Trouble first arose for Emerge Canada when the firm’s auditor, BDO Canada LLP, resigned in November, according to a Morningstar report. On April 6, theissued its cease-trade orders — meaning that direct and indirect trading of the funds, including redemptions and distributions, must stop — saying that none of the funds filed their year-end annual disclosure as required by provincial law.
Included in the ban were EARK CN and the Emerge ARK AI & Big Data ETF as well as some of the firm’s women-run ESG funds. Such trading bans are uncommon, according to Todd Sohn, an ETF strategist at Strategas Securities. “I see liquidations quite often, but a cease-trade order, that’s not something I see very often.”Article content“We are working to engage a new auditor and prepare the required financial documents to have the CTO lifted,” Emerge Canada chief executive Lisa Langley wrote in an April 10 letter to investors.
As a result, Ark is now re-evaluating its relationship with Emerge, though it intends to remain in Canada with the offerings it manages directly. “We are certainly evaluating the situation continuously,” Tom Staudt, Ark’s chief operating officer said by phone. “We are prepared to take any action that is required.”
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