Prospectuses made simple

Say goodbye to the 80-plus page “simplified” prospectus for investment products, It’s about to get a lot shorter.

In keeping with the Ontario Securities Commission push for plain-speak, the commission is working with security and insurance regulators to examine ways of simplifying the disclosure documents given to investors.

In a speech to the Economic Club of Toronto, OSC chair David Wilson said the aim is to develop a two-page, front and back, point-of-sale disclosure document for mutual funds and segregated funds.

Wilson acknowledged that the current disclosure regime is too complex and excessively long to be of use to investors. When these documents arrive in the mail, they “usually go straight to the blue box,” he says.

“The prototype document will contain all the key information about the product, the sales charges and the fees that the investor is being asked to pay,” he explains. The public will get its first glimpse of the prototype on June 15.

The rest of Wilson’s speech focused on some of the current compliance and enforcement challenges facing the commission, including the ongoing battle against old cons like pump-and-dump schemes that have been “juiced up” with new technology.

To combat these schemes, the OSC is setting up a new unit to fight scams and illegal distributions, including boiler rooms, and will work alongside other law-enforcement agencies.

The OSC chair hopes the beefed-up RCMP Integrated Market Enforcement Teams will help. Wilson notes that IMETs annual budget has increased by a third to $40 million from $30 million. Although this is a positive move, Wilson notes the funding is contingent on IMET improving its overall effectiveness.

Since launching in 2003 to focus on securities crimes, IMET hasn’t laid charges in any of the high-profile investigations it has launched.

Wilson concluded his speech by urging audience member Gerry Phillips, the Ontario minister responsible for securities regulation, “to chart a path toward the urgently needed modernization of our securities regulatory structure.”

Filed by Mark Brown Advisor.ca, mark.brown@advisor.rogers.com