Letters to the Editor Raise red alarm flag

We read with interest the continuing debate by the Ontario Securities Commission and the Thompson Committee regarding the commissions paid on financings raised by the “broker-dealers.”

Disregarding the fact, as you acknowledge in your editorial of Nov 3, that the OSC would rather trust the “Consumers Distributor Inc.’s” promoters and principals than the real entrepreneurs and new wealth-creating junior mining companies, and disregarding the fact that no large brokerage house will touch a financing deal under $500,000, as acknowledged in your story on the Thompson Committee in that same issue, it becomes a question of whether the public, financier and mining industry are being served effectively by the current system.

The system has been regulated to provide full and complete disclosure for the public investor to know what he or she is buying. The money raised is to be spent on an OSC-acceptable exploration program by the mining industry.

The commission question raises two points that should be addressed. The first is the profits accruing to the broker-dealers. If they were really as great as suggested, new competition, even from the established brokerage houses, would appear. The second point is if this type of small financing would exist without that incentive.

It becomes very simplistic to say the broker-dealers have marked up a +50% commission as opposed to the 15%-20% charged by the other established houses.

The over-regulatory nature of the OSC regarding mining is well known. The mining community should be raising the yellow flag of caution and the red flag of alarm to ensure that the desk-sitting civil servants and armchair mining explorationists within the government and the financing community do not destroy the fragile mining exploration recovery. L. G. Stephenson Geological, Financial Consulting Services Willowdale, Ont.