November 29, 2018 CSA Securities

Vancouver – The Canadian Securities Administrators (CSA), today 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.

“Misleading promotional activity by issuers undermines the integrity of our capital markets and puts investors at risk of harm,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “We are publishing this notice to remind issuers of our expectations in this area.”

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.

The CSA notice, which can be found on CSA members’ websites, urges companies to familiarize themselves with prohibitions against misleading statements, acts or conduct.

The CSA, the council of the securities regulators of Canada's provinces and territories, co- ordinates and harmonizes regulation for the Canadian capital markets.

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