Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - relief from theSuitability Requirements, as reflected in paragraph 1.5(1)(b) of OSC Rule 31-505,pursuant to section 4.1 of OSC Rule 31-505, subject to the terms and conditions set outin the Decision Document.

Decision pursuant to s.21.1(4) of the Act, that the IDA Suitability Requirements do notapply to the Filer, subject to the terms and conditions set out in the Decision Document.

Applicable Ontario Statute

Securities Act R.S.O. 1990, c.S.5, as amended, s.21.1(4).

Rules Cited

Ontario Securities Commission Rule 31-505 "Conditions of Registration" (1999) 22O.S.C.B. 731.

IDA Regulations Cited

IDA Regulation 1300.1(b), 1800.5(b), 1900.4.

IN THE MATTER OF THE SECURITIES LEGISLATION OFBRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, NOVA SCOTIA,NEWFOUNDLAND, NOVA SCOTIA AND ONTARIO

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
NORTHERN SECURITIES INC.


MRRS DECISION DOCUMENT


WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of the provinces of British Columbia, Alberta, Saskatchewan,Newfoundland, Nova Scotia and Ontario (collectively, the "Jurisdictions") has received anapplication from Northern Securities Inc. (the "Filer") regarding the operation of theseparate division, eNorthern (the "Division") for:

1. a decision under the securities legislation of the Jurisdictions (the "Legislation") thatthe requirements of the Legislation requiring the Division and its registeredsalespersons, partners, officers and directors ("Registered Representatives") tomake inquiries of each client of the Division as are appropriate, in view of thenature of the client's investments and of the type of transaction being effected forthe client's account, to determine (a) the general investment needs and objectivesof the client and (b) the suitability of a proposed purchase or sale of a security forthe client (such requirements, the "Suitability Requirements") do not apply to theDivision and its Registered Representatives; and

2. a decision under the Legislation, other than the securities legislation ofNewfoundland and Nova Scotia, that the requirements of the Investment DealersAssociation of Canada (the "IDA"), in particular IDA Regulation 1300.1(b),1800.5(b) and 1900.4, requiring the Division and its Registered Representatives tomake inquiries of each client of the Division as are appropriate, in view of thenature of the client's investments and of the type of transaction being effected forthe client's account, to determine (a) the general investment needs and objectivesof the client and (b) the suitability of a proposed purchase or sale of a security forthe client (such requirements, the "IDA Suitability Requirements") do not apply tothe Division and its Registered Representatives;

AND WHEREAS under the Mutual Reliance Review System for Exemptive ReliefApplications (the "System"), the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS the Filer and the Division have represented to the DecisionMakers that:

1. the Filer is a corporation incorporated under the Business Corporations Act(Ontario);

2. the Division is a division of the Filer which operates independently and carries onbusiness at a location separate from the remaining operations of the Filer;

3. the head office of the Filer is located in Ontario and the Division also maintainsoffices and has executive officers and Registered Representatives in Ontario andhas Registered Representatives who are resident in each Jurisdiction;

4. the Filer is registered under the Legislation as an investment dealer and is amember of the IDA;

5. eNorthern is a trade name of the Filer registered with each of the Jurisdictions;

6. the Division operates independently and operates using its own letterhead,accounts, Registered Representatives and account documentation;

7. the Division and its Registered Representatives do not and will not, except asprovided in 13 below, provide advice or recommendations regarding the purchaseor sale of any security and the Filer and the Division have adopted policies andprocedures to ensure the Division and the Division's Registered Representativesdo not and will not, with such exception, provide advice or recommendationsregarding the purchase or sale of any security;

8. when the Division provides trade execution services to clients it would, in theabsence of this Decision, be required to comply with the Suitability Requirementsand IDA Suitability Requirements;

9. clients who request the Division or its Registered Representatives to provide adviceor recommendations or advice as to suitability will be referred to the full-servicedivision of the Filer or another full-service dealer;

10. the Division does not and will not compensate its Registered Representatives onthe basis of transactional values;

11. each client of the Division will be advised of the Decision of the Decision Makersand requested to acknowledge that:

(a) no advice or recommendation will be provided by the Division or itsRegistered Representatives regarding the purchase or sale of any security,and

(b) the Division and its Registered Representatives will no longer determine thegeneral investment needs and objectives of the client or the suitability of aproposed purchase or sale of a security for the client; (both (a) and (b) shallconstitute the "Client Acknowledgement")

12. each client of the Division will be advised that he or she has the option oftransferring his or her account or accounts to the full-service division of the Filer oranother dealer at no cost to the client if the client does not wish to provide a ClientAcknowledgement (the "Account Transfer Option");

13. the Division and its Registered Representatives will continue to comply with theSuitability Requirements and IDA Suitability Requirements for client accounts forwhich no Client Acknowledgement is received for six months following the date ofthis Decision;

14. after the date six months following the date of this Decision, the Division will notpermit a transaction in an account for which a Client Acknowledgement has notbeen received unless the transaction is a sale for cash or a transfer of assets toanother account;

15. all prospective clients of the Division will be advised and required to acknowledgethat:

(a) no advice or recommendations will be provided by the Division or itsRegistered Representatives regarding the purchase or sale of any security,and

(b) the Division and its Registered Representatives will not determine thegeneral investment needs and objectives of the client or the suitability of aproposed purchase or sale of a security for the client, (both (a) and (b) shallconstitute the "Prospective Client Acknowledgement")

prior to the Division opening an account for such prospective client;

16. the Filer and the Division have adopted policies and procedures to ensure:

(a) that evidence of all Client Acknowledgements, Prospective ClientAcknowledgements and Account Transfer Options is established andretained pursuant to the record keeping requirements of the Legislation andthe IDA,

(b) all client accounts of the Division are appropriately designated as being aclient account to which a Client Acknowledgement or Prospective ClientAcknowledgement has been received or being a client account to which aClient Acknowledgement has not been received, and

(c) for any client of the Division who does not provide a ClientAcknowledgement and chooses to exercise the client's Account TransferOption, the Division will transfer the client's account in an expeditiousmanner and at no cost to the client; and

17. the Filer has adopted policies and procedures to ensure that:

(a) the Division operates separately from the full-service division of the Filer,

(b) Registered Representatives of the Division are clearly employed by theDivision and do not handle the business or clients of the full-service divisionof the Filer, and

(c) a list of Registered Representatives of the Division is maintained at all times;

AND WHEREAS under the System, this MRRS Decision Document evidences thedecision of each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;

THE DECISION of the Decision Makers under the Legislation is that the SuitabilityRequirements contained in the Legislation shall not apply to the Division and itsRegistered Representatives so long as:

1. except as permitted by 6 below, the Division and its Registered Representatives donot provide any advice or recommendations regarding the purchase or sale of anysecurity;

2. clients who request the Division or its Registered Representatives to provide adviceor recommendations or advice as to suitability are referred to the full-servicedivision of the Filer or a full-service dealer;

3. the Division operates independently and operates using its own letterhead,accounts, Registered Representatives and account documentation;

4. the Division does not compensate its Registered Representatives on the basis oftransactional values;

5. each client of the Division is advised of the Decision of the Decision Makers andrequested to make a Client Acknowledgement or transfer his or her account to thefull-service division of the Filer or another dealer if the client does not wish to makea Client Acknowledgement;

6. the Division and its Registered Representatives continue to comply, for six monthsfollowing the date of this Decision, with their Suitability Requirements and IDASuitability Requirements for client accounts for which no Client Acknowledgementis received;

7. commencing six months following the date of this Decision, the Division will notpermit transactions in an account for which a Client Acknowledgement has not beenreceived unless the transaction is a sale for cash or a transfer of assets to anotheraccount;

8. each prospective client of the Division is advised of the Decision of the DecisionMakers and required to make a Prospective Client Acknowledgement prior to theDivision or its Registered Representation servicing such prospective client;

9. evidence of all Client Acknowledgements, Prospective Client Acknowledgementsand Account Transfer Options is established and retained pursuant to the recordkeeping requirements of the Legislation and the IDA;

10. for any client who elects to exercise the client's Account Transfer Option, theDivision transfers such account or accounts to the full-service division of the Fileror another dealer in an expeditious manner and at no cost to the client;

11. the Division accurately identifies and distinguishes client accounts for which aClient Acknowledgement or Prospective Client Acknowledgement has beenprovided and client accounts for which no Client Acknowledgement has beenprovided;

12. the Filer has in force policies and procedures to ensure that:

(a) the Division continues to operate separately from the full-service division ofthe Filer,

(b) Registered Representatives of the Division are clearly employed by theDivision and do not handle the business or clients of the full-service divisionof the Filer, and

(c) a list of Registered Representatives of the Division is maintained at alltimes; and

13. if an IDA rule addressing the IDA Suitability Requirements comes into effect, theDecision with respect to the Suitability Requirements will terminate one yearfollowing the date such rule comes into force, unless the Decision Makerdetermines otherwise.

September 7th, 2000.

"William R. Gazzard"

THE DECISION of the Decisions Makers, other than Newfoundland and Nova Scotia, isthat the IDA Suitability Requirements do not apply to the Division and its RegisteredRepresentatives so long as:

1. except as permitted by 6 below, the Division and its Registered Representatives donot provide any advice or recommendations regarding the purchase or sale of anysecurity;

2. clients who request the Division or its Registered Representatives to provide adviceor recommendations or advice as to suitability are referred to the full-servicedivision of the Filer or a full-service dealer;

3. the Division operates independently and operates using its own letterhead,accounts, Registered Representatives and account documentation;

4. the Division does not compensate its Registered Representatives on the basis oftransactional values;

5. each client of the Division is advised of the Decision of the Decision Makers andrequested to make a Client Acknowledgement or transfer his or her account to thefull-service division of the Filer or another dealer if the client does not wish to makea Client Acknowledgement;

6. the Division and its Registered Representatives continue to comply, for six monthsfollowing the date of this Decision, with their Suitability Requirements and IDASuitability Requirements for client accounts for which no Client Acknowledgementis received;

7. commencing six months following the date of this Decision, the Division will notpermit transactions in an account for which a Client Acknowledgement has not beenreceived unless the transaction is a sale for cash or a transfer of assets to anotheraccount;

8. each prospective client of the Division is advised of the Decision of the DecisionMakers and required to make a Prospective Client Acknowledgement prior to theDivision or its Registered Representation servicing such prospective client;

9. evidence of all Client Acknowledgements, Prospective Client Acknowledgementsand Account Transfer Options is established and retained pursuant to the recordkeeping requirements of the Legislation and the IDA;

10. for any client who elects to exercise the client's Account Transfer Option, theDivision transfers such account or accounts to the full-service division of the Fileror another dealer in an expeditious manner and at no cost to the client;

11. the Division accurately identifies and distinguishes client accounts for which aClient Acknowledgement or Prospective Client Acknowledgement has beenprovided and client accounts for which no Client Acknowledgement has beenprovided;

12. the Filer has in force policies and procedures to ensure that:

(a) the Division continues to operate separately from the full-service division ofthe Filer,

(b) Registered Representatives of the Division are clearly employed by theDivision and do not handle the business or clients of the full-service divisionof the Filer, and

(c) a list of Registered Representatives of the Division is maintained at all times;and

13. if an IDA rule addressing the IDA Suitability Requirements comes into effect, theDecision with respect to the IDA Suitability Requirements will terminate one yearfollowing the date such rule comes into force, unless the Decision Makerdetermines otherwise.

September 7th, 2000.

"Howard I. Wetston"      "J. A. Geller"