The Ontario Securities Commission says it is looking at disclosures provided by a small number of companies about their holdings of asset-backed commercial paper.
The Canadian Securities Administrators (CSA), an umbrella group of provincial securities commissions, issued a statement yesterday saying fewer than 100 public firms in Canada hold significant amounts of non-bank-sponsored asset-backed commercial paper. OSC vice-chairman Jim Turner said no companies have yet been required to make a restatement, but a few are still being examined.
"Of that 100, there would be a very small number who we might be concerned about from a review of the disclosure," he said in an interview.
CSA said it is reviewing how the firms are accounting for ABCP investments, whether they have taken valuation writedowns where required, and whether the holdings have been appropriately classified on balance sheets. If filings are found to be deficient, CSA said issuers will be expected to restate and refile documents.
Some holders of non-bank commercial paper have announced accounting charges, cutting the value of the paper on their books. Typical cuts appear to range roughly from 8 to 15 per cent of the value of the notes, although National Bank of Canada cut the value of its holdings by 25 per cent.
Mr. Turner said he could not discuss whether cases could become enforcement matters, but said the focus is on improving disclosure. He added that more than 100 public firms may hold non-bank asset-backed commercial paper, but may have no requirement to disclose it. "There may be a lot of companies where none of this is materially affecting their financial statements, so we won't see anything and we may never see anything if they are very small holdings."
Janet McFarland