Many people probably remember 1997 as the year high-flying Bre-X Minerals Ltd. crashed in a huge fraud, Titanic became the No. 1 box-office film in history and the 12.9-kilometre Confederation Bridge opened to link Prince Edward Island and New Brunswick.

Much less attention was focused that year on a Toronto office building in which a newborn electronic filing system for the investment world flickered to life on the World Wide Web. The system, which can be found at www.sedar.com, became a massive potential resource for industry professionals. It is, however, still being ignored by the average investor.

SEDAR is an acronym for the system for electronic document analysis and retrieval. It is an online database that has grown to hold more than 1.5 million financial disclosure documents that have been filed by about 5,000 publicly traded companies and 2,000 investment funds across Canada.

Each day, between 500 and 800 new documents are added to the system, ranging from financial reports and press releases to initial public offerings, proxy material and details of company mergers and acquisitions.

The site remains incredibly popular, averaging about six million page views each month, and even more in the peak filing season of April and May, says Janet Comeau, manager of corporate communications at the Canadian Depository for Securities Ltd. in Toronto.

The high-tech system is appreciated by every facet of the investment industry. Issuers can easily meet their mandatory filing obligations with regulators, and advisors and their clients know that any pertinent financial documents they may want to study can be found in one spot on the Web.

The SEDAR Web site is not an entertaining site for the visitor, but its no-nonsense layout is easy to use and the site dutifully fulfils its mandate — to make important securities documents readily available to anyone.

Here’s how the system works:

> A company or fund that has just completed a prospectus, a financial statement or other important corporate document files the information electronically into the SEDAR system through an agent or via software that is provided by SEDAR’s parent company, Toronto-based CDS Inc. , which is a subsidiary of CDS. CDS is itself co-owned by Canada’s banks, the TSX Group Inc. and the Investment Dealers Association of Canada.

> Continuous disclosure filings such as financial statements, annual reports and press releases — the kind of items most investors track — do not require regulatory review by the provincial securities commission that oversees the specific firm, so the data is widely released and the full formal document moves directly into the SEDAR system.

> A very small group of high-roller SEDAR subscribers gain access to the full documents almost instantly. Everyone else who visits the SEDAR site has to wait until the next business day to see all data for free.

Valet service

The first-peek group are members of SEDAR-Scribe, another acronym which stands for the SEDAR system for Canadian real-time information broadcast electronically. Such valet service comes with a high price-tag, ranging from $20,000 a year to more than $100,000, depending on whether the Scribe subscriber wants access to small areas or specific companies and funds, or wants an instant look at the whole shebang in “real time” each day.

“SEDAR-Scribe has only about a dozen customers, and they include [data] resellers and a few specialists who acquire data in a given field,” Comeau says.

The SEDAR-Scribe subscription allows the resellers, whose names are confidential, to tap directly into a “feed” from the SEDAR system that automatically makes the documents accessible to their own business clients, she says.

The resellers’ clientele probably run the gamut of the investment industry, as brokerage research departments, mutual fund managers and institutional traders would want to study the fine print of thick documents far more than retail investors would.

The average advisor or client obviously wouldn’t want to pay for such immediacy, because most important information, such as earnings and press releases, are directly released by issuers to the public through their own Web sites, Canada News Wire, the data resellers’ clients and media outlets. The markets react within seconds to important news such as financial statements or takeovers, so paying SEDAR to get the formal documents on the day of the announcement would be pointless for most people.

Because the average advisor or client pays nothing to use SEDAR on the time-delay system, it makes most of its money by charging various fees to all the publicly traded companies and investment funds that use its resources.

@page_break@Each issuing company, for example, pays an initial set-up fee of $390, then an annual membership fee of the same amount. Companies in a single jurisdiction then pay $705 a year to file continuous disclosures, while firms in multiple jurisdictions pay $1,595; investment funds pay $495 a year.

There are no impending changes planned for the SEDAR system or its fees to filers, says Comeau, noting any alterations would have to be approved by SEDAR’s many stakeholders and market regulators.

The Web site is simple for advisors or clients to use. Most people will only be interested in two areas — “new filings” and “search database” — which are both listed at the top of the home page.

All new filings for the day are in groups, such as financial statements, annual reports, press releases, prospectuses and new filings by investment funds. The search function allows data detectives to find information by company, fund, date or document type.

The site has a few more helpful areas, such as a list of upcoming annual or special meetings of shareholders or unitholders, and an alphabetical database of brief profiles for each member filing firm. IE



If you have Web sites to share with IE readers, e-mail Glenn Flanagan at gflanagan@sympatico.ca.