Securities Law & Instruments


[UPDATE: The terms and conditions imposed by the Director in this Decision were removed on April 30, 2009. On June 5, 2009, the following terms and conditions on AIG Global Investment Corp. (Canada) became effective: 1. The Firm shall file on a monthly basis with the Compliance team of the Ontario Securities Commission, attention Financial Analyst, starting with the month ending April 30, 2009 the following information:

(a) year-to-date unaudited financial statements including a balance sheet and income statement, both prepared in accordance with generally accepted accounting principles; and

(b) month end calculation of minimum required capital; no later than three weeks after each month end.

2. The Firm will review its procedures for compliance with Ontario securities law and, no later than June 3, 2009, will file with the Compliance section of the Ontario Securities Commission, addressed to the attention of the ""Assistant Manager"", a report (the Compliance Report) setting out:

(a) the reasons for its failure to meet the filing requirements as at December 31, 2008 as required under Ontario securities law (the Filing Requirement);

(b) a certification from its Chief/Designated Compliance Officer to the effect that the Firm has reviewed its system for on-going compliance with Ontario securities law and rectified the problem(s) that led to its failure satisfy the Filing Requirement; and

(c) details of the specific measures that will be taken to ensure that the Filing Requirement will be satisfied at all times in the future.]



In the Matter of AIG Global Investment Corp. (Canada)



Opportunity to be Heard by the Director
under Subsection 26(3) of the Securities Act


Date:
April 29, 2008
 
Director:
Marrianne Bridge, CA
Manager, Compliance
Ontario Securities Commission
 
Submissions: Isabelita Chichioco
For Ontario Securities Commission staff
                      Marino Scarmozzino
For AIG Global Investment Corp. (Canada) (AIG)
                     
 
Overview

Regulation 139 under the Securities Act (Ontario) (Act) requires that audited financial statements be delivered to the Commission within 90 days after the end of the financial year. AIG filed its audited financial statements for the year ended December 31, 2007 on April 7, 2008, 5 business days after they were due. By letter dated April 14, 2008, staff recommended to the Director that terms and conditions for monthly filing of year-to-date unaudited financial statements and capital calculations be imposed for a minimum period of six months.

Process for requesting an opportunity to be heard

Under section 26(3) of the Act, if a registrant wants to oppose staff’s recommendation for terms and conditions, the registrant can request an opportunity to be heard. A registrant can choose to be heard either through written submissions to the Director or through a personal appearance before the Director. In either case, notice is required.

By email dated April 22, 2008, AIG provided its written submissions.

Submissions

Staff submits that the filing of annual audited financial statements by registrants is one of the most serious regulatory requirements in the Act. Financial solvency is one of the essential components of an adviser’s continued suitability for registration. Financial statements are the principal tool enabling staff to monitor a registrant’s financial viability and its capital position. As a result, the late filing of audited financial statements raises serious potential regulatory concerns and needs to be addressed in serious fashion.

For these reasons, staff uniformly recommends the imposition of terms and conditions on the registration of registrants that don’t file their financial statements on a timely basis. In staff’s opinion, the filing of audited financial statements is a serious regulatory obligation that belongs with the registrant, and only with the registrant, and only in extremely rare circumstances would staff not recommend imposing terms and conditions on a registrant that filed its financial statements late.

AIG argues that the late filing of its annual financial statements is completely the fault of its auditors. With respect, I disagree. It is the responsibility of AIG and not its auditors to ensure that its annual audited financial statements are filed on a timely basis.

Decision and reasons

My decision is to impose the recommended terms and conditions on the registration of AIG for a period of six months. These terms and conditions are as follows:
AIG Global Investment Corp. (Canada) shall file on a monthly basis with the Compliance team of the Ontario Securities Commission, attention Financial Analyst, starting with the month ending April 30, 2008 the following information:

(1) year-to-date unaudited financial statements including a balance sheet and an income statement, both prepared in accordance with generally accepted accounting principles; and

(2) month end calculation of minimum required capital;

no later than three weeks after each month end.
It is staff’s long standing position that it is the responsibility of the registrant, and only the registrant, to ensure that its annual audited financial statements are filed on a timely basis. As above, staff’s view is that the filing of annual audited financial statements is the most important of a registrant’s ongoing filing obligations. Only in rare and extenuating circumstances will a registrant be permitted to file its financial statements late and not be placed on the recommended terms and conditions. In my view, these rare and extenuating circumstances are not present in this case.

April 29, 2008

“Marrianne Bridge”