Investment fund managers are reminded that language used in advertising and marketing materials is subject to certain requirements and restrictions outlined in Part 15 of NI 81-102. The following are a few items to keep in mind:
- A reference to an award is considered by OSC Staff to be a performance rating, and communications containing such references should comply with the requirements set out in NI 81-102.
- The sales communication requirements for mutual funds in Part 15 of NI 81-102 do not permit the use of a performance rating or ranking of a mutual fund that is based partially on a subjective component. An example of a subjective component would be the awarder’s opinion of the quality of the manager of a fund. References to a manager’s award are acceptable but not as part of a fund’s rating or ranking.
- A slide deck used for presentation purposes can sometimes be considered an offering memorandum if securities are described in detail.
- Any claims made in sales communications should be corroborated and underlying assumptions should be made clear.
- Language that is unduly promotional, vague or exaggerated should be avoided. This includes statements such as “superior proven performance” or “superior risk adjusted performance”.
- If performance data is provided, it should be given equal prominence to any other performance data disclosed in the sales communication and not placed in the disclaimer at the end of the communication.
- The regulators do not support listing a client in advertising and marketing materials, even if the client consents.