim, Lawrence Page and John Ivany were responsible for contraventions of disclosure requirements during a period in 1989 when they constituted senior management of Prime Resources and Calpine Resources. At that time, the two companies were actively involved in the Eskay Creek polymetallic discovery north of Stewart, B.C.

The commission ordered the removal of the trading rights of Pezim, Page and Ivany for one year beginning Jan. 1, 1991. They were also ordered to pay two-thirds of the costs of the hearing incurred by the commission and the superintendent of brokers, a sum being estimated at about $700,000.

It is expected that Pezim, Page and Ivany will seek leave to appeal the decision to the British Columbia Court of Appeal along with a stay of the trading ban until an appeal decision is brought down.

“I’m going to fight this harder than ever,” a defiant Pezim told The Northern Miner. “It’s clear they (British Columbia securities regulators) don’t understand mining or mining industry practices.”

The penalties imposed on Pezim, Page and Ivany are less than requested by the province’s superintendent of brokers. As well as the suspension, he sought to have the trio barred from acting as directors of publicly reporting companies and to pay all costs of the hearing.

At the same time, the commission did not accept the position of the respondents who argued that no orders should be made against them because the superintendent failed to prove the central allegations of his case — insider trading and breach of directors’ duties.

“The suspicions which led to the other allegations, about which the respondents complained, were aroused, quite reasonably, by the respondents’ own conduct in failing to make required disclosure and in filing misleading documents with the exchange,” the commission stated.

In its findings, the commission also rejected arguments that the contraventions resulted from senior management’s reliance on the “Chinese Wall” system, under which they were not informed of assay results until just before they were publicly disclosed.

The system was described by the respondents’ lawyers as a “respected and accepted procedure” which was known to the public, set up with the advice of legal counsel and discussed with regulators. It has since been dismantled.

“Nothing in the evidence indicated that the `Chinese Wall’ was a respected or accepted procedure or, indeed, whether it had ever been used in this way by anyone other than the respondents,” the commission said.

Notwithstanding this statement, a good many Vancouver-based junior mining companies do use outside firms or consultants to manage exploration programs, particularly when senior management does not include mining professionals.

Industry sources say senior management of these types of companies must now ensure that no material technical information or undisclosed assays are “in the outside system” before engaging in any sort of internal corporate transaction.

In Vancouver, reactions to the commission’s findings and penalties have been mixed. VSE watchdogs and critics appear to be pleased, but many industry observers say the findings are “politically motivated” and “confusing.”

The Vancouver Stock Exchange issued an official statement on the ruling which it said would have “serious and far-reaching ramifications and will affect everyone who deals with the Vancouver market.”

VSE officials refused to comment further except to state: “The commission has served notice in the marketplace as to appropriate disclosure requirements expected of managers of companies which list on the Vancouver Stock Exchange, and on the need for accurate and complete filing of information with the exchange.”