Proceedings

PDF Version
PDF Version

IN THE MATTER OF

SECTION 139 OF R.R.O. 1990, REGULATION 1015 (Regulation)

MADE UNDER THE SECURITIES ACT (ONTARIO) (Act)

AND

IN THE MATTER OF

ACCILENT CAPITAL MANAGEMENT INC.

 

WRITTEN SUBMISSIONS TO THE DIRECTOR PURSUANT

TO SUBSECTION 26(3) OF THE ACT

DATE:
March 5, 2004
 
DIRECTOR:
Julia Dublin
Senior Legal Counsel
Capital Markets

DIRECTOR'S DECISION

Decision

Accilent Capital Management ("ACM") is registered in the categories of Investment Counsel Portfolio Manager and Limited Market Dealer. By letter dated February 5, 2002 the Manager, Compliance advised ACM that as its audited financial statements for the year ended October 31, 2003 had not been delivered within 90 days of the year end as required by section 139 of the Regulation under the Act, that terms and conditions would be imposed on ACM's registration, and a late filing fee would be due. The statements were filed 7 days past the statutory deadline on February 10, 2004.

By undated letter, ACM has exercised its right under subsection 26(3) of the Act to be heard in writing in respect of a Director's decision as to whether to impose terms and conditions on its registration and whether it should pay a late filing fee of $700. Exercising the authority of the Director delegated to me, I find that ACM should pay the late filing fee and that the terms and conditions proposed by OSC staff should be attached to ACM's registration for a period of three months.

Reasons

Section 139 of the Regulation under the Act requires every registrant to deliver to the OSC a copy of its audited financial statements within 90 days of its financial year end. On January 8th, 2004, at its auditor's request, Accilent requested confirmation of the amount of trailing commissions and other sums paid to ACM by Bullion Management Services (BMS) for marketing and promotional services rendered by ACM in respect of the Millennium Bullion Fund. There had been some commercial disagreements between BMS and ACM, and the parties and the arrangement had been terminated by the time of the request. ACM did not indicate that the information was needed by the end of January.

On January 29th ACM learned that the commission information had not yet been received from BMS. ACM repeated its request about 10 days later, but again did not specify a deadline. BMS was not advised of the deadline until ACM's third request for the information on January 29th, after which it took 8 days to respond with the numbers requested. BMS would not undertake to provide the information in time for ACM to file its financials. ACM advised the OSC of the potential problem on January 29th. ACM argues that BMS's delay in providing the requested information was so unreasonable and unexpected that it should not have to face any late filing penalties.

While I have some sympathy for ACM in that BMS does seem to have taken a long time to supply fairly straightforward information, I do not think the late filing penalties should be waived. Filing financial statements on time is an important way in which registrants demonstrate their continued suitability for registration, and I would expect that all reasonable precautions would be taken to ensure that all the necessary information is gathered in time. However, ACM's expectation that it would receive the third party information that it needed to file on time was not completely unreasonable, ACM was in compliance with its capital requirements at all times, and ACM contacted the OSC to discuss its problem prior to the deadline, so the terms and conditions should be imposed for a period of three months only.

"Julia Dublin"

 

SCHEDULE "A"

TERMS AND CONDITIONS OF REGISTRATION ON

Accilent Capital Management Inc. (the "Registrant")

The Registrant shall deliver on a monthly basis with the Compliance section of the Ontario Securities Commission ("the Commission"), attention Financial Analyst, effective with the month ending February 29, 2004, the following information:

 

(1) year-to-date unaudited financial statements, which includes a balance sheet and income statement prepared in accordance with generally accepted accounting principles;

(2) month end calculation of excess free capital;

no later than three weeks after each month end.

The above terms and conditions of registration are agreed to by:

_________________________
[Compliance Officer]
 
____________________
Date