IIAC has responded to CSA’s request for comment on soliciting dealer arrangements and the associated fees that may be paid to dealers.
For example, issuers approach dealer members to contact security holders and encourage them to vote in connection with matters requiring security holder approval or to tender securities in connection with a takeover bid.
IIAC notes that dealer members’ policies differ on participation in these arrangements, and that participating firms take steps to manage potential conflicts.
For example, overriding suitability obligations govern an advisor’s recommendation as to whether a client should tender or vote their shares, and many dealer members have restrictions on paying arrangement fees to advisors who manage discretionary or managed accounts.
IIAC recognizes there may be concerns with the use of soliciting dealer arrangements in the context of proxy contests to solicit votes in favour of a particular outcome (for example, voting in favour of management’s nominees). IIAC says that the few dealers who experienced contested proxy contests indicate they’re unlikely to participate in these arrangements going forward.
In April 2018, CSA published for comment Staff Notice 61-303 and Request for Comment Soliciting Dealer Arrangements.
CSA outlined a number of potential regulatory issues, including potential conflicts of interest that are posed by the use of these arrangements. CSA is examining how these arrangements are used and if further regulatory action is appropriate.