Answer: Registrants have an obligation to deal fairly, honestly and in good faith with their clients. Among other things, this means that registrants must ensure that their marketing materials (and any representations that they make in social media) are clear, accurate and non-misleading and that any claims made in such materials are substantiated. In our experience, securities regulators continue to be concerned about:
- Performance data (including use of hypothetical performance data, benchmarks, and performance composites);
- Exaggerated and unsubstantiated claims (g. “We are a leading investment management firm”);
- Holding out and the use of names (g. unregistered individuals using business titles that imply they are registered, failing to use the firm’s full legal name or registered trade name in marketing materials, or misleading, inaccurate or hard-to-substantiate testimonials); and
- Inadequate policies, procedures and records in relation to marketing activities and social media.
Registrants also should be aware that there are specific rules about how they represent their registration status. In particular, subsection 44(1) of the Ontario Securities Act (Act) prohibits any person or company from representing that they are registered under the Act unless the representation is true and the representation specifies the relevant registration category or categories. OSC staff have emphasized that firms also should specify in which jurisdictions they are registered. In addition, section 46 of the Act prohibits everyone from representing that the Commission has passed in any way on the financial standing, fitness or conduct of a registrant.
AUM Law can help you stay on top of these requirements and regulators’ evolving expectations. For example, we can review your marketing materials and social media activities on an ad hoc or regular basis, review your marketing, social media and record-keeping policies and enhance them as needed, and provide compliance training to your staff. Please contact us if you would like to learn more.
February 28, 2020