Canadian Securities Law - Liability/Risk for Posting Models?

rtelford · December 30, 2019, 7:09pm

All,

I am working on a few designer models, however before publishing I need to understand any risks or liabilities as I am a Canadian citizen.

As per the P123 DM FAQs, providing details on an investment model is generally not considered providing buy/sell recommendations in the US.

I would like to see if there are any Canadian (or other) users who are familiar with Canadian securities law or who have looked into this, or work in the industry and fully understand any risks or liabilities being from Canada, or have any good legal contacts who can clearly answer this.

A few years ago I briefly spoke to some Canadian securities lawyers, but didn’t receive a firm answer “yes/no” as to whether providing an investment model is the same as providing recommendations/guidance. I am not a registered advisor.

Feel free to PM me as well.

Any feedback would be very helpful!

Thanks in advance.

Cheers,
Ryan

Barn · December 30, 2019, 7:15pm

Quoted from the link

What Kinds of Advisers Must Register?
The Canadian securities regulators have said that financial advisers to the parties in an M&A transaction are not normally required to register as advisers, even though the M&A transaction may result in trades in securities as a result of their advice. Further, professionals such as lawyers, accountants, engineers, geologists and teachers who provide advice on securities in the normal course of their professional activities are not required to register.

There is also an exemption for giving general advice that is not tailored to a specific recipient, as long as the adviser discloses any financial interest or other potentially conflicting interest it may have. So, providing information through newsletters, articles in newspapers or magazines, or on websites, over the Internet or by radio or television would generally be exempt from the adviser registration requirement if the required disclosure of financial or other interests is made.

https://www.osler.com/en/resources/cross-border/2013/giving-investment-advice-to-canadian-clients

rtelford · December 31, 2019, 1:37pm

Thx Barn, I’ve reached out to Osler for some finer details.

InspectorSector · December 31, 2019, 4:46pm

I phoned the Canadian Law Society several years ago when I had this concern. Basically, the response was not helpful, starting with “why would you want to do that?” According to the strict laws, it is an issue but nobody really cares. it is only if someone raises a complaint that you will get into trouble. So long as you above board about what it is you are doing then I wouldn’t worry too much. Just don’t do things like taking kickbacks from companies to promote them, or pump-and-dump schemes. Simply publishing Designer Models should not be an issue. Don’t do anything that could infuriate people and you will likely be alright. Not the answer you are hoping for but that is pretty much the situation.

Steve

rtelford · December 31, 2019, 6:57pm

Steve, until now I didn’t realize you resided in Canada as well. Can I ask what province/area? Feel free to PM me if you’d prefer. Would be nice to meet up with some fellow quants face to face one of these days

Thanks for your feedback. I reached out a couple of years ago to some securities lawyers, they shone a very negative light over it, but didn’t really answer the question. I’ve revisiting this, I’ll let you know what I find out.

Ryan

InspectorSector · December 31, 2019, 8:10pm

I am in Ottawa. How about you?

rtelford · December 31, 2019, 8:49pm

Nice. I’m in Ancaster, just west of Hamilton, Ontario. We should arrange a P123 Ontario (and adjoining US states if practical) meet-up one of these days.