OSC Identifies Issues With Investment Funds' Marketing Materials

SE
Stikeman Elliott LLP

Contributor

Stikeman Elliott LLP logo
Stikeman Elliott is a global leader in Canadian business law and the first call for businesses working in and with Canada. We provide clients with the highest quality counsel, strategic advice, and creative solutions. Stikeman Elliott consistently ranks as a top law firm in our primary practice areas. www.stikeman.com
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.
Canada Finance and Banking

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 materials.

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 81-720.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More