The Ontario Securities Commission reports that it recently carried out reviews of money managers’ fair allocation policies, uncovering some common deficiencies.

Securities rules require money managers to treat clients fairly in allocating investment opportunities and to file a copy of their current fairness policy with the OSC. Of the 40-odd managers the OSC visited, it found that 74% of the fairness policies were missing one or more of the disclosures it expects to see; 26% of the policies currently in use had not been filed with the OSC; 26% of the policies currently in use had not been provided to clients and, 15% of the policies were “generic”.

All of the investment counsel/portfolio managers (ICPM) with disclosure or filing deficiencies have rectified their deficiencies, the OSC reports. And it says its staff ensured that any “generic” policies filed accurately reflected the actual practice of the ICPM.

As well, 9% of the ICPMs included proprietary, employee and/or personal accounts in block trades and allocated a pro-rata share of partially filled blocked trades or IPOs to proprietary, employee and/or personal accounts. All of these ICPMs have now amended, or will be amending, their policies and practices so that client orders are completely filled first.

Also, the OSC reports no issues were noted regarding subadvisers’ compliance with ICPMs’ fairness policies.

The notice goes on to explain what should be in an ICPM’s fairness policy, and it says that its staff will continue to monitor compliance by ICPMs. “Staff will take seriously any deficiencies found in future compliance field reviews,” it warns. “Staff also expects that improved documentation of policies and procedures will result in increased fairness in the allocation of investment opportunities to clients by ICPMs.”