A secondary market disclosure is normally brought out by the relevant authorities, who are in-charge of controlling the working of a secondary market. Any secondary market disclosure provides information about the issuing of new governmental securities by the relevant authorities.
Secondary Market Disclosure Laws:
There are certain legislations in place for secondary market disclosures. These laws concern the brokers and dealers. By these laws, they have to provide concrete information regarding the trading of securities to a certain section of investors, as specified by the laws.
There are certain countries, like Canada for example, who are amending laws regarding secondary market disclosure. The amendments would now make it necessary for people to pay for receiving information on secondary market disclosure.
Previously the issuers of secondary market disclosures needed to pay if they manipulated the prospectuses or other securities documents.
Investor Rights:
As provided by the laws, the investors have the right to take legal steps against people in charge for bringing out the secondary market disclosures, under certain circumstances. They may be enumerated as below:
- Failure to make timely disclosure.
- Misrepresentations in a much broader group of documents and in public oral statements
According to the laws, the following people may be sued if there is a misrepresentation of the secondary market disclosure:
- Experts like Auditors, Engineers, Financial Analysts and Lawyers
- Issuer
- Promoters
- Directors
- Secondary Market Insiders
- Authorized Officers
- Investment Fund Managers
- Control Persons
Secondary Market Disclosure Misrepresentation:
Misrepresentation in the secondary market disclosure is normally made in the central documents. They may be enumerated as below:
- Financial Statements
- Prospectuses
- Annual Information Form
- Circulars
- Material Change Documents
In order for a complainant to prove that a relevant official has misrepresented the secondary market disclosure, he has to provide evidence of misrepresentation. There are some other conditions as well, that the complainant needs to prove:
The defendant knew of the misrepresentation
Through action or failure to act, the defendant was guilty of gross misconduct
The defendant deliberately avoided acquiring knowledge of the misrepresentation
Last Updated on : 22 July 2016
