Canadian regulators crank up expectations for exempt market

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Financial Post  | Last Updated: 13/07/18 4:33 PM ET
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Canadian regulators appear to be sending a warning to players in the lightly regulated exempt market that certain behaviours revealed by a recent industry sweep won’t be tolerated.

On Thursday, the Canadian Securities Administrators, the umbrella group for provincial securities regulators, issued new guidance on the disclosure of key information including the risks of borrowing money to purchase securities, and the obligation of dealers to assess suitability before executing a transaction.

In regulatory parlance, guidance refers to behaviours that are expected, and failure to meet expectations can result in heightened scrutiny and regulatory enforcement action that can lead to fines and other sanctions.

Historically, the exempt market has operated on the premise that the private investors involved in it have enough wealth — and therefore investment sophistication — to require less policing by regulators.

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