TORONTO, April 14 (Reuters Breakingviews) - Canadian regulators have halted trading in 11 exchange-traded funds after their sponsor, Emerge Canada, failed to file audited financial statements by a deadline of March 31, the Financial Times reported. The highly unusual move is concerning for investors. And not just those trapped in the ETFs.
Toronto-based Emerge Canada, which distributes Cathie Wood’s Ark Invest ETFs among other products, failed to find a replacement auditor after announcing in December that it ended its relationship with the previous auditor, BDO Canada. Emerge Canada has been looking for a new auditor ever since.
The damage appears to be limited to these funds, but the message it sends is hardly inspiring. Some investors flocked to invest in Canadian ETFs during the U.S. regional bank turmoil. Trapping investors against their will in ETFs is not a good marketing strategy for any investment destination. If Canada wants to build on its new-found safe haven status, it will have to make sure the problems at Emerge Canada are short-lived. (By Sharon Lam)
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