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 OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, NOVA SCOTIA,NEWFOUNDLAND AND ONTARIO

AND

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


AND

IN THE MATTER OF
SUN LIFE 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 receivedan application from Sun Life Securities Inc. (the "Filer") for:

1. a decision under the securities legislation of the Jurisdictions (the "Legislation")that the requirements of the Legislation requiring the Filer and its registeredsalespersons, partners, officers and directors ("Registered Representatives") tomake inquiries of each client of the Filer as are appropriate, in view of the natureof the client's investments and of the type of transaction being effected for theclient's account, to determine (a) the general investment needs and objectives ofthe 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 theFiler 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 Filer and its Registered Representatives tomake inquiries of each client of the Filer as are appropriate, in view of the natureof the client's investments and of the type of transaction being effected for theclient's account, to determine (a) the general investment needs and objectives ofthe 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 Filer and its Registered Representatives;

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

AND WHEREAS the Filer has represented to the Decision Makers that:

1. the Filer is a corporation incorporated under the Canada Business CorporationsAct;

2. the head office of the Filer is located in Ontario and the Filer has officers andsalespersons registered in each of the Jurisdictions;

3. the Filer is registered under the Legislation as an investment dealer and is amember of the IDA, The Toronto Stock Exchange and the Winnipeg StockExchange;

4. the Filer and its Registered Representatives do not and will not, except asprovided in 10 below, provide advice or recommendations regarding thepurchase or sale of any security and the Filer has adopted policies andprocedures to ensure the Filer and its Registered Representatives do not, withsuch exception, provide advice or recommendations regarding the purchase orsale of any security;

5. when the Filer provides trade execution services to clients it would, in theabsence of this Decision, be required to comply with the SuitabilityRequirements and IDA Suitability Requirements;

6. clients who request the Filer or its Registered Representatives to provide adviceor recommendations or advice as to suitability will be referred to a registereddealer or adviser that provides those services;

7. the Filer does not and will not compensate its Registered Representatives on thebasis of transactional values;

8. each client of the Filer will be advised of the Decision of the Decision Makersand requested to acknowledge that:

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

(b) the Filer 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)shall constitute the "Client Acknowledgement")

9. each client of the Filer will be advised that he or she has the option oftransferring his or her account or accounts, at no cost to the client, to aregistered dealer or adviser that provides advice and recommendations if theclient does not provide a Client Acknowledgement (the "Account TransferOption");

10. the Filer 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 dateof this Decision;

11. after the date six months following the date of this Decision, the Filer 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;

12. all prospective clients of the Filer will be advised and required to acknowledgethat:

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

(b) the Filer 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)shall constitute the "Prospective Client Acknowledgement")

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

13. The Filer has 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 Legislationand the IDA,

(b) client accounts of the Filer are appropriately designated as being a clientaccount 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 Filer who does not provide a Client Acknowledgementand chooses to exercise the client's Account Transfer Option, the Filerwill transfer the client's account in an expeditious manner and at no costto the client;

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

AND WHEREAS each of the Decision Makers is satisfied that the test containedin the Legislation that provides the Decision Maker with the jurisdiction to make theDecision has been met;

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

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

2. clients who request the Filer or its Registered Representatives to provide adviceor recommendations or advice as to suitability are referred to a registered dealeror adviser that provides those services;

3. the Filer is a distinct legal entity and operates using its own letterhead,accounts, Registered Representatives and account documentation;

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

5. each client of the Filer is advised of the Decision of the Decision Makers andrequested to make a Client Acknowledgement or transfer his or her account to adealer who provides advice if the client does not make a ClientAcknowledgement;

6. the Filer 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 ClientAcknowledgement is received;

7. commencing six months following the date of this Decision, the Filer will notpermit transactions 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;

8. each prospective client of the Filer is advised of the Decision of the DecisionMakers and required to make a Prospective Client Acknowledgement prior to theFiler 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, theFiler transfers such account or accounts to a registered dealer or adviser thatprovides advice or recommendations in an expeditious manner and at no cost tothe client;

11. the Filer accurately identifies and distinguishes client accounts for which a ClientAcknowledgement or Prospective Client Acknowledgement has been providedand client accounts for which no Client Acknowledgement has been provided;and

12. 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.

October 12th, 2000.

"William R. Gazzard"

THE DECISION of the Decisions Makers, other than Nova Scotia andNewfoundland, is that the IDA Suitability Requirements do not apply to the Filer and itsRegistered Representatives so long as:

1. excepted as permitted by 6 below, the Filer and its Registered Representativesdo not provide any advice or recommendations regarding the purchase or sale ofany security;

 

2. clients who request the Filer or its Registered Representatives to provide adviceor recommendations or advice as to suitability are referred to a registered dealeror adviser that provides those services;

 

3. the Filer is a distinct legal entity and operates using its own letterhead,accounts, Registered Representatives and account documentation;

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

5. each client of the Filer is advised of the Decision of the Decision Makers andrequested to make a Client Acknowledgement or transfer his or her account to adealer who provides advice if the client does not make a ClientAcknowledgement;

6. the Filer 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 ClientAcknowledgement is received;

7. commencing six months following the date of this Decision, the Filer will notpermit transactions 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;

8. each prospective client of the Filer is advised of the Decision of the DecisionMakers and required to make a Prospective Client Acknowledgement prior to theFiler 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, theFiler transfers such account or accounts to a registered dealer or adviser thatprovides advice or recommendations in an expeditious manner and at no cost tothe client;

11. the Filer accurately identifies and distinguishes client accounts for which a ClientAcknowledgement or Prospective Client Acknowledgement has been providedand client accounts for which no Client Acknowledgement has been provided;and

12. 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.

October 12th, 2000.

"J. A. Geller"     "Robert W. Korthals"