Securities Law & Instruments

Headnote

Variation of previous MRRS Decisionextending the duration and extending the time within which theapplicant must transfer its group retirement business to anentity that is appropriately registered.

Director's Decision

Variation of the duration ofthe original Director's decision and extending the specifiedtime within which the applicant must transfer its group retirementbusiness to an entity that is properly registered.

Applicable Ontario Statute

Securities Act, R.S.O. 1990,c. S.5, as am., ss. 25 and 74(1).

Applicable Ontario SecuritiesCommission Rule

Rule 31-505 "Conditionsof Registration" (1999) 22 O.S.C.B. 731, ss. 1.5 and 4.1.
 
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
ALBERTA AND ONTARIO

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
FIDELITY INVESTMENTS CANADALIMITED,
BELL HELICOPTER TEXTRONCANADA LIMITED,
TEXTRON FASTENING SYSTEMSCANADA LIMITED AND
TEXTRON FINANCIAL CANADALIMITED
(FORMERLY TEXTRON CANADALIMITED)

MRRS DECISION DOCUMENT

WHEREAS the local securitiesregulatory authority or regulator (the "Decision Maker")in both Alberta and Ontario (the "Jurisdictions")has received an application (the "Application") fromFidelity Investments Canada Limited ("Fidelity") tovary a MRRS Decision of the Alberta Securities Commission (the"ASC") and the Ontario Securities Commission (the"OSC") dated September 14, 2001 (the "OriginalMRRS Decision"), a Decision of the Director of the OSCdated September 14, 2001, and an Order of the ASC dated September14, 2001 (collectively, the "Decisions"), which provided,subject to terms and conditions, relief from the registrationrequirements under the securities legislation of the Jurisdictions(the "Legislation") in respect of certain trades andfrom making certain "suitability" enquiries underthe Legislation in connection with these trades made by Fidelityon behalf of the Group Retirement Clients (as defined below)in the employer-sponsored savings plan (the "Program")of Bell Helicopter Textron Canada Limited, Textron FasteningsSystems Canada Limited and Textron Financial Canada Limited(collectively, "Textron");

AND WHEREAS Fidelitywishes to vary the duration of the Original MRRS Decision andthe Decisions and extend the specified time within which itmust transfer its Group Retirement Business (as defined below)to an entity that is appropriately registered under the Legislationto trade in securities;

AND WHEREAS under theMutual Reliance Review System for Exemptive Relief Applications(the "System"), the Ontario Securities Commissionis the principal regulator for this application;

AND WHEREAS Fidelityhas represented to the Decision Makers that:

1. Fidelity is registeredin all Jurisdictions as a dealer in the category of mutualfund dealer and as an adviser in the categories of "investmentcounsel" and "portfolio manager" in all Jurisdictions;

2. Fidelity's registrationunder the legislation of the Jurisdictions as a "mutualfund dealer" has been restricted to certain activitiesthat are incidental to its principal business. The restrictedtrading activity includes trades by Fidelity to a participantin an employer-sponsored plan until the earlier of:

(i) the assumption of suchtrading activity by Fidelity Intermediary Securities CompanyLimited (the "IDA Company"), a wholly-owned subsidiaryof Fidelity, and

(ii) December 31, 2002;

3. Currently, Fidelity sellscommon shares of Textron U.S. "Common Shares" tocertain participants ("Group Retirement Clients")in the Program;

4. Fidelity Retirement ServicesCompany of Canada Limited ("FRSCo") has appliedfor registration under the Legislation as a mutual fund dealerand has applied for membership in the Mutual Fund DealersAssociation (the "MFDA");

5. The Original MRRS Decisionand the Decisions (collectively, the "Relief") weregranted to Fidelity and allows it to trade Common Shares providedthe trade is made to a Group Retirement Client until the earlierof:

(i) the assumption of suchtrading activity by FRSCo; and

(ii) July 2, 2002 (the "Deadline");

6. The facts set out in theRelief are accurate, except as otherwise stated herein;

7. At the time when Fidelityreceived the Relief, Fidelity intended to transfer the GroupRetirement Clients to FRSCo, once FRSCo was registered asa mutual fund dealer in each jurisdiction and was acceptedas a member of the MFDA;

8. To service its Group RetirementClients, Fidelity has determined that the business needs ofthe Group Retirement Clients (the "Group Retirement Business")requires greater flexibility in terms of the product offeringthat would be permitted under a mutual fund dealer registration;

9. Fidelity has determinedthat the Group Retirement Clients will be more appropriatelyserviced by an investment dealer that is a member of the InvestmentDealers Association of Canada (the "IDA");

10. Fidelity has incorporatedanother wholly-owned subsidiary under the Business CorporationsAct (Ontario), the IDA Company, which has submitted anapplication for registration as an investment dealer in eachCanadian jurisdiction. The IDA Company is a member of theIDA;

11. Fidelity proposes to transferits Group Retirement Clients to the IDA Company no later thanDecember 31, 2002. Fidelity proposes to run its Group RetirementBusiness as a division of the IDA Company once the IDA Companyhas become registered in each Canadian jurisdiction and oncecertain systems and other changes have been made to ensurethat the business can be conducted in a manner that is compliantwith the IDA By-laws and Rules;

12. Fidelity is unable totransfer the Group Retirement Clients to the IDA Company bythe Deadline due to a number of operational and systems reasons;

13. Fidelity is attemptingto ensure that the transfer of the Group Retirement Clientswill be completed as soon as possible;

AND WHEREAS under theSystem, this MRRS Decision Document evidences the decision ofeach Decision Maker (collectively, the "MRRS Decision");

AND WHEREAS each of theDecision Makers is satisfied that the test contained in theLegislation that provides the Decision Maker with the jurisdictionto make the Decision has been met;

THE MRRS DECISION ofthe Decision Makers, pursuant to the Legislation of each Jurisdiction,is that:

1. the representations inparagraphs 3 and 4 of the Original MRRS Decision are replacedwith paragraphs 2 and 11, respectively, of this MRRS Decision;and

2. proviso number 3 of theOriginal MRRS Decision is replaced with the following:

"3. this MRRS Decisionwill terminate upon the earlier of:

(1) the assumption ofthe activity referred to in paragraph 18 by Fidelity IntermediarySecurities Company Limited; and

(2) December 31, 2002;"

PROVIDED THAT Fidelitycomplies with all other terms and conditions of the OriginalMRRS Decision and the Decisions.

"May 31, 2002"

"Harold P. Hands"                    "RobertW. Korthals"

 

DECISION OF THE DIRECTOROF ONTARIO AND
THE ALBERTA SECURITIES COMMISSION
UNDER THE SECURITIES LEGISLATION

WHEREAS the Directorof the Ontario Securities Commission (the "Director")and the Alberta Securities Commission (the "ASC")have each received an application from Fidelity to vary theDecisions, which provided relief from making certain "suitability"enquiries under the Legislation in connection with trades madeby Fidelity on behalf of the Group Retirement Clients in theProgram;

AND WHEREAS Fidelitywishes to vary the duration of the Decisions and extend thespecified time within which it must transfer its Group RetirementBusiness to an entity that is appropriately registered underthe Legislation to trade in securities;

AND WHEREAS Fidelityhas made to the Director and the ASC the same representationsreferred to in the above MRRS Decision;

AND UPON the Directorand the ASC being satisfied that to do so would not be prejudicialto the public interest;

IT IS THE DECISION ofthe Director and the ASC that, pursuant to the Legislation,effective on the effective date of the above MRRS Decision,the proviso of the Decisions stipulating that such Decisionswill terminate upon the earlier of:

(1) the assumption of theactivity referred to in paragraph 18 of the above MRRS decisionby New Fidelity; and

(2) July 2, 2002;

is replaced with the following:

(1) the assumption of theactivity referred to in paragraph 18 by Fidelity IntermediarySecurities Company Limited; and

(2) December 31, 2002;

PROVIDED THAT Fidelitycomplies with all other terms and conditions of the Relief.

May 31, 2002.

"David M. Gilkes"