Whistleblower clauses, unproven AI claims and a $0.37 share transfer also made the list
One Ontario portfolio manager had more than 600 clients for every advising representative, the Ontario Securities Commission said in a report released October 7, 2026.
That number comes from OSC Staff Notice 33-762, the annual report of the OSC's Registration, Inspections and Examinations (RIE) Division for the fiscal year ended March 31, 2026. It focuses on firms the OSC oversees directly, such as portfolio managers (PMs).
Stretched thin at one portfolio manager
The firm offered discretionary managed accounts across a broad range of securities. The report says its advisers could not give clients the attention they needed, including failing to meet them at least annually to update their information and reassess suitability. There is no set formula for staffing, the OSC says, so firms need to keep assessing their own.
Fees were another sore spot. Examiners kept finding PMs charging management fees that did not match the fee schedule given to clients. The report says clients should get 60 days written notice before any fee change.
Some PMs also used leverage in managed accounts without documenting whether it suited the client, and some held too much of their clients' alternative investments in a single issuer or sector.
Whistleblowers, AI and what's on your business card
The OSC kept spotting employment, severance and confidentiality agreements with terms that try to stop staff from reporting possible violations to the OSC, a self-regulatory organization or law enforcement. The OSC may take enforcement action against employers that retaliate against or try to silence whistleblowers, and that Ontario securities law may make such terms void.
AI got a close look too. The OSC surveyed firms in November 2025 and started examinations in January 2026. Staff found a lack of written AI policies, little or no oversight of outside AI tools and marketing claims about AI use that could not be backed up. Findings are expected in early fall.
Even job titles came up. An associate advising representative should not go by "Portfolio Manager" without a qualifier such as "Associate Portfolio Manager." In the report's words, "Titles should not risk misleading clients about the individual's authority or activities."
Bank branches, suspensions and new cost reports
The OSC and CIRO are now examining five large bank-affiliated mutual fund dealers, a review that began in November 2024 after a media report of high-pressure sales practices at some bank branches. The examinations look at pay and incentive practices and the related conflict controls. The OSC says it will share more later in 2026.
Eight Director's decisions were published during the fiscal year. The Director suspended the registrations of exempt market dealer Ternion Financial Services Inc. and Alison Travers after staff raised concerns about a product that, in the Registrant Conduct Team's view, appeared to have several characteristics of an RRSP strip scheme. In a settlement involving Bellwether Investment Management Inc., Robert Sewell admitted that, on one occasion, he moved shares of the firm's thinly traded parent from taxable accounts held by himself and his mother into non-taxable accounts at $0.37 per share instead of the most recent price of $1.35.
Client Relationship Model Phase 3 amendments took effect January 1, 2026, and the first annual reports under the new total cost reporting rules are due in 2027 for the year ending December 31, 2026.
"Evolving markets require an equally adaptive approach to oversight," said Matthew Onyeaju, senior vice president of RIE at the OSC. "This year, we strengthened our supervisory toolkit through targeted reviews, greater engagement with industry and the thoughtful adoption of technology, all while keeping investor protection at the centre of our work."
The full text of OSC Staff Notice 33-762 is available at https://www.osc.ca/en/securities-law/instruments-rules-policies/3/33-762/osc-staff-notice-33-762-registration-inspections-and-examinations-division-2026-annual-report.
