Securities Law & Instruments

Headnote

MRRS Decision

Exemptive relief for a mutualfund dealer from the requirement to become a member of the MutualFund Dealers Association.

Applicable Ontario StatutoryProvisions

Securities Act, R.S.O. 1990,c. S.5, as am s. 25.

Applicable Ontario SecuritiesCommission Rule

Rule 31-506 - SRO Membership- Mutual Fund Dealers, s. 2.1.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

ONTARIO AND SASKATCHEWAN

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

WORKING VENTURES INVESTMENTSERVICES INC.

MRRS DECISION DOCUMENT

WHEREAS the local securitiesregulatory authority or regulator (the "Decision Maker")in both of the provinces of Ontario and Saskatchewan (the "Jurisdictions")has received an application (the "Application") fromWorking Ventures Investment Services Inc. (the "Registrant")for a decision pursuant to the securities legislation of theJurisdictions (the "Legislation") that the Registrantnot be required to file an application to become a member ofthe Mutual Fund Dealers Association of Canada (the "MFDA")and to become a member of the MFDA.

AND WHEREAS pursuantto the Mutual Reliance Review System for Exemptive Relief Applications(the "System"), the Ontario Securities Commissionis the principal regulator for this application.

AND WHEREAS it has beenrepresented by the Registrant to the Decision Makers that:

1. the Registrant is a corporationsubsisting under the laws of the Province of Ontario and isregistered as a dealer in the category of mutual fund dealerin both of the Jurisdictions;

2. the Registrant also isregistered under the Legislation as an adviser in the categoryof investment counsel/portfolio manager in Ontario;

3. the Registrant's principalbusiness activity is managing mutual funds, the securitiesof which are qualified for sale to the public in some or allof the provinces and territories of Canada pursuant to prospectusesfor which receipts have been issued by the relevant Canadiansecurities administrators;

4. the Registrant's activitiesas a mutual fund dealer currently represent and will continueto represent activities that are incidental to its principalbusiness activities;

5. the Registrant has agreedto the imposition of the terms and conditions on the Registrant'sregistration as a mutual fund dealer set out in the attachedSchedule "A", which outlines the activities theRegistrant has agreed to adhere to in connection with itsapplication for this Decision;

6. any person or company thatis not currently a client of the Registrant on the effectivedate of this Decision, will, before they are accepted as aclient of the Registrant, receive prominent written noticefrom the Registrant that:

The Registrant is notcurrently a member, and does not intend to become a memberof the Mutual Fund Dealers Association; consequently,clients of the Registrant will not have available to theminvestor protection benefits that would otherwise derivefrom membership of the Registrant in the MFDA, includingcoverage under any investor protection plan for clientsof members of the MFDA;

7. upon the next general mailingto its account holders and in any event before August 31,2002, the Registrant shall provide, to any client that wasa client of the Registrant on the effective date of this Decision,the prominent written notice referred to in paragraph 7, above;

AND WHEREAS pursuantto the System this MRRS Decision Document evidences the decisionof both Decision Makers (collectively, "Decision");

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

IT IS THE DECISION ofthe Decision Makers pursuant to the Legislation that the Registrantnot be required to file an application to become a member ofthe MFDA and to become a member of the MFDA;

PROVIDED THAT:

The Registrant complies withthe terms and conditions on its registration under the Legislationas a mutual fund dealer set out in the attached Schedule "A".

June 27, 2002.

"David M. Gilkes"

 

 

Schedule "A"

TERMS AND CONDITIONS OFREGISTRATION
OF
WORKING VENTURES INVESTMENTSERVICES INC.

AS A MUTUAL FUND DEALER

Definitions

1. For the purposes hereof,unless the context otherwise requires:

(a) "Act" means,in Ontario, the Securities Act, R.S.O. 1990, c.S5,as amended; in Saskatchewan, The Securities Act, 1988,S.S. 1988, c.S-42.2, as amended;

(b) "Adviser"means an adviser as defined in the applicable Act;

(c) "Client Name Trade"means, for the Registrant, a trade to, or on behalf of,a person or company, in securities of a mutual fund, thatis managed by the Registrant or an affiliate of the Registrant,where, immediately before the trade, the person or company,is shown on the records of the mutual fund or of an othermutual fund managed by the Registrant or an affiliate ofthe Registrant as the holder of securities of such mutualfund, and the trade consists of:

(A) a purchase, by theperson or company, through the Registrant, of securitiesof the mutual fund; or

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

and where, the person orcompany

(C) is a client of theRegistrant that was not solicited by the Registrant;or

(D) was an existingclient of the Registrant on the Effective Date;

(d) "Effective Date"means the date of the MRRS Decision Document;

(e) "Employee",for the Registrant, means:

(A) an employee of theRegistrant;

(B) an employee of anaffiliated entity of the Registrant; or

(C) an individual thatis engaged to provide, on a bona fide basis,consulting, technical, management or other servicesto the Registrant or to an affiliated entity of theRegistrant, under a written contract between the Registrantor the affiliated entity and the individual or a consultantcompany or consultant partnership of the individual,and, in the reasonable opinion of the Registrant, theindividual spends or will spend a significant amountof time and attention on the affairs and business ofthe Registrant or an affiliated entity of the Registrant;

(f) "Employee",for a Service Provider, means an employee of the ServiceProvider or an affiliated entity of the Service Provider,provided that, at the relevant time, in the reasonable opinionof the Registrant, the employee spends or will spend, asignificant amount of time and attention on the affairsand business of:

(A) the Registrant oran affiliated entity of the Registrant; or

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

(g) "Executive",for the Registrant, means a director, officer or partnerof the Registrant or of an affiliated entity of the Registrant;

(h) "Executive",for a Service Provider, means a director, officer or partnerof the Service Provider or of an affiliated entity of theService Provider;

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

(i) in Ontario and Saskatchewan,a trade in securities of a mutual fund that is made betweena person or company and an underwriter acting as purchaseror between or among underwriters;

(ii) in Ontario, a tradein securities of a mutual fund for which the Registrantwould have available to it an exemption from the registrationrequirements of the Act if the Registrant were not a "marketintermediary" as such term is defined in section204 of the Ontario Regulation;

(iii) in Saskatchewan,a trade in securities of a mutual fund for which the Registrantwould have available to it an exemption from the registrationrequirements of the Act; or

(iv) a trade in securitiesof a mutual fund for which the Registrant has receiveda discretionary exemption from the registration requirementsof the Act;

(j) "Fund-on-Fund Trade"means a trade that consists of:

(i) a purchase, throughthe Registrant, of securities of a mutual fund that ismade by another mutual fund;

(ii) a purchase, throughthe Registrant, of securities of a mutual fund that ismade by a person or company where the person or company,an affiliated entity of the person or company, or an otherperson or company is, or will become, the counterpartyin a specified derivative or swap with another mutualfund; or

(iii) a sale, throughthe Registrant, of securities of a mutual fund that ismade by another mutual fund where the party purchasingthe securities is:

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

(B) a person or companythat acquired the securities where the person or company,an affiliated entity of the person or company, or another person or company is, or was, the counterpartyin a specified derivative or swap with another mutualfund; and

where, in each case, atleast one of the referenced mutual funds is a mutual fundthat is managed by either the Registrant or an affiliatedentity of the Registrant;

(k) "In FurtheranceTrade" means, for the Registrant, a trade by the Registrantthat consists of any act, advertisement, or solicitation,directly or indirectly in furtherance of any other tradein securities of a mutual fund, where the other trade consistsof:

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

(ii) a purchase or saleof 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 another registereddealer if the Registrant is not otherwise permitted to makethe purchase or sale pursuant to these terms and conditions;

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

(m) "Ontario Regulation"means R.R.O. 1990, Reg. 1015, as amended, made under theOntario Act;

(n) "Permitted Client"means a person or company that is a client of the Registrant,and that is, or was at the time the person or company becamea client of the Registrant:

(i) an Executive or Employeeof the Registrant;

(ii) a Related Party ofan Executive or Employee of the Registrant;

(iii) a Service Provideror an affiliated entity of a Service Provider;

(iv) an Executive or Employeeof a Service Provider; or

(v) a Related Party ofan Executive or Employee of a Service Provider;

(o) "Permitted ClientTrade" means, for the Registrant, 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 ofPermitted Client, in securities of a mutual fund that ismanaged by the Registrant or an affiliate of the Registrant,and the trade consists of a purchase or redemption, by theperson, through the Registrant, of securities of the mutualfund;

(p) "Registered Plan"means a registered pension plan, deferred profit sharingplan, registered retirement savings plan, registered retirementincome fund, registered education savings plan or otherdeferred income plan registered under the Income Tax Act(Canada);

(q) "Registrant"means Working Ventures Investment Services Inc.;

(r) "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 insubparagraphs (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 or all of the foregoing;

(vi) a trust where oneor more of the trustees is a person referred to aboveand the beneficiaries of the trust are restricted to one,some, or all of the foregoing;

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

(s) "securities",for a mutual fund, means shares or units of the mutual fund;

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

(u) "Service Provider"means:

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

(ii) an Adviser to a mutualfund that is managed by the Registrant or an affiliatedentity of the Registrant; or

(iii) a person or companythat provides or has provided professional, consulting,technical, management or other services to a mutual fundthat is managed by the Registrant or an affiliated entityof the Registrant.

2. For the purposes hereof,a person or company is considered to be an "affiliatedentity" of an other person or company if the person orcompany would be an affiliated entity of that other personor company for the purposes of Ontario Securities CommissionRule 45-503 Trades To Employees, Executives and Consultants.

3. For the purposes hereof:

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

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

(c) "registered dealer"means a person or company that is registered under the Actas a dealer in a category that permits the person or companyto act as dealer for the subject trade; and

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

4. Any terms that are notspecifically 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 is specificallyascribed to such term in the Mutual Fund Instrument, thesame meaning the term would have for the purposes of theAct.

Restricted Registration

Permitted Activities

5. The registration of theRegistrant as a mutual fund dealer under the Act shall befor 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-Fund Trade;

(d) an In Furtherance Trade;

(e) a Permitted Client Trade;or

(f) a Seed Capital Trade;

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