OSC targeted 90 for misconduct last year

By Staff | July 21, 2016 | Last updated on July 21, 2016
2 min read

The OSC took action against 90 firms or individuals during the fiscal year ending March 31, the securities regulator says in a year-end report.

Of that 90, seven had their registrations suspended and 11 were referred to enforcement, the OSC says in the report released Thursday. Twelve were denied registration and 15 received warning letters.

The OSC’s annual summary covered registration and compliance activities, policy initiatives and new programs. The document reiterated chronic issues that may seem like common sense, but apparently aren’t.

Read: CSA announces priorities for next three years

For instance, it chided portfolio managers that improperly represent their registration through misleading statements and/or leaving out information. The regulator found managers stating in marketing materials that they’re registered with the OSC without identifying their category. Others incorrectly stated their registration category or failed to include the provinces or territories in which they’re registered.

“This may lead an investor to believe that they are registered in all Canadian jurisdictions when this may not be the case,” the OSC says.

The commission also found that registrants and permitted individuals still aren’t disclosing key info.

Registrant firms are submitting “placeholder-type information, e.g. ‘aaaaaa’ or ‘xxxxx’, rather than complete and substantive details,” the OSC says, referring to missing information in Form 33-109F4.

Read: OSC’s whistleblower program open for business

Robos and the regulator

The regulator found some PMs aren’t maintaining enough advising representatives and associate advising representatives for what they’re managing.

One portfolio manager that served about 1,000 high-net-worth individuals had only one registered AR and no AARs, the OSC says. “Based on the firm’s business activities, and the number of its clients, we found this firm to have an inadequate number of ARs. To address our concerns, the firm registered additional ARs and AARs to service their clients,” the OSC says.

While it says there are “no bright-line tests for determining an adequate number of ARs and AARs for each firm,” the report notes a firm that offers “simple, passive investments” and has automated KYC and suitability processes — like many robo-advisors — “likely does not need as many ARs compared to a firm with manual KYC and suitability processes and complex, active investments.”

Speaking of robos, the report reminds us OSC has been reviewing Ontario-based online advisors this year. OSC may publish guidance for robos, as well as the review results, in future.

Read: 4 ways to compete with robo-advisors

Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.