PrefBlog

Well, so much for the pretense of independent and objective advice!

Toronto-Dominion Bank has taken unusual steps to discourage some clients from investing in the marijuana sector.

The bank is limiting the ways in which its advisers discuss the industry with clients, banning staff from recommending almost all marijuana firms and exchange-traded funds (ETFs), according to a recent internal e-mail viewed by The Globe and Mail. TD is also prohibiting portfolio managers from proactively adding most cannabis shares to certain client investment accounts – unless clients specifically instruct their adviser to do so.

As a result, the bank’s investment advisory channel – TD Wealth Private Investment Advice (PIA) – has put dozens of pot stocks and the four Canadian-listed cannabis ETFs onto its non-approved list of securities, leaving advisers with only three Canadian marijuana stocks to suggest.
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Investors who use the bank’s online discount brokerage – TD Direct Investing – can buy and sell pot stocks without issue, as those trades are self-directed.

The restrictions put on advisers who work at PIA appear to be driven out of concern of the legal risks the bank could face in the United States, where cannabis is legal in some states but illegal under federal law.

“This is an evolving issue with legal ramifications in the U.S. Therefore, we are restricting our advisers from counselling clients to acquire shares in certain cannabis-organizations with operations in the U.S.,” TD spokeswoman Emily Vear said in an e-mail.
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In the internal e-mail sent to TD advisers at the end of March, TD warned that cannabis companies “with U.S. touchpoints could create significant legal risks to [TD Wealth Private Investment Advice] due to the application of U.S. federal laws.” Last week, it wouldn’t explain what those risks are.

I’m sure that if I started tailoring my advice to reduce my company’s legal risk in a foreign country, I’d be getting an uncomfortable visit from the OSC! But don’t worry, regulation fans! I’m sure TD will be OK.

This entry was posted on Monday, April 9th, 2018 at 7:01 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.