Tougher Rules for Investment Promotions

Summary#

• This bill updates Manitoba’s Securities Act. It aims to protect investors from misleading promotions, strengthen oversight of financial “benchmarks” (common reference rates and indexes), and set up a stronger way to resolve complaints with investment firms.

• It adds clear rules against false or high‑pressure sales tactics, limits risky promises made during promotions, and gives a new dispute service power to order firms to fix problems and pay compensation.

• Key changes:

  • Creates a system to designate and regulate financial benchmarks, their administrators, contributors, and users. Bans false data and manipulation of benchmarks.
  • Defines and limits “promotional activity,” including bans on predicting future prices and claiming a listing on an exchange without written permission.
  • Bars unfair practices in promotions, such as high‑pressure tactics or taking advantage of vulnerable people.
  • Sets up a designated dispute resolution service for clients of registered investment firms, with binding orders that can include compensation and other fixes.
  • Clarifies when experts and others are liable for misstatements in offering documents and expands investor rights if required documents are not provided.
  • Pauses a civil lawsuit if the securities commission is already holding a compensation hearing about the same loss.
  • Adds a rule against aiding or abetting violations of securities laws.

What it means for you#

• Investors and savers

  • You should see fewer hype‑driven or misleading investment promotions. Firms cannot predict future prices or make listing claims without approval.
  • Salespeople cannot use unfair practices, like high‑pressure tactics or taking advantage of age, disability, or low literacy.
  • If you have a complaint with a registered investment firm, a designated dispute service can order the firm to compensate you and correct errors (for example, fees, credit reports, or contract terms). Its orders are binding and enforceable in court.
  • If the commission is holding a hearing that includes your claim for compensation, any court case you started for the same loss will be paused until that process ends. You can still file in court to preserve your deadline.

• People who see investment promotions (including online)

  • Promoters cannot promise to buy back your investment or refund your money, unless the product’s terms already include that right or other limited exceptions apply.
  • Promoters must not leave out key facts that make a statement misleading.

• Borrowers and investors tied to benchmarks (like common interest rate indexes)

  • Benchmarks used to set rates or measure performance will face stronger oversight. It will be illegal to submit false data or manipulate a benchmark.
  • Users may be limited to designated benchmarks and must follow disclosure rules, which can reduce the risk of unfair rate setting.

• Small businesses and start‑ups raising money

  • Your promotional materials face stricter rules against predictions and misstatements.
  • Liability rules for misstatements in offering documents are clarified and extended to other prescribed disclosure documents, so careful review is more important.

• Investment firms and advisors (registrants)

  • You may be required to join and comply with a designated dispute resolution service. Orders can require compensation and other remedies.
  • New rules govern promotional activity and unfair practices. Claims about future prices and exchange listings are restricted.
  • If you administer, contribute to, or use benchmarks, you must meet governance, conflict‑of‑interest, record‑keeping, and contingency‑plan requirements set by regulation. Using non‑designated benchmarks may be restricted or banned.
  • A new “aiding and abetting” rule expands enforcement reach for helping others break securities laws.

Expenses#

No publicly available information.

Proponents' View#

• Protects investors by cracking down on misleading or high‑pressure promotions and unfair sales tactics.
• Gives people a faster, simpler way to get compensation and concrete fixes from investment firms, without needing to go to court.
• Strengthens the integrity of benchmarks that affect loan rates and investment returns by banning false submissions and manipulation, and by setting governance standards.
• Clarifies accountability for statements in offering documents, helping ensure information given to investors is accurate and complete.
• Reduces duplicate proceedings by pausing court cases when the commission is already handling a compensation claim.

Opponents' View#

• Compliance costs may rise for firms, especially smaller issuers, due to stricter promotion rules, added documentation duties, and benchmark governance requirements.
• Broad limits on “promotional activity” could chill normal business communications or investor education.
• Binding decisions by a dispute resolution service, with no commission review and outside the Arbitration Act, may raise fairness and due‑process concerns for firms.
• Pausing civil lawsuits during commission proceedings could delay court‑based remedies for some investors.
• Strict controls on the use of non‑designated benchmarks might reduce flexibility or innovation in financial products.