Moving target: As Ontario eyes U.S. fund disclosure model, SEC considers looser standard

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The task force is trying to strike a balance between granting more transparency for companies and more freedom for investors, according to Walied Soliman, the chair of the task force and the Canadian chair of law firm Norton Rose Fulbright.

“We think that that balance is quite fair, and we’re looking forward to comments from both the issuer and fund community on these recommendations,” Soliman said in an interview with the Financial Post.

The lack of transparency hinders shareholder engagement and the ability for issuers to respond to shareholder concerns

Ontario task force report

John Wilson, managing partner and co-CEO at Ninepoint Partners, said that if Ontario introduces its own form of 13F disclosures, there would have to be stark differences.

For one, the floor likely can’t be set at a number that compares to the SEC’s US$3.5 billion, given the disparity between AUM for Canadian and American funds.

“Our liquidity is different, the breadth of our market is different, the number of players here that are meaningful is very different,” said Wilson. “The TSX is a fraction of the S&P 500, so you don’t need to be nearly as large to have undue influence.”

More important for Wilson, this disclosure needs to have some sort of significance. One common complaint that multiple fund managers have about the SEC process is that many don’t feel that the regulator is actually analyzing the reports because of the sheer number of them  — about 5,000 — that are submitted. They think the reports simply end up in a black hole of sorts.

Wilson has been filing 13Fs for 20 years and has never fielded a question about them. Last year, the Financial Post found that a major Canadian pension fund, British Columbia Investment Management Corp., had excluded significant chunks of its portfolio in 13Fs for 10 consecutive quarters and that the SEC was unaware. The last time a firm appears to have gotten the attention of the SEC was in 2007 when Quatro Global Capital LLC stopped filing 13Fs for three years.

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