Weekly Wrap: The Regulator Beat

Weekly Wrap: The Regulator Beat

Weekly Wrap: The Regulator Beat CSA proposes guidance for proxy advisor firms
The Canadian Securities Administrators (CSA) published Thursday guidance notes for proxy advisory firms to ensure best practices in the areas of conflict of interest, transparency and accuracy of voting recommendations.

The concerns – which arose following a 2012 consultation report – specifically addresses the influence these firms have when providing institutional investors with voting recommendations on a host of shareholder issues. According to the CSA, market participants agree that there is potential for a conflict of interest that could compromise the independence of proxy advisory firms. Issuers, trade groups, and law firms also raised concerns about how voting recommendations and guidelines are developed.

The CSA says it is proposing policy-based approach "to promote transparency in the services they provide to clients and to foster an understanding among market participants about proxy advisory activities."
The National Policy 25-201 Guidance for Proxy Advisory Firms is open for comment until June 23.

NSAA cracks down on 'insufficient' disclosure requirements
The North American Securities Administrators Association (NASAA) called for improved fee disclosure in a report released Thursday, after finding a disparity in how U.S. brokers disclose their fees and dubious charging practices.

A survey, conducted by the Investment Products and Services Project Group within NASAA's Broker-Dealer Section, found that disclosure methods lacked uniformity, ranging from single-paragraph to seven-page fee explanations, and the use of conflicting terminology, and locations identified.

Inconsistent disclosure requirements; including those buried in small print or account-opening documents, lose their effectiveness, NASAA notes. The survey also found inconsistencies in fee disclosures including markups on transfer fees ranging from 100% to 280% above the wholesale cost, and other services, which may violate state laws and regulatory rules. .

IIROC seeks to tighten its reigns on electronic trading
The Investment Industry Regulatory Organization of Canada (IIROC) proposed Thursday rule changes to equalize the level of oversight and scrutiny active traders face regardless how they access the markets.

In its revised proposals, IIROC wants to ensure that similar trading activity occurring from various third-party electronic access points is supervised and regulated in the same way.

The proposal would also require dealers - including foreign dealers - conducting order execution services to include client identifiers on the orders of active traders that make an average of 500 orders per trading day and to reveal the identity of the client to IIROC. Risks associated with lack of intermediation by OES dealers will also need to be addressed in policies and procedures and systems of supervision and control.

Meanwhile, IIROC has also introduced a new secure email service for communicating with its dealers. The new email service, OneWorld, announced Tuesday, will be used for transmitting confidential, private, or sensitive, information between the self-regulatory organization (SRO) and its dealers.
IIROC will phase out its EMX service and delete all historical content by Sept. 1.

ASC reciprocates OSC bans; reverses former decision
The Alberta Securities Commission (ASC) has reciprocated bans the Ontario Securities Commission (OSC) imposed against former investment banker, Richard Moore, reversing a decision it made earlier this year.

The OSC came to a settlement with Moore last April after the accused admitted to acting contrary to the public interest and engaging in illegal insider against Ontario securities laws

The ASC initially declined to reciprocate the ban citing a lack of information in the case.

Following a parallel investigation, the United States Securities and Exchange Commission also reached a settlement with Moore.
In the ASC decision, Moore must cease trading in (with limited exceptions) or purchasing securities, with all Alberta securities laws exemptions not applying to him, for 10 years; is prohibited from becoming or acting as a director and/or officer of any reporting issuer, for 10 years; and is prohibited from becoming or acting as a registrant, an investment fund manager, a promoter in respect of a reporting issuer, or a director and/or officer of any registrant or investment fund manager, for 15 years.