Disclaimers of Liability for Third Party Information in Prospectuses
This article was originally published in the Investment Funds Practitioner in May 2013.
We have seen disclaimers in prospectuses that relate to the accuracy of third-party information. The disclaimers indicate that the issuer is not responsible for information provided by third parties, which is typically information that is publicly available, including economic data or index information provided by an index sponsor. Staff are of the view that such disclaimers do not reflect the liability for prospectus misrepresentations under securities law. Section 130 of the Securities Act (Ontario) makes an issuer liable for any misrepresentation in a prospectus, even if the misrepresentation was taken from a reliable third-party source. The only defence to a misrepresentation claim available to an issuer is that the purchaser making the claim was aware of the misrepresentation at the time of purchase. As issuers are unable to disclaim liability for third party information in a prospectus, staff’s position is that such disclaimers should not be included in prospectuses.