Canada’s ‘Light Touch’ on Penny Stocks Draws Ire as Deal Fails
- Regulators decline to reverse trades as mining deal collapses
- West High Yield’s $750 million sale raised several red flags
A marked tree is pictured near a West High Yield GPS survey coordinate outside of Rossland, British Columbia, Canada.
Photographer: Ben Nelms/Bloomberg
Investors are fuming over the collapse of a $750 million mining deal that sent a tiny magnesium explorer soaring, sparking criticism that Canada’s light-handed approach to regulating its venture market needs to get heavier.
Canada’s investment regulator won’t be reversing the trades on West High Yield (W.H.Y.) Resources Ltd. from Oct. 5, when the Calgary-based penny stock surged almost 1,000 percent on a deal to sell its main assets to an unknown buyer. The announcement “did not contain information which was either misstated or inaccurate,” according to a letter obtained by Bloomberg News that the Investment Industry Regulatory Organization of Canada sent to an investor in the company.