The IIROC Short Selling Debate

In this InvestorIntel interview, host Tracy Weslosky brings together Power Nickel Inc.‘s (TSXV: PNPN | OTCQB: CMETF) CEO Terry Lynch and Founder of Save Canadian Mining, a movement to stop predatory short selling, along with compliance expert and CBLT Inc.’s (TSXV: CBLT) President, CEO, and Director Peter Clausi to debate about whether the recently released IIROC (the Investment Industry Regulatory Organization of Canada) guidance on short selling has any teeth and will have any effect on short sellers or brokerage houses.

IIROC’s August 17, 2022 Guidance Note sets out the rule that a short seller must have a “reasonable expectation” that sufficient shares will be available to settle any resulting trade on settlement date. As Terry Lynch and Peter Clausi point out, this is not a new rule, but a restatement of a current prohibition under UMIR 2.2 – Manipulative and Deceptive Activities.

In the debate, which can also be viewed in full on the InvestorIntel YouTube channel (click here), Terry tells Tracy that the IIROC statement “has the potential to be big news,” because “the problem was it wasn’t well understood by the major investment banks, and so they didn’t adhere to the practices. So now I think IIROC has clarified this once and for all and has clearly moved the liability away from from them and onto the people that don’t follow the rules.”

Peter and Terry both agree that the recent IIROC guidance has shifted the responsibility for covering short selling from the individual investors to the brokerage houses who have to have a “reasonable expectation” that sufficient shares will be available to settle any resulting trade, but Peter Clausi points out that the IIROC guidance doesn’t itself prohibit naked short selling, which is a major problem in the market. He also points out that there is tremendous wiggle room in the words “reasonable expectation” used by IIROC to make enforcement difficult, and in reality protects brokerage houses from prosecution.

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About Power Nickel Inc.

Power Nickel is a Canadian junior exploration company focusing on high-potential copper, gold, and battery metal prospects in Canada and Chile.

Power Nickel is the 100-per-cent owner of five properties comprising over 50,000 acres strategically located in the prolific iron-oxide-copper-gold belt of northern Chile. It also owns a 3-per-cent NSR royalty interest on any future production from the Copaquire copper-molybdenum deposit, recently sold to a subsidiary of Teck resources Inc. Under the terms of the sale agreement, Teck has the right to acquire one-third of the 3-per-cent NSR for $3-million at any time. The Copaquire property borders Teck’s producing Quebrada Blanca copper mine in Chile’s first region.

To learn more about Power Nickel Inc., click here

About CBLT Inc.

CBLT Inc. is a Canadian mineral exploration company with a proven leadership team, targeting lithium, cobalt and gold in reliable mining jurisdictions. CBLT is well-poised to deliver real value to its shareholders.

To learn more about CBLT Inc., click here

Disclaimer: Power Nickel Inc. and CBLT Inc. are advertorial members of InvestorIntel Corp.

This interview, which was produced by InvestorIntel Corp., (IIC), does not contain, nor does it purport to contain, a summary of all the material information concerning the “Company” being interviewed. IIC offers no representations or warranties that any of the information contained in this interview is accurate or complete.

This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking statements are based on the opinions and assumptions of the management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Prospective investors are urged to review the Company’s profile on Sedar.com and to carry out independent investigations in order to determine their interest in investing in the Company.

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Peter Clausi on social media and compliance for public companies

“Compliance and social media is really easy. People get carried away because it is a new platform of communicating but the old rules (of compliance in communication for public companies) still apply.” States Peter Clausi, InvestorIntel’s Advisor stated in an interview with InvestorIntel’s Tracy Weslosky during PDAC 2020.

Peter went on to say that public companies report on Sedar through press releases, financial statements, material change statements, etc. If a piece of information is in those documents, is factually true and has been publicly disclosed, companies can share it on social media. He also said that public companies should not share any news on social media before they have made an official public announcement.

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Gowling’s Partner on the return of excitement in the mining sector

March 28, 2018 – “My practice is corporate finance securities, M&A. I work with all kinds of companies helping them raise money, go public.” states Jason Saltzman, Partner at Gowling WLG, in an interview with InvestorIntel’s Peter Clausi.

Peter Clausi: Gowlings is a law firm. It used to be Gowlings Lafleur Henderson. Now the formal name is? 

Jason Saltzman: Gowling WLG. Gowling WLG Canada is the Canadian version, but we are now a global law firm.

Peter Clausi: How many lawyers do you have globally? 

Jason Saltzman: 1,400 give or take.

Peter Clausi: I bet you are covering all sectors.

Jason Saltzman: Covering all sectors.

Peter Clausi: You had a big Russia office at one point.

Jason Saltzman: We still do. The roots of the Gowling law firm go way back to IP and Russia and that office is still thriving.

Peter Clausi: Wow. Good. What is your practice like?

Jason Saltzman: My practice is corporate finance securities, M&A. I work with all kinds of companies helping them raise money, go public.

Peter Clausi: Any one sector or across the board?

Jason Saltzman: Doing a lot in mining, doing a lot in cannabis, a lot in cryptocurrencies these days and alternative finance, but just a general securities practice. In Canada, mining is obviously a big part of that.

Peter Clausi: Were you bored out of your mind between 2013 and 2015?

Jason Saltzman: That is when we started getting into some of the exciting stuff in the Fintech space, but definitely we like the more robust markets that we have today.

Peter Clausi: Do you think a lot of the risk capital went into those projects during the nuclear winter of mining finance and has not come back yet?

Jason Saltzman: It is starting to come back. Certainly those projects are still quite popular with investors, but we are definitely seeing more excitement in the mining sector.

Peter Clausi: Are you on the board of anything these days?

Jason Saltzman: No not in the mining sector.

Peter Clausi: In anything?

Jason Saltzman: Yeah, I am on the board of a couple of crypto companies.

Peter Clausi: We had talked about a marijuana project a couple of years ago.

Jason Saltzman: Yeah.

Peter Clausi: Did that work through?

Jason Saltzman: Yeah. I am doing lots of work in the marijuana space. Have a company that is going public. They just raised $30 million dollars in a brokered financing and the public transaction will be finished at the end of this month.

Peter Clausi: Do you find that the cost of compliance is getting too high within the mining sector?

Jason Saltzman: Yeah certainly. I mean it is not easy to be a public company these days in any sector, but particularly in mining with the extra reports and whatnot that are required. For a small company it is very taxing on their resources both in terms of financial resources and just time and bandwidth…to access the complete interview, click here