The British Columbia Securities Commission (BCSC) has published BC Notice 15-702 Prohibitions against Misrepresentations and False or Misleading Statements (The Staff Notice). The Staff Notice provides guidance about the prohibitions in sections 50(2) and 50(3) of the British Columbia Securities Act (the Act) against misrepresentations and against false or misleading statements or information while engaged in a promotional activity.
Generally:
- Section 50(2) replaced a previous misrepresentation provision of the Act, section 50(1)(d). Section 50(2) prohibits a person from making a statement that the person knows, or reasonably should know, is a misrepresentation. For there to be a contravention, the statement must be about a material fact, which is defined in the Act as a fact that would reasonably be expected to have a significant effect on the market price or value of a security or on the market price or value of, or obligations under, a derivative.
- Section 50(3) prohibits a person engaged in a promotional activity from making a statement or providing information that is false or misleading or that omits a fact necessary to make the statement or information not false or misleading in circumstances where a reasonable investor would consider that statement or omission important when deciding to buy or trade a security or derivative or in deciding not to buy or trade. Unlike section 50(2) of the Act, section 50(3) does not require that the statement, information or omission concern a material fact. The regulator notes that this prohibition extends to disclosure and continuous disclosure documents in connection to offerings, but to also online securities promotions or marketing, such as promotions on social media, in chat rooms, videos, emails and newsletters.
Any BC market participants making statements, whether oral or written about securities or derivatives must comply with sections 50(2) and 50(3) of the Act. The regulator notes that the prohibitions may be broader than in some other Canadian provinces and territories. Additionally, the regulator warns that it will be applying these standards in disclosure reviews and advises that Enforcement staff will be acting against those market participants it finds in violation of these provisions.
BC Notice 15-702 Prohibitions against Misrepresentations and False or Misleading Statements is available for download from the website of the British Columbia Securities Commission.
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.
