#needsimprovement: CSA releases report on social media disclosure practices by Canadian public companies

The Canadian Securities Administrators (CSA), concerned by the increased prevalence of corporate disclosure through social media, have issued guidance for Canadian public companies. Their notice follows a review of the tweets, blogs, posts and videos of 111 public companies on various social media websites, as well as the companies’ own websites.  The three key areas identified for improvement are: (i) ensuring that material company information is not released on social media before being generally disclosed; (ii) providing sufficient and balanced information so as not to be misleading or inconsistent; and (iii) putting in place adequate social media governance policies.

  1. Selective or early disclosureSecurities laws in Canada prohibit directors, officers, employees and others in a “special relationship” with the company from informing others of material information about the company before the information has been generally disclosed. Posting information through social media or on the company’s own website does not mean the information has been generally disclosed. Instead, it may result in some investors receiving valuable company information before others.

    Although securities laws do not specify what it means for information to be “generally disclosed”, it is understood that the information must have been disseminated in a manner calculated to effectively reach the marketplace and investors must have been given a reasonable amount of time to analyze the information. A news release distributed through a widely circulated news or wire service will generally satisfy the requirement, as will a press conference or conference call announcement, so long as interested members of the public may attend in person, by phone or electronic means, adequate notice is provided and a transcript or replay of the call is made available afterwards.

  2. Misleading and unbalanced informationOne of the attractions of social media is it is typically short and snappy. The downside is it may not provide sufficient information and, as a result, may be misleading or inconsistent with other sources of corporate disclosure. The other risk with social media is that the information provided may not be balanced and is more likely to be overly promotional in tone. For example, the CSA requires unfavourable news to be disclosed just as promptly and completely as favourable news.

    In addition, companies should avoid disclosing forward-looking information through social media, that is, statements regarding possible events, conditions or financial performance that is based on assumptions about future economic conditions and courses of action. This is because social media often does not lend itself to complying with other securities law disclosure requirements related to forward-looking information, such as the requirements to identify material risk factors that could cause actual results to differ materially and to provide the material factors and assumptions supporting such information. That type of information would be difficult to provide on a message board or a blog, much less a 140-character tweet.

  3. Insufficient internal governanceWithout an adequate social media governance policy, companies are more likely to run afoul of securities laws by posting unbalanced, misleading or selective disclosure. The CSA recommends that a corporate policy cover at least the following items:
  • who can post information about the company on social media
  • what type of sites (including personal social media accounts vs. corporate) can be used
  • what type of information about the company (financial, legal, operational, marketing, etc.) can be posted on social media
  • what, if any, approvals are required before information can be posted
  • who is responsible for monitoring the company’s social media accounts, including third-party postings about the company
  • what other guidelines and best practices are followed (for example, if employees post about the company on personal social media sites they should identify themselves as employees of the company)

Other Important Considerations

In addition to the concerns related to securities law compliance addressed in the CSA notice, companies should also consider the following in developing a robust social media governance policy:

  • Terms of Use: Ensure you understand and can accept the terms of use of each social media site where the company posts, including prohibitions on use for commercial purposes and legal responsibilities assumed with site use.
  • Privacy: Include provisions in the policy to protect third-party confidentiality and privacy.
  • Intellectual Property: Include guidelines around: (i) respecting third-party intellectual property; and (ii) the protection and use of the company’s own intellectual property to address issues such as consistent trademark use and the inadvertent disclosure of proprietary information or trade secrets.
  • Employment: Ensure that relevant employment legislation, employee privacy policies and employment agreements are considered to confirm compliance and consistency with a social media governance policy. Ensure there are policies in place that provide adequate guidelines for social media usage by employees.

The CSA Staff Notice is available here.

 

Only 61% of issuers address cyber security in their risk factor disclosure. Is your company one of them?

Earlier this year, the Canadian Securities Administrators (CSA) released the results of a review of the disclosure of 240 issuers in the S&P/TSX composite index on cyber security issues.  The review found that only 61% of issuers addressed cyber security in their risk factor disclosure, 20% of these issuers had identified a person or group responsible for cyber security, and “few” issuers disclosed that they had been subject to cyber-attacks but none disclosed these as material.

The Securities and Exchange Commission’s (SEC)’s Office of Compliance Inspections and Examinations (OCIE) also conducted a survey on capital market cyber security issues and published a report finding that a majority of broker-dealers (88%) and advisers (74%) stated that they have experienced cyber attacks.

Not surprisingly, cyber security has been identified as a priority area by both the CSA and the SEC.  As a result, there are a growing number of regulatory publications concerning cyber security, including the CSA’s September 2013 Staff Notice 11-326 and September 2016 Staff Notice 11-332 .  The latter sets out that CSA members:

  • expect issuers to: i) provide risk disclosure that is as detailed and entity specific as possible, ii) address in any cyber-attack remediation plan how the materiality of an attack would be assessed, and iii) consider the impact on the company’s operations and reputation, its customers, employees and investors;
  • expect registrants to remain vigilant in developing, implementing and updating their approach to cyber security hygiene and management; and
  • expect regulated entities to: i) examine and review their compliance with ongoing requirements outlined in securities legislation and terms and conditions of recognition, registration or exemption orders, which include the need to have internal controls over their systems and to report security breaches, and ii) adopt a cyber security framework provided by a regulatory authority or standard-setting body that is appropriate to their size and scale.

In January 2017, the CSA published Multilateral Staff Notice 51-347 which recommends that issuers disclose specific cyber security risks and disclose cyber security breaches where they amount to a material fact or a material change.  However, the CSA cautioned that it does not expect issuers to disclose details that are sensitive in nature or that could compromise their cyber security.  The CSA has also undertaken roundtable discussions modeled after similar discussions in the U.S.  The first of these roundtables was held on February 28.

The Canadian regulators have largely followed their counterparts in the U.S.  In October 2011, the SEC published a guidance on cyber security providing an overview of specific disclosure obligations that may require a discussion of cyber security risks and cyber incidents.  The SEC has also begun to undertake enforcement actions in respect of cyber security disclosure.  Yahoo! Inc., for example, recently disclosed that the SEC is investigating whether its disclosures about cyber attacks complied with securities law.  It is only a matter of time before we see similar enforcement actions in Canada.

We expect that regulatory attention to cyber security risk and disclosure will only continue to grow.  Capital market participants should not only protect themselves from cyber security risks, but also be aware that they may face regulatory exposure if they do not.

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OSC: New Commissioner Appointments

On March 3, 2017, the Ontario Securities Commission announced the appointment of two new Commissioners: Robert P. Hutchison and Mark J. Sandler.

Mr. Hutchison joins the Commission from Borden Ladner Gervais LLP, where he practised for over 40 years in the business law group.  Mr. Sandler was formerly a senior partner of Cooper, Sandler, Shime & Bergman LLP.  Mr. Sandler is an experienced appellate and trial litigator specializing in criminal and regulatory law.

Mr. Hutchison and Mr. Sandler will each serve a two year term on the Commission, effective February 2, 2017.

Thinking Inside the Sandbox: CSA Supports Innovative Business Models

The Canadian Securities Administrators (CSA) recently launched a regulatory sandbox initiative as part of a push to foster greater innovation among industry participants.  Under the initiative, qualifying businesses that have registered or received relief from certain requirements will be permitted to test novel products and services throughout the Canadian market.

The CSA provided the following examples of business models that may be eligible for the sandbox initiative:

  • online platforms, including crowdfunding portals, online lenders, angel investor networks or other technological innovations for securities trading and advising;
  • business models using artificial intelligence for trades or recommendations;
  • cryptocurrency or distributed ledger technology based ventures; and
  • technology service providers to the securities industry, such as non-client facing risk and compliance support services (also known as regulatory technology or regtech).

The CSA described the purpose of the initiative as being to “facilitate the ability of those businesses to use innovative products, services and applications all across Canada, while ensuring appropriate investor protection.”  The Ontario Securities Commission has a similar new Fintech support initiative called Launchpad (see: https://www.osc.gov.on.ca/en/osclaunchpad.htm).

To apply to the CSA regulatory sandbox, business should contact their local securities regulator for consideration.

The author would like to thank Brian Peebles, articling student, for his assistance in preparing this legal update.

Fiorillo v Ontario Securities Commission: deference wins the day on insider trading appeal

The Divisional Court recently upheld an Ontario Securities Commission (Commission) decision sanctioning a number of individuals for insider trading and tipping, and acting contrary to the public interest.[1]

This is the latest in a series of unsuccessful appeals from Commission decisions, suggesting that the courts’ significant deference to decisions of that tribunal makes most appeals an exercise in futility.[2]

Background to the Appeal

On February 11, 2015, the Commission released its decision finding that Eda Agueci, Henry Fiorillo, Dennis Wing, and Kimberly Stephany had contravened the insider trading and tipping provisions under s. 127 of the Securities Act (the Act). The sanctions were set out in a later decision released on June 24, 2015.

The Commission concluded that Ms. Agueci, an administrative assistant at an investment bank, had access to material non-public information about transactions her firm was working on. Ms. Agueci tipped Mr. Fiorillo, Mr. Wing, and Ms. Stephany who all went on to make well-timed and profitable trades. Mr. Fiorillo, Mr. Wing, and Ms. Stephany appealed. Ms. Agueci did not.

In a decision written by Associate Chief Justice Marrocco, the Divisional Court rejected the appellants’ arguments that the Commission had drawn improper inferences from the evidence before it, which was largely circumstantial, that they had been deprived of procedural fairness, and that the sanctions ordered were excessive.

Inferences Drawn From Circumstantial Evidence

In rejecting the appellants’ submissions about the inferences drawn by the Commission, Justice Marrocco closely examined the factual findings of the Commission, the evidentiary record before it, and the errors alleged by the appellants. The suggestion that the cases of Walton v Alberta (Securities Commission) and Re Azeff required a rigid “approach” to assessing circumstantial evidence in insider trading cases was rejected. The types of circumstantial evidence that may constitute indicia of insider trading or tipping are not fixed and will vary according to the case.

Justice Marrocco went on to undertake a detailed assessment of the evidence before the Commission, finding there was sufficient support in the record before the Commission for the factual findings made and inferences drawn.

In reasons concurring with the result, Justice Morawetz took a different approach than Justice Marrocco, declining to enter into a detailed review of the evidence and relying instead upon the deferential standard of review applicable to Commission decisions:

Given that the Commission is a specialized tribunal and that its decisions in insider trading cases are subjected to a reasonableness standard of review, this court should not substitute its own conclusions concerning what kind of market behavior is sufficient to permit it to draw the inference that material non-public information was communicated for those of the Commission.

I am satisfied that the Commission’s reasons adequately explain why it drew the inferences that it did and that the appellants arguments before this court should be rejected because they are an invitation to this court to retry the matter. This is inconsistent with the standard of review which this court has decided in the past to apply to decisions of the Commission in insider trading.

Procedural Fairness at the OSC

The court also rejected arguments that the appellants had been deprived of procedural fairness due to having received allegedly insufficient notice and disclosure prior to investigative examinations, the Commission’s misuse of portions of Ms. Agueci’s compelled testimony at the hearing, and failure to apply the normal rules of procedure for the use of her compelled testimony.

Following prior decisions, the court determined that there is a low threshold of fairness at the investigative stage for reasons, including that no penalty could be imposed in an investigation, people in the securities industry have a reasonable expectation that the Commission may investigate their market activity, and there were opportunities to correct or explain answers given during investigatory interviews.

The court rejected the appellants’ argument that staff had unfairly introduced only the favourable parts of Ms. Agueci’s compelled testimony at the hearing while denying them the opportunity to cross-examine her because she had elected not to testify at the hearing. The court held that the appellants had no right to cross-examine Ms. Agueci because she was not an adverse witness. Furthermore, the appellants were able to, and did, introduce excerpts from her compelled testimony that they intended to rely on.

The court disagreed with the suggestion that, as Ms. Agueci was effectively a witness for staff, it was improper for staff to discredit her testimony by introducing evidence that contravened parts of her compelled evidence that they had put into the record. Ms. Agueci was not a witness for staff; she was a respondent to allegations that she had contravened the Act. In any case, the normal rules of procedure only prohibit a party from impeaching the general credibility of its own witness.[ The court held that Commission was entitled to accept staff’s evidence that contradicted Ms. Agueci’s testimony since it did not go to general credibility.

Sanctions

The court rejected arguments that the sanctions imposed were excessive. The orders fell within the reasonable range of outcomes available to the Commission based upon the Commission’s findings on the merits.

Arguments that the measure of profits for disgorgement should be limited to the period between the date of insider trades and when the insider information became public also failed. The Commission had the discretion under Section 127(1) of the Act to disgorge any amounts that were the result of non-compliance. This permitted the Commission to order the disgorgement of actual profits, not just those made during the period that the information was non-public.

Conclusion

The Divisional Court’s decision affirms the reluctance of Ontario courts to interfere with the factual findings of securities regulators in insider trading cases. Respondents to insider trading allegations who may have hoped Walton signalled that assessments of circumstantial evidence by securities regulators would be closely scrutinized upon review will be disappointed. Justice Morawetz’s concurring judgment rejecting the proposition that an appeal from a Commission decision is an invitation to re-assess and re-evaluate the evidentiary record before the Commission will likely discourage future appeals.

The Divisional Court will have the opportunity to add further commentary on insider trading and the standard of review when it releases its decision in the appeal of Re Azeff, which was heard in late October 2016.

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[1]       Fiorillo v Ontario Securities Commission, 2016 ONSC 6559 (Div Ct) (“Fiorillo”): <http://canlii.ca/t/gvb96>.

[2]       See: Pushka v Ontario (Securities Commission), 2016 ONSC 3041 (Div Ct); Northern Securities Inc. v Ontario (Securities Commission), 2015 ONSC 3641 (Div Ct); Cornish v Ontario (Securities Commission), 2013 ONSC 1310 (Div Ct).

“Substance over form” in defining a security

What constitutes a “security” under the Ontario Securities Act? In Ontario (Securities Commission) v Tiffin, 2016 ONCJ 543, the accused was charged with three offences under the Act for issuing a number of promissory notes while prohibited from trading in securities. Under the Act, security is defined to include “a bond, debenture, note or other evidence of indebtedness.” The primary issue before the Ontario Court of Justice was whether the promissory notes issued fell within that definition, or were instead private loan agreements not subject to its application.

The court applied the United States Supreme Court decision in Reves v Ernst & Young, 494 US 56 in finding that, although the notes were presumptively securities under the Act, they did not meet the overall statutory definition of security. The court held that neither the statutory goals set out at section 1.1 of the Act, nor the circumstances of the particular transactions, required that the promissory notes be regulated as securities.

Background

Following the imposition of sanctions and financial penalties against them by the Ontario Securities Commission in another proceeding, the accused, Mr. Tiffin, and his company, Tiffin Financial Corporation (TFC), issued a number of promissory notes to investment clients to raise funds to maintain the operation of TFC. At the time the notes were issued, Mr. Tiffin and TFC were prohibited from trading in securities or relying upon any exemption in Ontario securities law.

All funds received for the notes were deposited into TFC’s corporate account and disbursed for “general business purposes” and to cover Mr. Tiffin’s personal expenses. The notes expressly indicated the relationship created by them was solely that of debtor and creditor. The evidence at trial was that the notes were understood by the parties to be loans to Mr. Tiffin through his business. They were secured against assets of the business and carried no expectation of gain or loss based on the fortune of the business.

At trial, Mr. Tiffin did not challenge that he was not licensed to trade at the material time. He also conceded that promissory notes can be securities under the definition of “security” found at section 1(1) of the Act. However, he argued his issuance of the promissory notes was a private transaction not subject to securities laws.

The court’s dismissal of the charges

Although the court agreed with the Commission’s submission that the ordinary meaning of the definition of “security” in the Act is presumed to be the meaning intended by the legislature, it held that its interpretation must ultimately be consistent with the twin goals of the Act, namely: (i) to provide protection to investors from unfair, improper or fraudulent practices, and (ii) to foster fair and efficient capital markets and confidence in capital markets.

Noting the Act does not seek to regulate all commercial or private transactions, the court held that applying a literal interpretation of “note” in the context of the case against Mr. Tiffin would conflict with these goals. In rejecting the Commission’s arguments, the court explained: “Literal interpretation focuses on the form with no inquiry into the substance of the agreement.” Although the court agreed with the Commission that the general legislative scheme of the Act may be characterized as “catch and exclude,” it disagreed that the only bases on which to “exclude” are found in the statute or regulations.

The court followed the United States Supreme Court in Reves in finding there is an initial presumption that every note is a security. That presumption may then be rebutted by reference to a general list of notes, referred to in Reves as a “family” of notes, that have been held not to be a security. This “family resemblance test” presumes a note is a security unless it “bears a strong resemblance,” determined by examining a set of four factors, to one of a judicially crafted list of categories of instruments that are not considered securities. The four factors from Reves ask:

  • whether the borrower’s motivation is to raise money for general business use and whether the lender’s motivation is to make a profit;
  • whether the borrower’s plan or distribution of the note resembles “common trading for speculation or investment”;
  • whether the investing public reasonably expects that the note is a security; and
  • whether there is a regulatory scheme that protects the investor other than securities laws.

Notably, notes secured against an asset of a small business were included in the exempt family of notes in Reves. The court in that case also noted that where a loan is issued as a means to correct the seller’s cash-flow difficulties it is less likely the note will be considered a security.

Applying the Reves analysis, the court concluded that the TFC notes were presumptively securities under the Act but did not meet the overall statutory definition of “security.” The court noted that the TFC notes were akin to notes secured by a lien on a small business or its assets, one of the “family” of recognized non-security notes in Reves.

In dismissing the charges against Mr. Tiffin, the court held that neither the twin statutory goals found at section 1.1 of the Act, nor the circumstances of the particular transaction, required the promissory notes issued by him and TFC to be regulated as securities.

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A house divided: The Canadian Securities Administrators’ “best interest” standard proposal

On April 28, 2016, the Canadian Securities Administrators (CSA) released its long-awaited Consultation Paper 33-404: Proposals to Enhance the Obligations of Advisers, Dealers and Representatives Toward Their Clients.   Consultation Paper 33-404 is the continuation of a four-year project to consider the introduction of a best interest standard for investment advisers and dealers in Canada.  The end is not in sight – the paper reflects the lack of unanimity within the CSA on creating an overarching best interest standard.

The paper describes:

(1) specific reforms to NI 31-103 under consideration by all CSA jurisdictions designed “to better align the interests of registrants to the interests of their clients and enhance various specific obligations that registrants owe to their clients,” and

(2) a general regulatory “best interest” standard that is supported by the provincial securities regulators in Ontario and New Brunswick, opposed by the securities regulator in British Columbia, and looked upon by regulators in Quebec, Alberta, Manitoba and Nova Scotia with “strong reservations.”

Both the specific reforms and the proposed best interest standard would apply to all advisers, dealers and representatives, including members of the Investment Industry Regulatory Organization of Canada and Mutual Fund Dealers Association of Canada.

The CSA’s proposals

Specific Targeted Reforms

The specific targeted reforms would amend NI 31-103 as it relates to obligations concerning, among other things, conflicts of interest, know your client, know your product, suitability, relationship disclosure, and proficiency.

It would require, for example, that firms and representatives respond to material conflicts of interest in a manner that prioritizes the interests of the client ahead of the interests of the firm and/or representative, and that disclosing a conflict of interest to a client be “prominent, specific and clear.”

Know-your-product obligations of representatives would require that they understand and consider the structure, product strategy, features, costs and risks of each security on their firm’s product list, how a product being recommended compares to other products on the firm’s product list, and the impact on the performance of the product of all fees, costs and charges connected to the product, the client’s account and investment strategy.

Firms would be required to identify whether they have either a proprietary or mixed/non-proprietary product list.

Mixed/non-proprietary firms would be burdened with additional regulatory obligations, including the obligation to select products that they offer in accordance with a “fair and unbiased market investigation of a reasonable universe of products that the firm is registered to advise on or trade in” and a product comparison to determine whether the products that the firm offers are “appropriately representative” of the reasonable universe of products most likely to meet the investment needs and objectives of its clients. An “optimization process” whereby the firm adjusts the range of products offered to achieve a range “that is appropriately representative of the products most likely to meet the investment needs and objectives of its clients” also would be required.

Among the consultation questions posed in relation to this proposal is whether this could result in firms offering fewer products and create incentives for firms to stop offering non-proprietary products.

Registrants would be required to undertake a comprehensive financial suitability, investment strategy suitability and product selection suitability analysis in accordance with specified criteria each time they make a recommendation concerning or accept a client instruction to buy, sell, hold or exchange a security, or make a purchase, sale, hold or exchange of a security for a managed account.

Existing provincial securities legislation would be amended to introduce a statutory fiduciary duty for registrants when managing the investment portfolio of a client through discretionary authority granted by the client.

Best Interest Standard

The proposed framework for a regulatory best interest standard, unequivocally supported by only two of the provincial securities regulators, would require that a registered dealer or adviser (and its representatives) deal fairly, honestly and in good faith with its clients and act in its clients’ best interests. The conduct expected of a registrant in that regard would be that of a prudent and unbiased firm or representative acting reasonably.

Registrants would be guided by certain articulated principles in that regard, namely, acting in the best interests of the client, avoiding or controlling conflicts of interest in a manner that prioritizes the client’s best interests, providing full, clear, meaningful and timely disclosure, interpreting law and agreements with clients “in a manner favourable to the client’s interests where reasonably conflicting interpretations arise,” and acting with care.

This would be a “regulatory conduct standard” not a restatement of a common law fiduciary duty – the intention is not to create a statutory fiduciary duty.

The Ontario and New Brunswick regulators believe the regulatory best interest standard as a governing principle would assist in interpreting the more specific requirements and guide registrants in addressing situations not covered by a specific rule.

However, the Alberta, Quebec, Manitoba and Nova Scotia regulators share “strong reservations” about the benefits of this proposal. The British Columbia Securities Commission does not support the introduction of a general best interest standard, believing it will create uncertainty for registrants and may be unworkable.

The British Columbia, Alberta, Quebec, Manitoba and Nova Scotia regulators share concerns that introducing an overarching best interest standard may exacerbate the expectations gap between clients and registrants because of the existing restricted registration categories and proprietary business models permitted in Canada. “Clients may expect that all registrants have an unqualified duty to act in their best interests, not understanding that some conflicts would still be permitted.” For example, “It is simply not possible to require a salesperson of proprietary products only to act in a manner that is truly in an investor’s best interest.”

The new standard may also create legal uncertainty. How will courts interpret a standard that expressly requires conduct in the client’s best interest, but in some cases permits conduct that may not be in the client’s best interests so long as there is disclosure? The proposed standard may affect the interpretation of existing fiduciary standards for portfolio managers and investment fund managers. Adopting a best interest standard for other registrants that is “qualified to mean something less than a full fiduciary standard may impact the interpretation of the words ‘best interest’ as they apply elsewhere.”

The US analogue

On April 6, 2016, following extensive consultation, the US Department of Labor published its final fiduciary rule requiring those who provide investment advice to retirement plans and individual retirement accounts about the purchase, sale, holding or exchange of securities for compensation to abide by a fiduciary standard. In general, financial institutions and advisers will be prohibited from receiving compensation that creates a conflict of interest unless a “best interest contract exemption” is met.

The exemption would allow financial institutions and their advisers to charge commissions provided specific conditions are met that mitigate potential conflicts of interest. The best interest contract exemption would require the financial institution and its advisers to: (i) acknowledge their fiduciary status in a written agreement with the client; (ii) adhere to standards of impartial conduct, including giving prudent advice in the customer’s best interest, avoid misleading statements, and receive no more than reasonable compensation; (iii) adopt policies and procedures to mitigate conflicts of interest; and (iv) disclose information about conflicts of interest and the cost of their advice.

Although a best interest standard of more general application had been proposed by Securities and Exchange Commission staff in 2011, to date no new standard has been adopted.

Issues arising from the best interest standard proposal

A number of concerns have been raised surrounding the application of best interest standards in the United States and Canada.

The costs of compliance may be onerous. The Investment Industry Regulatory Organization of Canada previously announced that the CSA’s original proposal would result in increased scrutiny of compensation-related conflicts of interest. Many firms will have to make changes to their monitoring technology, account opening procedures and general operations to demonstrate compliance. In the US, AIG sold its broker-dealer arm citing increased compliance costs. There is also a concern the changes will increase the risk of client lawsuits and regulatory action.

A general best interest standard may be too broad and disadvantageous for certain consumers. It may force firms to shift away from commission-based payment structures to reduce compliance risk, notwithstanding that there are circumstances where commission payment structures may be less expensive and entirely appropriate for certain clients. Investors without significant investment assets may be the most disadvantaged by a general fiduciary rule. Firms may be reluctant to provide cheap investment advice to small retail investors as compliance costs rise, increasing the advice gap between those who can afford personal advisers and those who cannot.

Finally, there is concern that notwithstanding efforts to harmonize requirements, potentially different standards may be imposed by different securities regulators, making compliance even more of a challenge. As indicated, in the US the fiduciary rule has only been adopted for certain types of retirement investment advice. A somewhat different standard or broader application could be put in place by the SEC. In Canada, the apparent lack of unanimity among provincial securities regulators about implementing a general best interest standard creates a risk that such a standard may apply to dealers and advisers operating in one province, but not another.

Comments on the CSA proposals were required to be submitted by August 26, 2016.  No further update from the CSA has yet been made.

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