Securities Law & Instruments

[Update: The terms and conditions imposed by the Director in this decision were removed as at June 28, 2004.]

IN THE MATTER OF

THE REGISTRATION OF

MONARCH DELANEY FINANCIAL INC.

OPPORTUNITY TO BE HEARD BY THE DIRECTOR

PURSUANT TO SUBSECTION 26(3) OF THE SECURITIES ACT

Date:
June 23, 2004
 
Director:
David M. Gilkes
Manager, Registrant Regulation
Capital Markets Branch
 
Submissions:
Cynthia Huerto
Leslie Daiter
For the Commission
Stephen Freedman
For Monarch Delaney

Background

1. Monarch Delaney Financial Inc. (MFDI) was first granted registration in August 1987 in the category of Mutual Fund Dealer.

2. On May 31, 2004, the sole registered officer and also compliance officer of MDFI was terminated in good standing. There were no other registered officers to take the position of compliance officer with MDFI.

3. On June 8, 2004, Commission Staff sent a letter to Mr. Stephen Freedman of MDFI advising that Staff had recommended to the Director that terms and conditions be imposed on MDFI as it no longer had a registered officer and a compliance officer.

4. The following terms and conditions were proposed by Staff:

Monarch Delaney Financial Inc. and all its directors, officers and employees are restricted to non-trading under the Securities Act (Ontario).

5. After receiving the letter from Staff, Mr. Stephen Freedman of MDFI requested an Opportunity to be Heard by the Director pursuant to subsection 26(3) of the Act that states:

(3) Refusal -- The Director shall not refuse to grant, renew, reinstate or amend registration or impose terms and conditions thereon without giving the applicant an opportunity to be heard.

6. The Opportunity to be Heard was conducted through written submissions. MDFI provided its submission on June 14, 2004 and Staff provided their submission on June 16, 2004.

Rule 31-505, Conditions of Registration

7. The Applicant has not met the requirements of Rule 31-505, Conditions of Registration. This rule reads in part:

(1) A registered dealer or adviser shall designate a registered partner or officer as the compliance officer who is responsible for discharging the obligations of the registered dealer or adviser under Ontario securities law.

8. MDFI does not meet this requirement of registration. For this reason, Staff proposed a term and condition that would prevent any registered person with MDFI from engaging in trading.

9. MDFI sponsored a candidate for registration as an officer. However, Staff has recommended to the Director that registration for this candidate not be granted.

10. MDFI acquired another mutual fund dealer which has a registered officer and compliance officer. MDFI submitted that it will amalgamate with this other company but it did not provide a date when this amalgamation would be completed.

Decision

11. It is required as per Rule 31-505 that a dealer must have a compliance officer. The duties of the compliance officer are described in the Rule.

(2) The person designated under subsection (1) by a registered dealer or adviser shall also be responsible for opening each new account, supervising trades made for or with each client and supervising advice provided to each client or, if a branch manager is designated under subsection 1.4(1), for supervising the branch manager's conduct of the activities specified in subsection 1.4(2).

12. Currently MDFI does not have any person in place to take responsibility for opening new client accounts and supervising trades.

13. Without a compliance officer in place there is a risk to existing investors and new investors. In addition, it cannot provide services to clients and meet the requirements of the Act.

14. Based on the submissions I believe that MDFI should have its activities restricted. I am imposing the following terms and conditions on registration of Monarch Delaney Financial Inc.

1. Effective immediately, Monarch Delaney Financial Inc. shall not open any new accounts.

2. Effective immediately all salespersons sponsored by MDFI are prohibited from trading.

3. The registration of Monarch Delaney Financial Inc. will expire at the end of business on July 30, 2004 unless it has a registered officer and compliance officer by that time.

June 23, 2004.

"David M. Gilkes"