Murphy & Durieu - s. 218 of the Regulation

Headnote

Application to the Commission for an order, pursuant to section 218 of Regulation 1015 of the Securities Act (Ontario), that the requirement in section 213 of the Regulation, which provides that a registered dealer that is not an individual must be a company incorporated, or a person formed or created, under the laws of Canada or a province or territory of Canada, shall not apply to the Applicant. The order sets out the terms and conditions applicable to a non-resident limited market dealer.

Applicable Statutes

Ontario Regulation 1015, R.R.O. 1990, ss. 213, 218.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c.S.5, AS AMENDED (the ACT)

AND

IN THE MATTER OF

R.R.O. 1990, REGULATION 1015,

AS AMENDED (the REGULATION)

AND

IN THE MATTER OF

MURPHY & DURIEU

ORDER

(Section 218 of the Regulation)

UPON the application (the Application) of Murphy & Durieu (the Applicant) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 218 of the Regulation, exempting the Applicant from the requirement under section 213 of the Regulation that the Applicant be incorporated, or otherwise formed or created, under the laws of Canada or a province or territory of Canada, for the Applicant to be registered under the Act as a dealer in the category of "limited market dealer" (LMD) pursuant to Ontario Securities Commission Rule 31-503 Limited Market Dealer (Rule 31-503);

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON the Applicant having represented to the Commission that:

1. The Applicant is a partnership organized under the laws of the State of New York. The head office of the Applicant is located in New York City, New York.

2. The Applicant is not presently registered under the Act in any dealer capacity. The Applicant is applying to the Commission for registration under the Act as a dealer in the category of LMD.

3. The Applicant is presently registered in the United States as a broker-dealer with the United States Securities and Exchange Commission (the SEC) and is a member of the National Association of Securities Dealers (the NASD). The Applicant's business activities include:

(i) a broker or dealer selling corporate debt securities;

(ii) a broker or dealer retailing corporate equity securities over-the-counter;

(iii) an exchange member engaged in exchange commission business other than floor activities;

(iv) an exchange member engaged in floor activities;

(v) a government and municipal securities broker;

(vi) a broker or dealer making inter-dealer markets in corporate securities over-the-counter;

(vii) a mutual fund retailer;

(viii) private placements, underwriting and participating as a selling group member for corporate securities other than mutual funds; and

(ix) an inter-dealer broker in credit derivatives.

4. Where the Applicant participates as a dealer in a distribution of securities in Ontario, the Applicant will do so under registration and prospectus exemptions contained in the Act, National Instrument 45-106 Prospectus and Registration Exemptions and Commission Rule 45-501 Exempt Distributions.

5. Section 213 of the Regulation provides that a registered dealer that is not an individual must be a company incorporated, or a person formed or created, under the laws of Canada or a province of territory of Canada.

6. The Applicant is not incorporated, formed or created under the laws of Canada or any province or territory of Canada. The Applicant is not a resident of Canada and does not require a separate Canadian company in order to carry out its proposed LMD activities in Ontario as it is more efficient and cost effective for the Applicant to carry out those activities through the existing company.

7. The Applicant requests an exemption from the requirement under section 213 of the Regulation to permit it to obtain registration as a LMD without having to incorporate a separate company under the laws of Canada or a province or territory of Canada.

8. Without the relief requested, the Applicant would not meet the requirements for registration as a dealer in the category of LMD as the Applicant is not a company incorporated, formed or created under the laws of Canada or any province or territory of Canada.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to section 218 of the Regulation, that, in connection with the registration of the Applicant as a dealer under the Act in the category of LMD, section 213 of the Regulation shall not apply to the Applicant for a period of three (3) years, provided that:

1. The Applicant appoints an agent for service of process in Ontario.

2. The Applicant provides to each client resident in Ontario a statement in writing disclosing the non-resident status of the Applicant, its jurisdiction of residence, the name and address of its agent for service of process in Ontario, and the nature of the risks to clients that legal rights may not be enforceable.

3. The Applicant will not change its agent for service of process in Ontario without giving the Commission thirty (30) days' prior notice of such change by filing a new Submission to Jurisdiction and Appointment of Agent for Service of Process.

4. The Applicant and each of its registered directors or officers irrevocably and unconditionally submits to the non-exclusive jurisdiction of the judicial, quasi-judicial, and administrative tribunals of Ontario and any administrative proceedings in Ontario, in any proceedings arising out of or related to or concerning its registration under the Act or its activities in Ontario as a registrant.

5. Securities, funds, and other assets of the Applicant's clients in Ontario will be held:

(a) by the client; or

(b) by a custodian or sub-custodian:

(i) that meets the guidelines prescribed for acting as a sub-custodian of the portfolio securities of a mutual fund in Part 6 of National Instrument 81-102 Mutual Funds;

(ii) that is:

(A) subject to the agreement announced by the Bank for International Settlements (the BIS) on July 1, 1988 concerning international convergence of capital measurement and capital standards; or

(B) exempt from the requirements of paragraph 3.7(1)(b)(ii) of OSC Rule 35-502 Non Resident Advisers; and

(c) if such securities, funds and other assets are held by a custodian or sub-custodian that is the Applicant or an affiliate of the Applicant, that custodian holds such securities, funds and other assets in compliance with the requirements of the Regulation.

6. Securities of the Applicant's Ontario clients may be deposited with or delivered to a recognised depository or clearing agency.

7. The Applicant will inform the Director immediately upon it becoming aware:

(a) that it has ceased to be registered in the United States as a broker-dealer;

(b) of its registration in any other jurisdiction not being renewed or being suspended or revoked;

(c) that it is the subject of an investigation or disciplinary action by any financial services or securities regulatory authority or self-regulatory authority;

(d) that the registration of its salespersons, officers or directors who are registered in Ontario have not been renewed or have been suspended or revoked in any Canadian or foreign jurisdiction; or

(e) that any of its salespersons, officers or directors who are registered in Ontario are the subject of an investigation or disciplinary action by any financial services or securities regulatory authority or self-regulatory authority in any Canadian or foreign jurisdiction.

8. The Applicant will pay the increased compliance and case assessment costs of the Commission due to its location outside Ontario, including the cost of hiring a third party to perform a compliance review on behalf of the Commission in connection with its registration as a LMD.

9. The Applicant will make its books and records outside Ontario, including electronic records, readily accessible in Ontario, and will produce physical records for the Commission within a reasonable time if requested.

10. If the laws of the jurisdiction in which the Applicant's books and records are located prohibit production of the books and records in Ontario without the consent of the relevant client, the Applicant shall, upon a request by the Commission:

(a) so advise the Commission; and

(b) use its best efforts to obtain the client's consent to the production of the books and records.

11. The Applicant will, upon the Commission's request, provide a representative to assist the Commission in compliance and enforcement matters.

12. The Applicant and each of its registered directors or officers will comply, at its expense, with requests under the Commission's investigation powers and orders under the Act in relation to the Applicant's dealings with Ontario clients, including producing documents and witnesses in Ontario, submitting to audit or search and seizure process or consenting to an asset freeze, to the extent such powers would be enforceable against the Applicant if it were resident in Ontario.

13. If the laws of the Applicant's jurisdiction of residence that are otherwise applicable to the giving of evidence or production of documents prohibit the Applicant or the witnesses from giving the evidence without the consent or leave of the relevant client or any third party, including a court of competent jurisdiction, the Applicant shall:

(a) so advise the Commission; and

(b) use its best efforts to obtain the client's consent to the giving of the evidence.

14. The Applicant will maintain appropriate registration and regulatory organization membership, in the jurisdiction of its principal operations, and if required, in its jurisdiction of residence.

June 30, 2006

"Paul M. Moore"

"Harold P. Hands"