The Ontario Securities Commission (OSC) today published its 2008 Compliance Team Annual Report, which summarizes the findings of compliance reviews of investment counsel portfolio managers, investment fund managers and limited market dealers that were conducted during the 2008 fiscal year.

As part of its oversight of approximately 1,400 market participants, the OSC regularly conducts compliance reviews. These include field reviews, focused reviews, desk reviews and for cause inspections. The OSC uses a risk assessment model, enabling it to efficiently target market participants with higher risk rankings and allocate resources more effectively.

“We expect Ontario market participants will use the 2008 Report as a self-assessment tool to ensure compliance with Ontario securities law,” says Susan Silma, director of compliance and registrant regulation.

The 2008 Report outlines the top three significant deficiencies for fiscal 2008 of portfolio managers, investment fund managers and limited market dealers (LMDs).

Reviews of portfolio managers in the 2008 fiscal year resulted in an average of 14 deficiencies per firm reviewed. An average of four, or 29%, of these
deficiencies were significant. The top three deficiencies were in marketing, capital calculations and personal trading.

Reviews of investment fund managers conducted in the 2008 fiscal year resulted in an average of seven deficiencies per firm reviewed. An average of two, or 29%, of these deficiencies were significant. The top three deficiencies were in marketing, oversight of service providers, and trust accounts.

Reviews of LMDs conducted in the 2008 fiscal year resulted in an average of nine deficiencies per firm reviewed. An average of three, or 33%, of these deficiencies were significant. The top three deficiencies were in suitability and KYC information, use of prospectus and registration exemptions, and disclosure in offering memorandums.

When the OSC finds a deficiency, the market participant has 30 days to respond in writing, outlining steps that it has taken, or will take, to address the deficiency. If OSC staff are not satisfied, they may take further action to ensure compliance, for example by imposing terms and conditions on the registrant or by referring the matter to the Enforcement Branch.