Regulators re-examine ASDP insider filing exemptions

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Mon, 05/27/2019 - 9:42 am INK Staff, Canadian Insider

Following inquiries from INK Research and information that we have provided in relation to the creation of our No-Go list which we announced last week, Canadian securities regulators have told us in an email (which we just came across this weekend) that they are reviewing the granting of insider filing exemptions for Automatic Securities Disposition Plans (ASDPs).

For those who have not been following the creation of our No-Go list, it was inspired after what we saw transpire with Bombardier's (BBD.B) ASDP.  Under the plan, insiders were able via an exemption granted by regulators to delay the reporting of the ASDP related stock sales in 2018 until March of this year. That worked out particularly well for CEO Alain Bellemare who sold more than 3 million shares for a $10 million profit. We do not know for sure because regulators allowed those ASDP sales to be filed in a summary form, but most of those sell transactions appeared to take place within the first month or so of the plan's insider filing exemption date.

How's that for automatic?

As we see more and more of these plans, the more concerned we get that they will be used by insiders to legally side-step regular insider reporting requirements. So far, to our knowledge only a handful of issuers have sought ASDP insiders filing exemptions. However, if ASDP filing exemptions continue to be granted, there is a big risk that such plans and exemption requests will mushroom. At that point, we should probably stop referring to them as automatic securities disposition plans and call them by a name that better describes what they are evolving into, something like algorithmic stock dumping plans.

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