Neil de Gelder ushering in new securities era for VSE

Keeping his finger on the policy-making pulse of North America’s leading venture capital market, British Columbia’s superintendent of brokers, Neil de Gelder, is exceedingly bullish about the future of the Vancouver Stock Exchange. .T De Gelder came to his position in June, 1987, after a new era of securities legislation had been ushered into British Columbia just four months earlier. The 35-year-old securities lawyer and partner at Ladner Downs, had an unstated mandate to clean up the image of the fast-growing venture capital exchange. And he wasted little time in initiating higher standards and efficiencies.

The first step was to get the backlog of prospectuses and filing rolling again. “Time taken to process a prospectus has been cut by two- thirds,” de Gelder boasts, adding that “the feedback is that we are moving in the right direction.”

Hiring new staff and streamlining the analysis of prospectuses has been accompanied by across-the- board cost increases. It now costs about $2,000 to file a Statement of Material Facts but de Gelder justifies the charge in the context of user pay policies by governments and other major securities commissions. “If we can deliver the services, the increased fee is not unreasonable,” he asserts.

Looking ahead, de Gelder’s number one goal is “to create a welcoming and efficient environment for legitimate venture capital financing.

“Everything we can do to facilitate this, including competitive policy, efficient reviews, dialogue with industry participants and clear rules, will promote the VSE as a central and international venture capital marketplace,” he says.

Critical of some of the knocks directed at the VSE, de Gelder claims the image problem is caused when criticism is directed at the exchange rather than the individual culprits. “It’s a shame that, here in Canada, we have one of the world’s premier risk capital exchanges and rather than spending a lot of time promoting and developing it, we spend a lot of time picking it apart.”

“The impressive growth of the VSE is a hopeful sign that it wins out over internal self-criticisms,” he says. Indeed, the VSE has gone from strength to strength in its 81-year trading history. Last year for example it established new records in nearly all areas of trading activity. Trading volume was 4.8 billion shares and the value of trading was $6.7 billion, a 48% increase from the previous year. Transactions for 1987 totalled, 3.1 million, a 37% rise.

Turning to enforcement, the superintendent’s view of the securities system is based on the concept of individual and corporate responsibility — and accountability when actions are irresponsible or illegal.

“The VSE is self-regulatory. It should not, nor should any other stock exchange in the world, be responsible for looking over the shoulders of management in every aspect of their business.” Believing that policing powers under the Securities Act are to be used sparingly, de Gelder is nevertheless unafraid to flex his muscles as shown in the unprecedented $90,000 penalty paid by Canarim Investment Corp. for allegedly botching the preparation of a Statement of Material Facts for Banco Resources.

Canarim’s chairman, Peter Brown, commented at the time that his company had met the standards of due diligence “of the day in B.C.” He criticized de Gelder for “imposing higher standards retroactively.”

But higher standards appear to be the superintendent’s trademark. Another is his enthusiasm for Vancouver’s stock exchange.

“The VSE is still head and shoulders above any other venture capital market in the world and is far ahead in terms of experience, infrastructure in the brokerage and professional communities, sophistication of trading, and dealing with problems,” de Gelder says.

He adds that all participants — the superintendent’s office, the VSE and the brokerage community — have the same goals in terms of seeing the local venture capital market prosper. Gillian Cobban is a freelance journalist.