The Investment Fund and Asset Management industries encompass a broad range of vehicles and services. The term “investment funds” takes into account such diverse entities as public mutual funds, closed-end funds, private investment funds, labor-sponsored or venture capital funds, and scholarship plans. Investment funds can vary in terms of legal structure, ownership, and investment criteria or goals.
In Canada, the largest of these funds are pension plans, sovereign wealth funds, private equity firms, and hedge funds. “Asset management,” also known as “investment management” or “fund management,” involves the discretionary management of securities and other assets to achieve the investment objectives of individuals and/or institutions. Clients in this space raise, invest, and manage capital on behalf of others.
Due to the scope of activities and providers serviced within this practice area, lawyers often focus on particular aspects of it. Lawyers in this area have mandates in:
- the establishment of new funds;
- offerings of fund securities by prospectus or private placement;
- advising as to regulatory compliance and disclosure obligations;
- advising as to access to US and offshore markets for Canadian funds and access of US and offshore funds to Canadian markets;
- fund mergers and conversions;
- advisor and dealer registrations;
- custodial arrangements;
- reviewing sales communications and distribution plans; and
- advising on the fiduciary duties of participants and on general governance issues.
In May 2020 the Canadian Securities Administrators (CSA) issued updates on recent actions of securities regulators to help investors weather the uncertain economic times and capital markets caused by the COVID-19 pandemic. “We understand this is a very difficult time for many Canadians who depend on their investments to meet their current and future financial needs,”1 said Louis Morisset, president of the CSA and chief executive officer of the Autorité des marchés financiers.
Through a new information hub (www.securities-administrators.ca), the CSA shares COVID-19‒related news releases and information that explain regulatory reliefs and promote investment fraud awareness. The CSA has noted a rise in potentially fraudulent investment solicitations relating to COVID-19 and therefore warns investors to be careful in dealing with such schemes, which “often appear legitimate because they refer to current news, medical reports and social and political developments.”2
The CSA has been focusing on various policy initiatives to protect and to support investors, such as the client-focused reforms. It is also working on a proposed regulatory framework that aims to more effectively safeguard clients who are older or who are considered vulnerable.
Two blanket orders were recently published by the CSA that offer investment funds and non-investment fund issuers temporary relief from some regulatory filings and delivery obligations in the context of the pandemic, provided that these issuers and funds have filing deadlines that fall within certain specified periods.
The CSA is also cooperating with law enforcement agencies, regulatory bodies, international securities regulators, and other international bodies, such as the International Organization of Securities Commissions and the North American Securities Administrators Association’s COVID-19 enforcement task force, to continue with its mission to safeguard investors.
The CSA said that it is likewise looking to strengthen the Ombudsman for Banking Services and Investments, which is an independent dispute resolution service available to investment firms and clients who cannot resolve their disputes on their own.
In light of the current economic climate, the CSA encourages investors to develop a better understanding of their financial goals and the fees and charges that they pay, possibly with the aid of a registered advisor. If investors are struggling financially, they can also opt to discuss possible reliefs and fee waivers with their registered advisors and firms.
- Carolino, Bernise. “Canadian securities regulators update investors on pandemic-related measures.” Canadian Lawyer. May 28, 2020. https://www.canadianlawyermag.com/practice-areas/corporate-commercial/canadian-securities-regulators-update-investors-on-pandemic-related-measures/330025.
- “Canadian securities regulators provide update to investors in response to COVID-19.” Autorité des marches finaciers. May 21, 2020. https://lautorite.qc.ca/en/general-public/media-centre/news/fiche-dactualites/canadian-securities-regulators-provide-update-to-investors-in-response-to-covid-19.