IAG.PR.G : No Conversion to FloatingReset

Industrial Alliance Insurance and Financial Services Inc. has disclosed in an eMail response to my nine (count ’em, nine) inquiries:

Per our May 31 press release, since there were less than 1,000,000 shares to be converted into Series H, no Series H shares will be issued and all shares will remain in Series G, returning a 3.777% dividend rate.

We decided not to issue a press release. We informed CDS last week and the result should have been communicated through CDS. We certainly take note of your comment regarding peers issuing press release in that situation.

Please let me know if you have any questions.

Best regards,

This is pretty second-rate shareholder communication, although I have no doubt that it is legal. CDS? The company is relying on CDS, a bank-owned monopoly with basically no mandate or incentive to communicate with shareholders and entrusting it with the responsibility to promulgate corporate information? The idea is ridiculous.

We can look, for instance, at the SEC’s 2013 announcement regarding disclosures via Twitter (emphasis added):

The Securities and Exchange Commission today issued a report that makes clear that companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD) so long as investors have been alerted about which social media will be used to disseminate such information.

The SEC’s report of investigation confirms that Regulation FD applies to social media and other emerging means of communication used by public companies the same way it applies to company websites. The SEC issued guidance in 2008 clarifying that websites can serve as an effective means for disseminating information to investors if they’ve been made aware that’s where to look for it. Today’s report clarifies that company communications made through social media channels could constitute selective disclosures and, therefore, require careful Regulation FD analysis.

“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” said George Canellos, Acting Director of the SEC’s Division of Enforcement. “Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news.”

The fact that material disclosures of this nature can be made selectively to broker-members of CDS is a disgrace and is particularly obnoxious in that CDS’s immediate controller, the bank-owned Toronto Stock Exchange, has not publicized this information on their website listing for IAG.PR.G or, indeed, for IAG common. However, given that this selective disclosure favours the Big Banks, I’m not holding my breath while waiting for regulatory action.

Assiduous Readers will recall that IAG.PR.G will reset at 3.777% and should now be referred to as a FixedReset, 3.777%+285. I recommended against conversion.

IAG.PR.G commenced trading 2012-6-1 (and was, unusually, re-opened on 2012-6-19) after being announced 2012-5-24. It has been a member of the FixedReset subindex since inception.

As this issue is not NVCC compliant, it is analyzed as having a Deemed Retraction.

Update, 2017-6-30 : The eMail quoted above was from the company and received 2017-06-28. The following was received from the always efficient Computershare on 2017-06-30 (they got the same inquiries I sent to the company itself):

Thank you for your inquiry.

We confirm that Industrial Alliance announced on June 1st, 2017 the conversion of the Class A preferred shares series G (CUSIP 455871806) for preferred series H shares (CUSIP 455871889). However, since less than 1,000,000 series G shares were deposited no shares will be converted. Shareholders will continue to hold their series G shares. Industrial Alliance gave written notice to this effect to holders of series G shares on or around June 22nd, 2017.

If you have any questions, please do not hesitate to contact our National Customer Contact Centre at 888-838-1405 (outside North America at 514-982-7555) between 8:30am and 8:00pm EST from Monday to Friday and one of our agents will be pleased to assist you with your inquiry.

Note that the phrase “gave written notice to this effect to holders” is a very, very clever phrase that some people consider ethical: since IAG.PR.G is book-based, there is (in a very, very clever, lawyerly sense) exactly one holder – CDS. So hats off to the very, very clever people at Computershare!

Yours Sincerely,

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