ALBERTA SECURITIES COMMISSION DECISION Flag Decisions... 2004 Golden Briar Financial Statements. In
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ALBERTA SECURITIES COMMISSION
Citation: Flag Resources (1985) Limited, Re, 2010 ABASC 143 Date: 20100329
Flag Resources (1985) Limited, Golden Briar Mines Limited,
Murdo Campbell McLeod and Sidney Miszczuk
Panel: Glenda A. Campbell, QC
Allan L. Edgeworth, P. Eng.
Roderick J. McKay, FCA
Appearing: Robert Stack
for Commission Staff
Dennis A. McDermott, QC
for the Respondents
Dates of Hearing: 24-28 August and 10 November 2009; and
12 January 2010
Date of Decision: 29 March 2010
 This proceeding commenced when staff ("Staff") of the Alberta Securities Commission (the
"Commission") issued a 14 July 2008 notice of hearing (the "Notice of Hearing"), alleging that two
corporate respondents (the "Corporate Respondents") – Flag Resources (1985) Limited ("Flag") and
Golden Briar Mines Limited ("Golden Briar") – contravened Alberta securities laws and engaged in
conduct contrary to the public interest by failing to file, or by filing deficient, continuous disclosure,
and further alleging that Murdo Campbell McLeod ("McLeod") was responsible for the Corporate
Respondents' contraventions and Sidney Miszczuk ("Miszczuk") was responsible for Flag's
contraventions and thus acted contrary to the public interest. The alleged continuous disclosure
failings pertained to Flag's fiscal years 2003 to 2005 and Golden Briar's fiscal years 2002 to 2004
(in each case, the "Relevant Period"). (Staff abandoned their allegations of failures to file insider
 In December 2009 the panel was advised that Miszczuk had passed away. In the
circumstances, we decline to make any findings on the allegations against Miszczuk, and we make
findings only on the allegations against the remaining three respondents – Flag, Golden Briar and
McLeod (the "Respondents").
 The parties agreed that the hearing would be bifurcated, with the first part of the hearing
addressing the merits of the allegations against the Respondents (the "Merits Hearing") and a
second part, if necessary, addressing the issues of sanction and costs.
 The Merits Hearing began on 24 August 2009. (It was originally scheduled to begin on
2 February 2009; however, on 23 January 2009 another panel granted McLeod's and Miszczuk's
request for an adjournment to enable counsel recently retained by them to prepare.) The
Respondents were represented at the Merits Hearing by other counsel (apparently retained in the
preceding week). We received documentary evidence and heard testimony from a Staff
investigative accountant (formerly a senior securities analyst), Michael Mumby ("Mumby"), from
McLeod and Miszczuk, from the Corporate Respondents' bookkeeper and from two of the
Corporate Respondents' Alberta-resident shareholders. In September, October and November 2009,
the parties provided written and oral submissions.
 On 4 December 2009 the Respondents applied to have the Merits Hearing re-opened to
consider new evidence and additional submissions provided by them via a 25 November 2009 letter.
Staff opposed the application. In 21 December 2009 written reply submissions, the Respondents
asked that an additional document and, it appeared, associated submissions also be considered by
the panel. In a 12 January 2010 ruling (Re Flag Resources (1985) Ltd., 2010 ABASC 15), the panel
agreed to admit into evidence the new documents and consider the additional submissions proffered
by the Respondents, and to consider the related submissions made by Staff. The Merits Hearing
was then adjourned for decision on the merits of the allegations against the Respondents.
 This decision sets out our conclusions, and reasons, concerning the merits of the allegations
against the Respondents. Stated briefly, we find that:
the Corporate Respondents filed with the Commission annual audited financial statements that were not prepared in accordance with generally accepted accounting
principles ("GAAP") as required by Alberta securities laws;
the Corporate Respondents filed with the Commission management's discussion & analysis ("MD&A") that was not prepared as required by Alberta securities laws;
Flag filed a certification with the Commission that was not prepared as required by Alberta securities laws and failed to file with the Commission other certifications so
the Corporate Respondents thereby contravened Alberta securities laws and acted contrary to the public interest; and
McLeod was responsible for the Corporate Respondents' contraventions of Alberta securities laws and thus acted contrary to the public interest.
 We have yet to determine what, if any, orders for sanction or costs ought to be made against
the Respondents in light of these findings. The issues of sanction and costs will be addressed in the
second part of the hearing.
 Flag is an Alberta corporation with its head office in Calgary. It is a junior resource issuer
engaged in the exploration and development of mineral properties in northern Ontario. McLeod and
Miszczuk were two of the four or five directors of Flag throughout the Relevant Period. Golden
Briar is a shareholder of Flag and was such during the Relevant Period.
 Flag is a reporting issuer in Alberta and British Columbia and was such during the Relevant
Period. Flag had its securities listed for trading on the TSX Venture Exchange ("TSXV") until its
securities were delisted from the TSXV in August 2005.
 Flag's fiscal year throughout the Relevant Period ended on 31 December of each year.
Flag's annual financial statements were audited for the Relevant Period by Lo Porter Hétu, Certified
General Accountants ("Lo Porter"). Flag's audit committee, when it had one during the Relevant
Period, consisted of McLeod and Miszczuk or McLeod, Miszczuk and Claude Giroux ("Giroux").
2. Golden Briar
 Golden Briar is an Alberta corporation with its head office in Calgary. It, like Flag, is in the
business of mining and mineral exploration. According to the Alberta Corporate Registration
System ("CORES"), two of the seven directors of Golden Briar during the Relevant Period were
McLeod and Miszczuk (misspelled "Misczuck"). Flag is a shareholder of Golden Briar and was
such during the Relevant Period.
 Golden Briar is a reporting issuer in Alberta, British Columbia, Ontario and Québec and was
such during the Relevant Period. Golden Briar had its securities listed for trading on the TSXV
until its securities were delisted from the TSXV in August 2005.
 Golden Briar's fiscal year throughout the Relevant Period ended on 31 December of each
year. Golden Briar's annual financial statements were audited for the Relevant Period by Lo Porter.
Golden Briar's audit committee, when it had one during the Relevant Period, consisted of McLeod,
Edwin Bauer ("Bauer") and Gerald Gereghty ("Gereghty").
 McLeod resides in Calgary. He was 82 years old at the time of the Merits Hearing, has been
the president and a director of Flag since 1976 and was Flag's chief executive officer ("CEO")
throughout the Relevant Period. He has also been a director of Golden Briar since 1974 and was
Golden Briar's president and apparently its CEO throughout the Relevant Period. McLeod is the
only regular employee of the Corporate Respondents. He was responsible throughout the Relevant
Period for the day-to-day operations of the Corporate Respondents, including their mineral
 Miszczuk resided in Ontario and was, throughout the Relevant Period, a director of Flag and
the chair of the Flag board of directors. Miszczuk was also the president of Cooksville Steel
Limited ("Cooksville") and was a shareholder of the Corporate Respondents. Cooksville is a
shareholder and the major creditor of the Corporate Respondents.
 Although Miszczuk apparently signed at least two Golden Briar financial statements on
behalf of the Golden Briar board of directors and CORES identified him as a director of Golden
Briar during the Relevant Period, Miszczuk contended that he had not been a director of Golden
Briar. In the circumstances, we need not decide this issue.
 The allegations of continuous disclosure failings by the Corporate Respondents, in
contravention of Alberta securities laws and contrary to the public interest, focused on three areas:
Annual audited Financial Statements
Flag's annual audited financial statements for its fiscal years ended 31 December 2003, 31 December 2004 and 31 December 2005 (the "2003 Flag Financial
Statements", "2004 Flag Financial Statements" and "2005 Flag Financial
Statements", respectively; collectively, the "Flag Financial Statements") filed with
the Commission were allegedly not prepared in accordance with GAAP as required