On October 15, the Ontario Securities Commission (OSC) released its Investment Funds Branch Annual Report for 2010 as well as its Compliance and Registrant Regulation Branch Annual Report.
The Investment Funds Branch (IF) report provides an overview of the IF Branch's major policy initiatives for the year (including with respect to the CSA's point of sale project and the modernization of investment fund product regulation) and also describes the IF Branch's ongoing reviews of the prospectus and continuous disclosure filings of Ontario-based investment funds.
Meanwhile, the Compliance and Registrant Regulation (CRR) Branch report summarizes the CRR Branch's activities and initiatives for the year (including, notably, with respect to registration reform), provides information for firms and individuals applying for registration for the first time and reviews its findings for the normal course reviews it conducted of regulated registrants. With respect to the latter, the CRR Branch found that the percentage of firms requring "significantly enhanced compliance" rose from 32% in fiscal 2009 to 50% in fiscal 2010. Meanwhile, referrals to the enforcement branch due to serious breaches of securities law jumped from 4% to 10% of field reviews.
General deficiencies identified by the CRR Branch included improper marketing practices on the part of large portfolio managers, inadequate written policies and procedures on the part of newly registered portfolio managers and prohibited investments for investment funds.