Securities Law & Instruments

Headnote

Section5.1 of O.S.C. Rule 31-506 - SRO Membership - Mutual Fund Dealers- mutual fund manager exempted from the requirements of the Rulethat it be a member of the Mutual Fund Dealers Association ("MFDA")and file with the MFDA an application and prescribed fees forthe application for membership, provided that it complies withterms and conditions of registration.

StatutesCited

SecuritiesAct, R.S.O. 1990, c. S.5, as am.

RulesCited

O.S.C.Rule 31-506 SRO Membership - Mutual Fund Dealers, ss. 2.1, 3.1,5.1.

PublishedDocuments Cited

LetterSent to The Investment Funds Institute of Canada and the InvestmentCounsel Association of Canada, December 6, 2000, (2000) 23 OSCB8467.

INTHE MATTER OF

THESECURITIES ACT

R.S.O.1990, CHAPTER S.5, AS AMENDED (the "Act")

AND

ONTARIOSECURITIES COMMISSION

RULE31-506 SRO MEMBERSHIP - MUTUAL FUND DEALERS (the "Rule")

AND

INTHE MATTER OF

FRANKRUSSELL CANADA LIMITED

DECISION

(Section5.1 of the Rule)

UPONThe Director having received an application (the "Application)from Frank Russell Canada Limited (the "Registrant") for a decision,pursuant to section 5.1 of the Rule, exempting the Registrantfrom the requirements in sections 2.1 and 3.1 of the Rule, whichwould otherwise require that the Registrant be a member of theMutual Fund Dealers Association (the "MFDA") on and after July2, 2002, and file with the MFDA, no later than May 23, 2001,an application and corresponding fees for membership;

UPONconsidering the Application and the recommendation of staffof the Ontario Securities Commission;

AND UPONthe Registrant having represented to the Director that:

1. the Registrantis registered under the Act as a dealer in the category of mutualfund dealer and as investment counsel and portfolio adviser;

2. the Registrantis the manager of the Russell Group of Funds, the LifepointsPortfolios and the Sovereign Pools families of mutual fundsthat it has established and will be the manager of other mutualfunds it expects to establish in the future;

3. the securitiesof the mutual funds managed by the Registrant are generallysold to the public through other registered dealers;

4. the Registrant'strading activities as a mutual fund dealer currently representand will continue to represent activities that are incidentalto its principal business activities;

5. the Registranthas agreed to the imposition of the terms and conditions onthe Registrant's registration as a mutual fund dealer set outin the attached Schedule "A", which outlines the activitiesthe Registrant has agreed to adhere to in connection with itsapplication for this Decision;

6. any person orcompany that is not currently a client of the Registrant onthe effective date of this Decision, will, before they are acceptedas a client of the Registrant, receive prominent written noticefrom the Registrant that:

The Registrantis not currently a member, and does not intend to become a memberof the Mutual Fund Dealers Association; consequently, clientsof the Registrant will not have available to them investor protectionbenefits that would otherwise derive from membership of theRegistrant in the MFDA, including coverage under any investorprotection plan for clients of members of the MFDA;

7. upon the nextgeneral mailing to its account holders and in any event beforeMay 23, 2002, the Registrant shall provide, to any client thatwas a client of the Registrant on the effective date of thisDecision, the prominent written notice referred to in paragraph6, above;

AND UPONthe Director being satisfied that to do so would not be prejudicialto the public interest;

IT IS THEDECISION of the Director, pursuant to section 5.1 ofthe Rule, that, effective May 23, 2001, the Registrant is exemptfrom the requirements in sections 2.1 and 3.1 of the Rule;

PROVIDEDTHAT:

The Registrant complieswith the terms and conditions on its registration under theAct as a mutual fund dealer set out in the attached Schedule"A".

June 1, 2001.

"Peggy Dowdall-Logie"

 


SCHEDULE"A"

TERMSAND CONDITIONS OF REGISTRATION

OF

FRANKRUSSELL CANADA LIMITED

ASA MUTUAL FUND DEALER


Definitions

1. For the purposeshereof, unless the context otherwise requires:

(a) "Act" means theSecurities Act, R.S.O. 1990, c. S.5, as amended;

(b) "Adviser" meansan adviser as defined in subsection 1(1) of the Act;

(c) "Client Name Trade"means, for the Registrant, a trade to, or on behalf of, a personor company, in securities of a mutual fund, that is managed bythe Registrant or an affiliate of the Registrant, where the personor company is shown on the records of the mutual fund or of another mutual fund managed by the Registrant or an affiliate ofthe Registrant as the holder of securities of such mutual fund,and the trade consists of:

(A) a purchase, bythe person or company, through the Registrant, of securities ofthe mutual fund; or

(B) a redemption, bythe person or company, through the Registrant, of securities ofthe mutual fund;

and where, the personor company is either a client of the Registrant that was not solicitedby the Registrant or was an existing client of the Registranton the Effective Date;

(d) "Commission" meansthe Ontario Securities Commission;

(e) "Effective Date"means May 23, 2001;

(f) "Employee", forthe Registrant, means:

(A) an employee ofthe Registrant;

(B) an employee ofan affiliated entity of the Registrant; or

(C) an individual thatis engaged to provide, on a bona fide basis, consulting,technical, management or other services to the Registrant or toan affiliated entity of the Registrant, under a written contractbetween the Registrant or the affiliated entity and the individualor a consultant company or consultant partnership of the individual,and, in the reasonable opinion of the Registrant, the individualspends or will spend a significant amount of time and attentionon the affairs and business of the Registrant or an affiliatedentity of the Registrant;

(g) "Employee", fora Service Provider, means an employee of the Service Provideror an affiliated entity of the Service Provider, provided that,at the relevant time, in the reasonable opinion of the Registrant,the employee spends or will spend, a significant amount of timeand attention on the affairs and business of:

(A) the Registrantor an affiliated entity of the Registrant; or

(B) a mutual fund managedby the Registrant or an affiliated entity of the Registrant;

(h) "Employee Rule"means Ontario Securities Commission Rule 45-503 Trades To Employees,Executives and Consultants;

(i) "Executive", forthe Registrant, means a director, officer or partner of the Registrantor of an affiliated entity of the Registrant;

(j) "Executive", fora Service Provider, means a director, officer or partner of theService Provider or of an affiliated entity of the Service Provider;

(k) "Exempt Trade",for the Registrant, means:

(i) a trade in securitiesof a mutual fund that is made between a person or company andan underwriter acting as purchaser or between or among underwriters;or

(ii) any other tradefor which the Registrant would have available to it an exemptionfrom the registration requirements of clause 25(1)(a) of the Actif the Registrant were not a "market intermediary" as such termis defined in section 204 of the Regulation;

(l) "Fund-on-Fund Trade",for the Registrant, means a trade that consists of:

(i) a purchase, throughthe Registrant, of securities of a mutual fund is made by anothermutual fund

(ii) a purchase, throughthe Registrant, of securities of a mutual fund that is made bya counterparty, an affiliated entity of the counterparty or another person or company, pursuant to an agreement to purchasethe securities to effect a hedge of a liability relating to acontract for a specified derivative or swap made between the counterpartyand another mutual fund; or

(iii) a sale, throughthe Registrant, of securities of a mutual fund that is made byanother mutual fund where the party purchasing the securitiesis:

(A) a mutual fund managedby the Registrant or an affiliated entity of the Registrant; or

(B) a counterparty,affiliated entity or other person or company that acquired thesecurities pursuant to an agreement to purchase the securitiesto effect a hedge of a liability relating to a contract for aspecified derivative or swap made between the counterparty andanother mutual fund; and

where, in each case,at least one of the referenced mutual funds is a mutual fund thatis managed by either the Registrant or an affiliated entity ofthe Registrant;

(m) an "In FurtheranceTrade" means, for the Registrant, a trade by the Registrant thatconsists of any act, advertisement, or solicitation, directlyor indirectly in furtherance of an other trade in securities ofa mutual fund, where the other trade consists of:

(i) a purchase or saleof securities of a mutual fund that is managed by the Registrantor an affiliated entity of the Registrant; or

(ii) a purchase orsale of securities of a mutual fund where the Registrant actsas the principal distributor of the mutual fund; and

where, in each case,the purchase or sale is made by or through an other registereddealer if the Registrant is not otherwise permitted to make thepurchase or sale pursuant to these terms and conditions;

(n) "Mutual Fund Instrument"means National Instrument 81-102 Mutual Funds, as amended;

(o) "Permitted Client",for the Registrant, means a person or company that is a clientof the Registrant, and that is, or was at the time the personor company became a client of the Registrant:

(i) an Executive orEmployee of the Registrant;

(ii) a Related Partyof an Executive or Employee of the Registrant;

(iii) a Service Providerof the Registrant or an affiliated entity of a Service Providerof the Registrant;

(iv) an Executive orEmployee of a Service Provider of the Registrant; or

(v) a Related Partyof an Executive or Employee of a Service Provider of the Registrant;

(p) "Registered Plan"means a registered pension plan, deferred profit sharing plan,registered retirement savings plan, registered retirement incomefund, registered education savings plan or other deferred incomeplan registered under the Income Tax Act (Canada);

(q) "Registrant" meansFrank Russell Canada Limited;

(r) "Regulation" meansR.R.O. 1990, Reg. 1015, as amended, made under the Act;

(s) "Related Party",for a person, means an other person who is:

(i) the spouse of theperson;

(ii) the issue of:

(A) the person,

(B) the spouse of theperson, or

(C) the spouse of anyperson that is the issue of a person referred to in subparagraphs(A) or (B) above;

(iii) the parent, grandparentor sibling of the person, or the spouse of any of them;

(iv) the issue of anyperson referred to in paragraph (iii) above; or

(v) a Registered Planestablished by, or for the exclusive benefit of, one, some orall of the foregoing;

(vi) a trust whereone or more of the trustees is a person referred to above andthe beneficiaries of the trust are restricted to one, some, orall of the foregoing;

(vii) a corporationwhere all the issued and outstanding shares of the corporationare owned by one, some, or all of the foregoing;

(t) "securities", fora mutual fund, means shares or units of the mutual fund;

(u) "Seed Capital Trade"means a trade in securities of a mutual fund made to a personsor company referred to in any of subparagraphs 3.1(1)(a)(i) to3.1(1)(a)(iii) of the Mutual Fund Instrument;

(v) "Service Provider",for the Registrant, means:

(i) a person or companythat provides or has provided professional, consulting, technical,management or other services to the Registrant or an affiliatedentity of the Registrant;

(ii) an Adviser to a mutual fund that is managed by the Registrantor an affiliated entity of the Registrant; or

(iii)a person or company that provides or has provided professional,consulting, technical, management or other services to a mutualfund that is managed by the Registrant or an affiliated entityof the Registrant

2. For the purposeshereof, a person or company is considered to be an "affiliatedentity" of an other person or company if the person or companywould be an affiliated entity of that other person or companyfor the purposes of the Employee Rule.

3. For the purposeshereof:

(a) "issue", "niece","nephew" and "sibling" includes any person having such relationshipthrough adoption, whether legally or in fact;

(b) "parent" and "grandparent"includes a parent or grandparent through adoption, whether legallyor in fact;

(c) "registered dealer"means a person or company that is registered under the Act asa dealer in a category that permits the person or company to actas dealer for the subject trade; and

(d) "spouse", for anEmployee or Executive, means a person who, at the relevant time,is the spouse of the Employee or Executive.

4. Any terms that arenot specifically defined above shall, unless the context otherwiserequires, have the meaning:

(a) specifically ascribedto such term in the Mutual Fund Instrument; or

(b) if no meaning isspecifically ascribed to such term in the Mutual Fund Instrument,the same meaning the term would have for the purposes of the Act.

RestrictedRegistration

Permitted Activities

5. The registrationof the Registrant as a mutual fund dealer under the Act shallbe for the purposes only of trading by the Registrant in securitiesof a mutual fund where the trade consists of:

(a) a Client Name Trade;

(b) an Exempt Trade;

(c) a Fund-on-FundTrade;

(d) an In FurtheranceTrade;

(e) a trade to a personwho is a Permitted Client or who represents to the Registrantthat he or she is a person included in the definition of PermittedClient; or

(f) a Seed CapitalTrade;

provided that, in thecase of all trades that are only referred to in clauses (a) or(e), the trades are limited and incidental to the principal businessof the Registrant.