The ISA has published a further COVID-19-related guideline. A question was raised to it as to whether, in the extraordinary circumstances of the corona crisis, it would be permissible for licensed portfolio managers to attach a letter of advice regarding the crisis and its possible consequences to quarterly reports, even though regulations do not allow for the attachment of additional materials to such reports.
The ISA replied in the affirmative. It noted that the relevant regulations do indeed set out the principle of a uniform reporting format to clients, and provide that a statement or an accompanying letter may not be attached.
This notwithstanding, though, the ISA stated that since the special circumstances created by the corona crisis are liable to create a heightened need on the part of clients to receive explanations and advice, the need to deal with this would increase the pressures already felt by portfolio managers if required to provide telephone responses to client during this period.
Consequently, with a view to helping clients to obtain a better understanding of the quarterly report, the ISA advised that it would view an explanatory letter sent with the next quarterly report to clients (covering the first quarter of 2020), which letter would explain the report against the background of the crisis, as a notification separate from the report, provided that the letter would be prepared as a separate document, be clearly distinct from the report itself and not appear to be a parallel report in a different format.
