The Investment Dealers Association of Canada today published a set of guidelines for reviewing advertisements, sales literature and other correspondence.

The IDA has revised by-law 29.7 to reduce the requirements for prior approval of advertisements. It now requires firms to implement policies and procedures for the review of these materials. The notice aims to provide guidance to on the development and implementation of such policies and procedures.

It says that the content of any communication determines whether it falls under the definition of advertising. For example, it notes that while simple link on another entities’ Web site, whether or not paid for, is not an advertisement, but any accompanying text or graphics promoting their services would turn it into one.

Also, a letter tailored to a specific client giving advice about his or her investments is not sales literature. “However, any letter sent to more than one client, whether or not purporting to be tailored to their specific requirements or objectives would generally fall within the definition of sales literature.”

General market and economic commentaries and educational seminars do not fall within the definitions of advertising or sales literature. “However, Members’ policies and procedures should include a process to approve the involvement of particular individuals in such endeavours, and guidance and training to ensure that they are aware of the boundaries between general commentary and advertising or sales literature.”

It says that any advertising, sales literature or correspondence used to solicit clients that contains performance reports or summaries must be pre-approved. “This provision does not include, for example, software-generated portfolio reports to clients or material containing price and volume charts for specific equities or yields for specific fixed income securities. It does cover advertisements containing performance reports on mutual funds or asset allocation services, which should be reviewed for compliance.”

Also, third party research is not governed by the by-law concerning advertising. It is dealt with under the rules governing research analysts. “However, members should satisfy themselves as to the bona fides of any third party research provider.”

The guidelines also point out that while “it is the content and purpose of the dissemination of material that determines whether it is advertising or sales literature, not the method of dissemination. However, the wide availability of electronic mail and the Internet raises additional issues.”

It warns that firms should have policies to ensure that all business-related e-mail to clients and prospective clients is captured; that it is a good business practice to have a policy on the appropriate use of e-mail and world wide web access and training on virus-protection; clients and registered representatives should be discouraged from making use of e-mail for order instructions; and, it is improper for registered persons to make anonymous representations or recommendations in Internet chat rooms or bulletin boards.