The securities division of The Manitoba Securities Commission protects investors and promotes fair and efficient capital markets throughout the province by conducting operations including registrations, processing of applications and prospectuses, preparing matters for the referral to the Commissioners and conducting investigations, prosecutions and other hearings.
Compliance staff have the authority to conduct reviews of registrants, including portfolio managers, exempt market dealers, investment fund managers, and scholarship plan dealers, registered in Manitoba to determine if a registered firm is complying with securities legislation. Our authority to conduct examinations is set out in section 35(1) of The Securities Act (Manitoba), which gives us the ability to review all of a registrant’s operations.
We use a risk-based approach to select firms for compliance reviews. A registered firm may also be selected for review based on a referral from another department within the MFSA or another regulator, or if the MFSA receives complaints about the firm.
Reviews may be full scope in nature, where we examine the major functional areas of the firm’s operations, or limited scope, where we focus on a particular issue. We also conduct a high-level review of newly registered firms within the first year of registration.
Staff may also conduct reviews of investment dealers and mutual fund dealers. If a firm is registered in multiple categories, it may be subject to compliance reviews by both the MSC and the firm’s self-regulatory organization.
If a registered firm is selected for a compliance review, we will typically provide advance notification and will provide a list of books and records that our staff will examine during the review. The review will include an interview with the firm’s senior management and other key employees. The duration of the review depends on the complexity of the firm’s operations and the nature of the findings.
Once the review is complete, the firm’s senior management will receive a schedule of findings, which outlines deficiencies found during the review and asks the firm to indicate its course of action to correct those deficiencies. If the firm addresses all issues satisfactorily, the file will be closed. If the firm does not adequately address the deficiencies, we may take further action, such as:
- increasing oversight of the firm
- conducting a follow-up review
- imposing terms and conditions
- referring the matter to enforcement
The MSC may take these steps immediately if a finding is particularly serious.