CSA issues warning about ‘problematic’ promotional activities

The CSA is warning companies about promotional activities the regulator deems “problematic,” such as undisclosed compensation of third parties and disseminating unsubstantiated claims.

The staff notice cautions companies about promotional activities that could artificially increase an issuer’s share price or trading volume, or mislead investors.

Promotional activities that may be misleading include:

• disseminating presentations, marketing materials, social media posts, or other information that describe early-stage plans with unwarranted certainty, or make unsupported assertions about growth of markets or demand for a product;
• announcing an issuer name or business change to reference an emerging industry or technology without a supporting business plan or comprehensive risk disclosure; and
• compensating third parties who use social media and general investing blogs to promote issuers but do not disclose their agency, compensation or financial interest.

The CSA’s action will include ordering a clarifying news release, the removal of overly promotional language from company communications, or re-filing of continuous disclosure documents.

Staff

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