CIS 3.3 False or misleading prospectus

The authorised fund manager, subject to (3), (4) and (5):

1. (a)

   must ensure that the prospectus does not contain any untrue or misleading statement or omit any matter required by the rules in this sourcebook to be included in it; and

2. (b)

   is liable to pay compensation to any person who has acquired any units in the authorised fund and suffered loss in respect of them as a result of any such statement or omission. This is in addition to any liability incurred apart from this rule (CIS 3.3.1 R).

The authorised fund manager is not in breach of (1)(a) and is not liable to pay compensation under (1)(b) if at the time when the prospectus was made available to the public it had taken reasonable care to determine that the statement was true and not misleading, or that the omission was proper, and that:

1. (a)

   it continued to take such reasonable care until the time of the relevant acquisition of units in the scheme;

2. (b)

   the acquisition took place before it was reasonably practicable to bring a correction to the attention of potential purchasers;

3. (c)

   it had already taken all reasonable steps to secure that a correction was brought to the attention of potential purchasers;

4. (d)

   the person who acquired the units was not materially influenced or affected by that statement or omission in making his decision.

The authorised fund manager is also not in breach of (1)(a) and is not liable to pay compensation under (1)(b) if:

1. (a)

   before the acquisition a correction had been published in a manner calculated to bring it to the attention of persons likely to acquire the units in question; or

2. (b)

   it took all reasonable steps to secure such publication and had reasonable grounds to conclude that it had taken place before the units were acquired.

The authorised fund manager is not liable to pay compensation under (1)(b) if the person who acquired the units knew at the time of his acquisition that the statement was untrue or misleading or knew of the omission.

For the purposes of this rule (CIS 3.3.1 R) a revised prospectus will be treated as a different prospectus from the prospectus to which the revision was made.

References in this rule (CIS 3.3.1 R) to the acquisition of units include references to contracting to acquire them.