BCSC’s compliance bulletin highlights shortcomings in investment firm marketing

VANCOUVER, BC, April 26, 2022 /CNW/ – The British Columbia Securities Commission’s (BCSC’s) latest Securities Dealers and Advisers Compliance Sheet, released today, reflects the focus over the past year on the marketing materials that these businesses use to attract and retain customers.

The report card highlights several recurring shortcomings in how some British Columbia portfolio managers, investment fund managers and exempt market dealers present themselves to the public, including:

  • Post outdated information and marketing materials
  • Unsubstantiated and/or overly promotional claims
  • Failure to Provide References and Third-Party Sources of Information Used in Marketing Materials
  • Social media posts that contain misleading or overly promotional claims and statements.

The focus on marketing in 2021 was part of a national effort, coordinated by the Canadian Securities Administrators, of which the BCSC is a member.

“We expect registered businesses to ensure their marketing is done responsibly,” said Pierre Brady, CEO of the BCSC. “Our goal is to identify issues and ensure they are resolved before problems arise.”

In 2021, the BCSC conducted 31 compliance reviews and found 210 deficiencies, an average of 6.77 deficiencies per review. This is down from an average of 8.14 gaps per review the previous year, largely due to a tighter focus on marketing.

The reviews also revealed that some companies are not complying with Know Your Client (KYC) requirements and their obligation to determine the suitability of investments for each client.

Some companies that have recently registered, following the repeal of the Mortgage Investment Entity (MIE) registration exemption, fall short in some areas. For example, some of them did not get KYC information from customers prior to business registration.

Some of the shortcomings, in marketing or other areas, were significant compliance failures that led the BCSC to impose registration conditions, such as requiring the hiring of a compliance monitor or preventing onboarding new customers until deficiencies have been resolved. corrected. The BCSC imposed restrictions on several listed companies this year. Additionally, several cases have been referred to the BCSC’s Enforcement Division for further investigation, which could result in public allegations of misconduct, a hearing and possible sanctions. This year, the BCSC reached settlements with several companies over registrant misconduct and imposed penalties on individuals for registration matters.

The BCSC is the primary regulator of approximately 161 advising and brokerage firms and takes a risk-based approach in reviewing firms.

The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia by the administration of the Securities Law. Our mission is to protect and promote the public interest by promoting:

  • A fair securities market that deserves the public’s trust
  • A dynamic and competitive securities industry that offers investment opportunities and access to capital

Learn how to protect yourself and become a smarter investor at www.investright.org

SOURCE British Columbia Securities Commission

For further information: Media contact: Elise Palmer, 604-899-6830; Public Inquiries: 604-899-6854 or 1-800-373-6393 (toll free), [email protected]