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CSA cautions issuers about problematic promotional activities

  • Securities - CSA Image

Nov 29, 2018

On November 29, 2018, the Canadian Securities Administrators (CSA) published CSA Staff Notice 51-356, "Problematic promotional activities by issuers", cautioning companies to avoid promotional activities that may artificially increase an issuer’s share price or trading volume, or may mislead investors.

The notice outlines CSA Staff’s concerns with certain promotional practices, including dissemination of unbalanced or unsubstantiated material claims. Such practices have been observed among issuers in the venture market, though expectations about disclosure and promotional activities apply to all issuers.

Examples of promotional activities that may be misleading include:

  • Disseminating presentations, marketing materials, social media posts, or other information that describe early-stage plans with unwarranted certainty, or make unsupported assertions about growth of markets or demand for a product;
  • Announcing an issuer name or business change to reference an emerging industry or technology without a supporting business plan or comprehensive risk disclosure;
  • Compensating third parties who use social media and general investing blogs to promote issuers, but do not disclose their agency, compensation or financial interest.

CSA members will continue to monitor promotional activities undertaken by, or on behalf of, issuers, and will take action as necessary, including ordering a clarifying news release, a removal of overly promotional language from company communications, or a re-filing of disclosure documents.

Review the press release on the CSA's website and the Staff Notice on the CSA members’ website.

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