On May 15, we heard rejoicing in the streets when the Ontario Securities Commission (OSC) confirmed a two-year moratorium on late fees payable when registrants disclose new, or changes to, outside employment or other business activities (OBAs) past the ten business-day filing deadline. Until the moratorium was announced, registered firms were subject to a late fee of $100 per business day (up to a maximum of $5,000 per year) for late filings with respect to OBAs.
The moratorium is backdated to January 1, 2019 and will end no later than December 31, 2021. During this period, the OSC will work on clarifying the disclosure requirement.
The late fees moratorium applies only in respect of OBAs. Late fees still attach to, among other things, delinquent filings to amend other information on Form 33-109F4 about registered individuals or on Form 33-109F6 about a registered firm.
Although the fee moratorium may offer some immediate financial relief, we encourage firms to remain focused on ensuring that new and changed OBAs are disclosed promptly to the firm and that updated OBA disclosures are consistently filed on time, for the following reasons.
- The late fee moratorium doesn’t change the underlying requirement. Failure to disclose new or changed OBAs by the filing deadline is a breach of securities legislation.
- Non-disclosure or late disclosure of OBAs by an individual to their firm could make it harder for the firm to address potential conflicts of interest before they become a problem. As a good practice, we recommend that firm policies require such disclosure before the individual becomes involved in, or effects changes to, an OBA.
- Patterns of late and/or inadequate disclosure of OBAs are a risk factor that could lead to more intrusive, frequent or extensive regulatory audits.