In early September, the Canadian Securities Administrators (CSA) began reviewing the sales practices of certain mutual funds, namely those that have a relationship with a registrant to act as a principal distributor of those funds. According to National Instrument 81-102 Investment Funds, a principal distributor is a person or company through whom mutual fund securities are distributed under an arrangement with the fund or its manager that provides either (i) an exclusive right to distribute the securities in a particular area, or (ii) a feature that gives or is intended to give the person or company a material competitive advantage over others in the distribution of the securities of the fund. The review is tied into a long-awaited potential review of National Instrument 81-105 Mutual Fund Sales Practices, which among many other provisions deals with permitted dealer compensation. Readers will want to follow any published results and next steps closely.

September 28, 2022