The Ontario Securities Commission
Investment Funds Branch released a notice today
setting out the findings of a targeted continuous disclosure review
of advertising and marketing materials of publicly offered
investment funds. While the review included conventional mutual
funds, closed-end funds, exchange-traded funds, commodity pools and
labour sponsored investment funds, the OSC focused to some
degree on conventional mutual funds as the advertising with this
type of fund is primarily targeted to retail investors.
While the report noted general compliance with disclosure
requirements related to sales communications, a number of issues
were identified. For example, the OSC noted that some basic
requirements like providing the date of first publication for a
written sales communication, were frequently not met. Ultimately,
the reviews led to, among other things, a commitment by fund
managers to review older marketing materials more frequently to
ensure they remain in compliance with current requirements, the
replacement of misleading performance charts, and the removal of
potentially misleading headlines, slogans and statements from
Of particular interest, the report takes note of internet
advertising. On that topic, the report encourages fund managers to
consider the appropriateness of new media formats where
"content limitations prevent the fund manager from providing
clear, accurate and balanced messages in the sales
communication". Warning language, in Staff's view, must be
visible on the same page as the sales communication or within one
click, and disclaimers should be easily comprehensible to retail
investors on first viewing of the advertisement.
Guidance based on OSC Staff's observations from the
reviews was also provided. For more information, see OSC Staff Notice
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guide to the subject matter. Specialist advice should be sought
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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