John H. Frank, for Commission staff.

      This is a hearing under sections 144(1) and 144.1 of the Securities Act, S.B.C. 1985, c. 83.  A Notice of Hearing was issued by the Superintendent of Brokers on July 17, 1995.  The Notice of Hearing alleged that Edward Rhodes failed to file insider reports disclosing changes in his direct or indirect beneficial ownership of, or control or direction over, the securities of Score Athletic Products Inc., as required under section 70 of the Act.  The hearing was held on August 22, 1995.

      The Notice of Hearing was sent by registered mail on July 20, 1995, to Rhodes at his last known address.  In a telephone conversation with Commission staff on or about August 10, 1995, Rhodes acknowledged that he had received the Notice of Hearing.  We find that Rhodes received notice of the hearing in accordance with section 156 of the Act.

2.   BACKGROUND

      Score became a reporting issuer on October 28, 1986, and Score's shares were listed and posted for trading on the Vancouver Stock Exchange.  Rhodes became a director of Score on April 21, 1993, and remained a director until at least May 1995.

      In a Report of Exempt Distribution dated September 2, 1993, Score disclosed that the company had distributed to Rhodes on May 14, 1993, 27,800 units of Score, each unit consisting of one share and one warrant.  Rhodes had not filed an insider report disclosing this acquisition.  On the basis of this, the Superintendent issued an order under section 146 of the Act on November 28, 1994, that Rhodes cease trading in the securities of Score until he files the insider report required under section 70 of the Act in a form satisfactory to the Superintendent.

      After receiving the Notice of Hearing in July 1995, Rhodes spoke with Commission staff and asked what he needed to do in order to update his filings.  On August 10, 1995, he submitted three insider reports, for the months of May 1993, November 1994 and May 1995.  The reports disclosed the acquisition of units on May 14, 1993, an acquisition of 25,000 options in November 1994, and the expiry of those options in May 1995.  The reports were found to be complete, with a few amendments, but they were not accompanied by the late filing fee of $50 per report set out in section 183(1) Item 35 of the Securities Regulation, B.C. Reg. 270/86.

3.

DECISION

The relevant provisions of the Act are as follows:

1(1)		"insider" means, where used in relation to an issuer, (a)  a director or senior officer of the issuer.
70(2)		A person who is an insider of a reporting issuer shall, within 10 days of becoming an insider, file an insider report in the required form effective the date on which he became an insider, disclosing any direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer.
70(3)		Where a person who is an insider of a reporting issuer does not have any direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer, the person is not required to file a report under subsection (2) merely to state that fact.
70(4)		Where a person (a)  has filed or is required to file an insider report under subsection (2) or under a former enactment, and (b)  whose direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer changes from that shown or required to be shown in the latest insider report filed by him, he shall, within 10 days after the end of the month in which the change takes place, file an insider report in the required form disclosing

(c)

his direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer at the end of that month, and

(d)  the change or changes in his ownership in securities of the reporting issuer that occurred during the month so long as he was an insider of the reporting issuer at any time that month.

      Rhodes was a director and, pursuant to section 1(1) of the Act, an insider of Score from April 21, 1993 until at least May 1995.  Score has been a reporting issuer since October 28, 1986.

      In May 1993, November 1994 and May 1995, Rhodes acquired or disposed of securities of Score.  Under section 70(4) of the Act, an insider report was required to be filed within 10 days after the end of each of these months.  The insider reports with respect to these months were not submitted to, and found acceptable by, the Commission until August 10, 1995. Therefore, we find that Rhodes contravened section 70(4) of the Act on three occasions by failing to file the insider reports required to be filed under that section within the time period set out in that section.

      The Commission has noted in several decisions, including In the Matter of Robert Theodore Slavik, (1990) BCSC Weekly Summary, Vol. 90:28, and  In the Matter of Seven Mile High Group Inc. [1991] 47 BCSC Weekly Summary 7, that disclosure of trading by insiders is a key element in the continuous disclosure regime for reporting issuers.  As the Commission stated in the  Seven Mile High decision at page 36:

The information provided by insider reports is important market information, as it discloses to market participants the trading activities of the persons most closely connected to, and therefore in a position to be most knowledgeable about, a reporting issuer.  Timely reporting is particularly important where,as in this case, the insider is an active trader.

      We consider Rhodes' conduct to have fallen below the standard expected of an insider and director of a reporting issuer.  Therefore, we consider it to be in the public interest to order:

1.		under section 144(1)(a) of the Act that Rhodes comply with the requirement to pay $150 for filing three insider reports outside the required time period, as provided in section 183(1) Item 35 of Securities Regulation, B.C. Reg. 270/86 (since January 1, 1996, section 22(1) Item 41 of Securities Regulation, B.C. Reg. 478/95);
2.		under section 144(1)(c) of the Act that the exemptions described in sections 30 to 32.1, 55, 58, 80 and 81 of the Act do not apply to Rhodes for a period of six months from the date of this decision;
3.		under section 144(1)(d) of the Act that Rhodes is prohibited from becoming or acting as a director or officer of a reporting issuer

(a)		until he has successfully completed a course of study satisfactory to the Executive Director concerning the duties and responsibility of directors and officers, and
(b)		a period of six months has elapsed from the date of this decision;

4.		under section 144.1 of the Act that Rhodes pay within 30 days from the date of this decision an administrative penalty of $1,500; and
5.		under section 154.2 of the Act that Rhodes pay prescribed fees or charges for the costs of or related to the hearing incurred by the Commission and the Executive Director, the amounts to be determined following further submissions from the parties.