Section 3.1 - Order pursuant to section 3.1 of Rule 31-501 to exempt CIBC InvestorServices Inc. from subsection 1.1(1) of Rule 31-501 to allow CIBC Investor ServicesInc. to temporarily employ certain individuals as salespersons who are alsoregistered as salespersons and employed by a full service investment dealeraffiliate subject to specified conditions.
Securities Act R.S.O. 1990, c. S. 5, as am.
Ontario Rules Cited
Rule 31-501- Registrant Relationships (1997) 20 O.S.C.B. 4633, ss. 1.1(1), s. 3.1.
IN THE MATTER OF
CIBC INVESTOR SERVICES INC.
(Section 3.1 of the Rule)
UPON the application of CIBC Investor Services Inc. ("CIBC") dated March 9,2000, March 16, 2000, April 3, 2000 and April 13, 2000, and certain individualsseeking to be registered with CIBC (collectively, the "Applicants") to the OntarioSecurities Commission (the "Commission") for an exemption pursuant to section 3.1of the Rule, exempting the Applicants from subsection 1.1(1) of the Rule to allowCIBC to temporarily employ certain individuals as salespersons who are alsoregistered as salespersons and employed by a full service investment dealeraffiliate of CIBC (the "Application");
AND UPON considering the Application;
AND UPON the Applicants having represented to the Commission that:
1. CIBC is a member of the Investment Dealers Association of Canada ("IDA")and is registered as a dealer in the category of investment dealer or itsequivalent in each of the provinces and territories of Canada;
2. Between October 1, 1999 and January 31, 2000, CIBC experienced anunanticipated 96% increase in the number of phone calls received during anormal trading day and is currently receiving a similar volume of phone calls;
3. CIBC has experienced an unanticipated increase in the number of dailytrades executed during the past six months;
4. CIBC has been endeavouring to address the increased demand for itsservices and continues to implement plans to accommodate the increase intrading volumes and the number of phone calls received and is in a positionto accommodate current and anticipated trading levels if the temporary reliefrequested in the Application is granted;
5. In order to better service its clients, CIBC seeks to employ, on a temporarybasis only, salespersons ("Temporary Salespersons") who are alreadyemployed by, and registered with, CIBC World Markets Inc. (the "Full ServiceAffiliate"), a full service investment dealer firm that is an affiliate of CIBC andalso a member of the IDA, and has made application for registration with theIDA on behalf of the Temporary Salespersons to be concurrently registeredwith CIBC;
6. CIBC is prohibited from employing the Temporary Salespersons pursuant tosubsection 1.1(1) of the Rule which expressly prohibits a registeredsalesperson from acting or being registered as a salesperson with anotherregistrant without an exemption;
7. While acting as a registered representative of CIBC, TemporarySalespersons will be remunerated solely based on a flat fee per hour, willonly accept and process orders over the phone and will be restricted fromproviding any advice or making any recommendations to clients of CIBC;
8. Each Temporary Salesperson will be required to preserve the confidentialityof information in relation to the clients of CIBC and the Full Service Affiliate,and will be prohibited from using information in relation to the clients of CIBCwhile working for the Full Service Affiliate and will be prohibited from usinginformation in relation to the clients of the Full Service Affiliate while workingfor CIBC, and CIBC and the Full Service Affiliate have implemented policiesand procedures to preserve the confidentiality of client information and tomonitor the transfer of customer accounts;
9. Each Temporary Salesperson will be registered as a registeredrepresentative of both CIBC and the Full Service Affiliate in accordance withapplicable IDA registration requirements and the registration requirements ofthe Act and Regulations made under the Act and will not be required to acton behalf of CIBC for more than twelve hours per week;
IT IS ORDERED, pursuant to section 3.1 of the Rule, that the employment ofTemporary Salespersons by CIBC and, concurrently, the Full Service Affiliate isexempt from subsection 1.1(1) of the Rule, respectively, provided that:
1. Temporary Salespersons performing services for clients of CIBC shall onlybe remunerated based on a flat fee per hour for such services;
2. Temporary Salespersons shall only accept and process orders from CIBCclients over the phone;
3. Temporary Salespersons shall not provide any advice or make anyrecommendations to clients of CIBC;
4. Temporary Salespersons shall preserve the confidentiality of information inrelation to the clients of CIBC and the Full Service Affiliate, and areprohibited from using information in relation to the clients of CIBC whileworking for the Full Service Affiliate and are prohibited from using informationin relation to the clients of the Full Service Affiliate while working for CIBC;
5. CIBC and the Full Service Affiliate shall implement policies and proceduresto ensure:
(i) the preservation of the confidentiality of client information;
(ii) the actions of the Temporary Salespersons are in compliance with theterms and conditions of this order and Ontario securities law; and
(iii) any transfer of customer accounts is appropriately monitored andsupervised; and
6. The relief provided in this Order shall expire on September 17, 2000.
April 17th, 2000.