Business: Stocks Across the Border

• Share

Only 20 months ago, the Securities & Exchange Commission and the Ontario Securities Commission signed a solemn covenant to put an end to the wild-eyed promotion of worthless Canadian mining stocks in the U.S. Under the agreement, Ontario said it would force its stockbrokers to abide by SEC laws when peddling stocks in the U.S.; if they failed to do so, they would be subject to extradition and trial in U.S. courts. Last week Chairman O. E. Lennox of the Canadian commission announced that Ontario had dropped the deal as "a dismal failure."

Lennox complained that the SEC had agreed to clear qualified Canadian issues within 15 days after they were filed, but in practice the clearance had taken up to two months. Furthermore, a change in the wording of the agreement, which Lennox had not approved, opened a loophole for fly-by-night American promoters to operate in Canada—and SEC was doing nothing to stop them. But the biggest trouble was that most of the Canadian sharpies had simply moved their operations to Montreal (TIME, May 10), where there was no agreement with the SEC.

Although Lennox warned that he would continue to crack down on any Ontario promoters out to fleece investors by mail or telephone, it looked to Wall Streeters as if the door might be blowing open again.