In our July bulletin we provided an overview of the 2016 Annual CRR Report (CRR Report) as well as a reference document outlining key areas with corresponding page references. We will continue to highlight important issues arising from the CRR Report in this and future bulletins. This month, we would like to draw your attention to the following areas of deficiency commonly identified by the CRR:
- Corporate Governance: The CRR Report (p. 36), emphasizes the importance of good corporate governance and establishing an appropriate “tone from the top”. During compliance reviews, Staff will continue to seek evidence that a “culture of compliance” is being communicated frequently and consistently by the UDP and the firm.
A compliance assessment is a key indicator of a UDP and/or firm’s commitment to a strong culture of compliance. Please contact a member of our Regulatory Compliance Group if you would like to discuss compliance assessments in greater detail.
- Referral Arrangements: The CRR Report (p.41), reiterates the problem of inadequate disclosure or lack of agreements relating to referral arrangements previously noted in OSC Staff Notice 33-736 and OSC Staff Notice 33-742.
The question of when a referral constitutes a registerable activity continues to be a murky area, and one the CRR is currently focused on. Contact your usual lawyer at AUM Law if you have any questions regarding referral arrangements.
- Trading in Recognized Options: The CRR Report (p. 54-55), notes that certain individuals who are registered as ARs and PMs are advising clients in recognized options without completing the required courses administered by the Canadian Securities Institute.
Fulfilling the requisite course requirements is commonly overlooked and may lead to an issue with regulators, amongst other things. No options course is not an option!