Expert: Steven Taylor - 8/19/2010

Question
QUESTION: Esperanza (ESPZF)recently changed its name and now my broker (Scottrade)says they can't value them until they receive new certificates. The stock still trades freely so I am wondering what the cause of this problem could be.
About Encore Renaissance, they received a cease trade order a while back for not providing financial statements. They say now they have provided them and have applied to resume trading. How can I know if they are being truthful?

Thanks in advance for your reply.

Frank

ANSWER: Frank, the answer you received from Scottrade makes no sense. The symbol has not changed - brokerage firms receive pricing and value information based on symbol. Notice of name and symbol changes for OTC stocks comes from the transfer agent - no certificates are involved at all. Esperanza is fully reporting with the SEC, so there are no surprises regarding the change. If Scottrade has not already fixed their problem of not being able to provide a quote, I suggest you talk to someone else there that may have more knowledge of the situation and is able to provide a more plausible answer.

Regarding Encore, they have clearly been delinquent in their filing responsibilities. On July 20th, they filed sixteen (!) very late news releases going back almost a year that were never filed with the regulatory agencies. There is no excuse for not correctly filing news releases, especially that many. I work with many companies to prepare and file required regulatory documents, and that is the worst I have ever seen. They did file their late 2nd quarter financial results on July 27th, and then put out a news release announcing they had filed them and hoped to be reinstated by the BCSC, but they never filed that release with the regulators, either! Since they are in hot water with both the BCSC and the TSX Venture, they will have to satisfy both regulatory bodies before they can resume trading, but hopefully they will do better filing their required information on time.

---------- FOLLOW-UP ----------

QUESTION: I talked with a secretary at Esperanza (their Denver CO. office) and she said that with the new name their CUSIP(?) number was changed and that they were trying to have it restored. Any thoughts?

Answer
Frank, that is possibly the problem, but it still has zero to do with the certificates as Scottrade originally told you. Additionally, most pricing is done by symbol, not CUSIP. The symbol has not changed, which makes it easy for you to follow the stock trading yourself on numerous sites on the web while you wait for Scottrade to figure it out.

Also, on the Encore Renaissance, I did not want to leave you with the impression that it is an entirely hopeless case. They did file their delinquent quarterly financial statements, but the continued lack of attention to the filing requirements for those and the news releases suggests that they are probably not quite ready to be reinstated for trading. But, that does not mean they will not continue to work out their problems and become a fully-reporting issuer again. I have worked professionally in a different unrelated company with one of the directors, and I know he is very experienced and likely understands very well what is needed to bring Encore back to trading.