Posted January 1, 2008
On November 25, 2007, I posted a story in which I discussed Powertech's recently released second quarter financial statements and related Management Discussion & Analysis (MD&A) report. I noted that Powertech did not mention in the MD&A either the termination of Centennial Project Manager Lane Douglas or the recently-announced opposition of U.S. Congresswoman Marilyn Musgrave. I also briefly discussed British Columbia Securities Commission (BCSC) rules and guidance on MD&A disclosures. The BCSC regulates Powertech and other public companies based in British Columbia.
If information about a company is "material", the BCSC and the Toronto Stock Exchange (TSX) require disclosure to investors in the MD&A. The definition of material for purposes of disclosure is information which "would reasonably be expected to have a significant effect on the market price or value of a security".
I don't know if disclosure of the two events in question would significantly affect Powertech's stock price. Investor reaction would probably be mixed. While I never explicitly asserted that Powertech had violated securities laws or stock exchange rules, my suggestion that investors should have been informed of these two significant developments via the company's MD&A could possibly be construed as such an assertion, though that was not my intent.
In response to my posting, I received a letter from John D. Fognani, Esq. of the law firm Fognani & Faught, PLLC, located in Denver, Colorado. Mr. Fognani, representing Powertech Uranium Corp., threatened to sue me unless I published a "full and complete" retraction of my "defamatory statements" regarding disclosure.
Therefore, in the interest of accuracy and precision, I have removed the original posting and make the following retraction and clarification:
- I have no evidence that disclosure by Powertech of the termination of project manager Lane Douglas and/or the opposition of Representative Marilyn Musgrave to the Centennial Project would have a significant effect on the price of Powertech stock. Without such evidence, the events do not meet the technical definition of "material" as found in BCSC regulations and TSX rules and therefore are not legally required to be disclosed to the investing public. I have no evidence that Powertech has violated disclosure regulations, and any statements made on this website with respect to potential violations of such regulations are incorrect and should be disregarded.
Apart from the question of what is legally required to be disclosed, a company can voluntarily disclose any information that might be helpful to existing or potential investors. The intent of disclosure rules is to promote transparency, including both positive and negative information. Even if the letter of the law allows non-disclosure of specific negative events, consideration should be given to disclosing such events for the benefit of investors, the company, and the market as a whole.
Continuous disclosure update - MD&A guidance for junior resource companies