Section 5.1 -- OSC Rule 31-506 -- exemption to mutual fund dealer from the requirement to be a member of the Mutual Fund Dealers Association of Canada -- exemption for a limited period of time.
Applicable Ontario Rule
Ontario Securities Commission Rule 31-506 SRO Membership -- Mutual Fund Dealers.
IN THE MATTER OF
THE SECURITIES ACT
R.S.O. 1990, C. S.5, AS AMENDED (the "Act")
IN THE MATTER OF
ONTARIO SECURITIES COMMISSION RULE 31-506
SRO MEMBERSHIP - MUTUAL FUND DEALERS (the "Rule")
IN THE MATTER OF
McGEE CAPITAL MANAGEMENT LIMITED
(Section 5.1 of the Rule)
UPON the Director having received an application (the "Application") from McGee Capital Management Limited ("McGee") seeking a decision pursuant to section 5.1 of the Rule, to exempt McGee from the application of section 2.1 of the Rule, which would require McGee to be a member of the Mutual Fund Dealers Association of Canada (the "MFDA") on the condition that McGee or an affiliated entity is a member of the MFDA by September 30, 2003;
AND UPON considering the Application and the recommendation of staff of the Commission;
AND UPON McGee having represented to the Director that:
1. McGee is registered under the Act as a mutual fund dealer, limited market dealer and investment counsel/portfolio manager and has its head office in Ontario;
2. McGee filed a membership application with the MFDA in 2001;
3. the MFDA advised McGee that a MFDA member may not engage in portfolio management activities, as discretionary trading is prohibited under MFDA Rule 2.3.4;
4. McGee established an affiliated entity, McGee & Associates Inc. ("MAI"), that was to assume the mutual fund distribution activities of McGee;
5. MAI applied for registration as a mutual fund dealer with the Ontario Securities Commission and submitted an application for membership in the MFDA on November 26, 2002. By letter dated May 29, 2003 the MFDA informed MAI that its application for membership had been approved subject to certain terms and conditions;
6. MAI has concluded that it will not pursue its membership in the MFDA;
7. McGee has concluded that it will discontinue the operation of its mutual fund distribution business and will transfer this business to another dealer registrant;
8. McGee will not expand its mutual fund dealer operations and will work diligently to transfer the accounts of its mutual fund distribution business to another dealer registrant;
9. McGee will surrender its registration as a mutual fund dealer once the mutual fund distribution business has been transitioned to another dealer registrant;
10. neither McGee nor MAI is, to its knowledge, in breach of any requirements of the Act or the regulations or rules made thereunder;
11. McGee received an exemption on June 28, 2002 (the "Initial Exemption") from the requirement of section 2.1 of the Rule on the condition that McGee, or its affiliate was a member of the MFDA by December 1, 2002. It received a second exemption on November 30, 2002 (the "Second Exemption") from the requirement of section 2.1 of the Rule on the condition that McGee, or its affiliate, was a member of the MFDA by April 1, 2003. It received a third exemption on March 31, 2003 (the "Third Exemption") from the requirement of section 2.1 of the Rule on the condition that from and after July 2, 2003, so long as McGee is registered as a mutual fund dealer under the Act, McGee is a member of the MFDA; and
12. neither McGee nor MAI will be a member of the MFDA.
AND UPON the Director being satisfied that to do so would not be prejudicial to the public interest;
IT IS THE DECISION of the Director, pursuant to section 5.1 of the Rule, that McGee is exempt from the requirement of section 2.1 of the Rule, as modified by the Initial Exemption, the Second Exemption and the Third Exemption, on the condition that from and after September 30, 2003, so long as McGee is registered as a mutual fund dealer under the Act, McGee is a member of the MFDA.
July 2, 2003.
"David M. Gilkes"