The nearest parallel might be the heavyweight fights between Muhammad Ali and Joe Frazier, which for those who aren’t old enough took place in the early 1970s.
The first two fights were held in New York, and the third in Manila; two were for the world title. All were brutal affairs, with both pugilists ending up in a near death situation after the Thrilla in Manila. Frazier won the first fight (on points) while Ali won the next two (on points and a TKO.)
Closer to home, a couple of parties — both of whom also aren’t fondly disposed to each other — are set for their second, winner take-all-battle.
Last time out it was Sprott Asset Management — through its Physical Gold Trust — versus Central Gold Trust. Both entities provided a passive investment in gold bullion, though the Sprott fund trades much closer to its true value, in part because it offers more attractive redemption features.
When that battle — which started in June 2015 and involved proxy fights, court challenges and hearings before the regulator — ended nine months later, Sprott came out on top, winning overwhelming support from Central’s unit holders and expanding its asset base by about $1 billion.
(Just like Ali/Frazier there were lots of damage, with Central on the hook for almost $3 million of costs.)
More importantly, unit holders in Central’s Gold Trust, who vended in their units, owned an investment that traded very close to its net asset value — rather than at a healthy discount.
Now, 14 months after Sprott emerged as the winner, the two parties are preparing for Battle No 2. On Wednesday, Sprott filed an application with the Court of Queen’s Bench of Alberta, to have the shareholders of Central Fund of Canada Ltd. exchange their shares for units of the newly created Sprott Physical Gold and Silver Trust.
Central Fund of Canada Ltd., formed in 1997, is a similar type of entity to Central Gold Trust, formed in 2003, and both were created and originally controlled by the Spicer family.
In effect, under a plan of arrangement, the new Trust wants to purchase the gold and silver assets of Central Fund — and pay for that purchase by issuing units. For Central Fund shareholders, the exchange would be on a tax-free basis.
If the court agrees with that request, then Sprott will presumably requisition a shareholder meeting at which its proposal will be put forward.
In a release Sprott said it has the support of a number of key Central Fund shareholders. Central Fund is a dual class of share company: 40,000 common shares (with a book value of $19.46 million) and 252.1 million Class A non-voting shares (with a book value of $2.398 billion.)
At last count (Jan. 31 2017) Central Fund had $3.344 billion of assets — though the market cap is about 10 per cent less.
But the Central shares, which can’t be redeemed for physical bullion (though they can be redeemed, at a discount, for cash) trade at a discount to NAV. In other words there are almost no good outcomes for a Central shareholder who wants out.
While the overall objective of that court application is the same as what Sprott wanted last time — to provide shareholders of Central Fund with an investment that trades very near to net asset value and which offers more attractive redemption features, including physical redemption — the approach is a little different.
Last time Sprott, initially, wanted to replace the administrator of the Central Gold Trust, an agreement that was about to expire. As the battle developed — and despite Central Trust winning the first few rounds — unit holders, when finally given a choice, signed up for Sprott’s offer.
As with the first stoush, Sprott has much of the same back-up crew as last time. Most notable is that its retained Stikeman Elliott.
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Last week, New York State’s new cyber security requirements for financial institutions came into full effect, including mandatory minimum standards for protecting customer data for firms that fall under the state financial watchdog’s purview.
But it isn’t just Wall Street giants who are being affected: Regulated financial institutions must also ensure that all third-party companies with which they do business demonstrate a minimum level of cyber security and report any breaches that impact their data.
These requirements have Canadian security experts taking note.
“One of the things that I found most interesting about the New York State legislation,” says Katherine Thompson, Cyber Council Chair at the Canadian Advanced Technology Alliance, “is the changes that are going to impact the securing of the supply chain.”
Thompson says that while Canada’s Big Five banks — RBC, TD, Scotiabank, Bank of Montreal and CIBC — have strong cyber security practices in place, they are now starting to look at securing their third-party business partners as well.
“What this means for small to medium sized Canadian businesses is, you may not see yourself as a risk, but the Big Five that you do business with are going to start seeing you as one. So you’re going to need to demonstrate your cyber readiness.”
Imran Ahmad, Cyber Security Practice Lead at Miller Thomson, says having regulations that address smaller businesses is a significant step forward.
“The smaller financial institutions which may not have the same type of resources, the same type of focus on cyber security, need a bit more guidance and a bit more help. Quite frankly, they need a clear understanding of what the expectation is for them to meet those standards.”
In the next year Canadians are going to become alarmingly aware of just how much the organizations they do business with are under attack
Other specific requirements in the new regulations include mandatory multi-factor authentication for remote access to secure company networks, the obligation to assign a Chief Information Security Officer and mandatory reporting of all breaches, all things that are not yet implemented in Canada.
Thompson says regulations in Canada are not as robust as those in New York, but that cyber security at major banks is still very strong.
“They spend hundreds of millions in cyber security, they have Chief Information Security Officers in place, they have very strong rigors. I think they are at the top of the heap in terms of cyber security in Canada.”
While financial oversight bodies such as The Office of the Superintendent of Financial Institutions (OSFI) and the Investment Industry Regulatory Organization of Canada (IIROC) provide guidelines, cyber security for all Canadian industries is currently regulated under the Personal Information Protection and Electronic Documents Act (PIPEDA).
PIPEDA was most recently amended by the Digital Privacy Act in 2015 to strengthen cyber security provisions.
“The Digital Privacy Act amended important parts of PIPEDA and three of them are really key when it comes to the broader cyber security landscape,” Ahmad says.
The amendment now requires all organizations that store personally identifiable information, regardless of size, to keep auditable records of all security breaches and provide them to the Privacy Commissioner. The commissioner has also been provided with the option of imposing up to a $100,000 fine on an organization which breaches the act.
Most importantly, the amendments make it mandatory for organizations to report security breaches to the commissioner and to the individual if it is determined that the data breach would cause them harm.
Ahmad says the requirement to report, which has not come into effect but is expected to later this year, is an important step for Canada to move towards the stronger cyber security regulations of our allies.
“In my opinion, I think we are slowly moving towards what other countries like Australia, the U.K. and the U.S. are doing, but we’re still way behind.”
The requirement to report breaches is also expected to increase public awareness of cyber security in Canada, which both Thompson and Ahmed agree is the most significant hurdle in the way of stronger cyber security.
“I think in the next year Canadians are going to become alarmingly aware of just how much the organizations they do business with are under attack,” says Thompson.
“What we need to do as Canadians is to start asking questions to the businesses we provide personal information to about how they secure our data. We have a vested stake in understanding each and every time we provide that information that there is an inherent risk behind it.”