CPA Securities Inc. et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations -- a registered firm must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual is registered as a dealing, advising or associate advising representative of another registered firm -- Filers are affiliated entities and have valid business reasons for an individual to be registered with both firms -- individual has time to serve both registered firms -- policies in place to handle potential conflicts of interest -- clients provided disclosure regarding the dual registration -- Filers exempted from prohibition for a limited period of time.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System, s. 4.7.

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1, 15.1.

September 19, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

and

IN THE MATTER OF

CPA SECURITIES INC. (CPA) AND

WATERSTREET FAMILY CAPITAL

COUNSEL INC. (WFCCI)

AND ROGER LYDIATT (Lydiatt)

(collectively, the Filers)

DECISION

Background

The regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction (the Legislation) for relief from the requirement under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) (the Relief Sought) to permit Lydiatt who is currently registered as an advising representative of WFCCI to be registered as an advising representative of CPA (the Dual Registration) for a limited period of time to facilitate the merger of the businesses.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for passport application):

(i) the Ontario Securities Commission is the principal regulator for this application; and

(ii) the Filer has provided notice that the subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by the Filers in Alberta, British Columbia, Ontario and Quebec (collectively with Ontario, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 Passport System have the same meaning in this decision unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filers:

1. WFCCI is registered as a portfolio manager and exempt market dealer in Ontario and as a portfolio manager in Alberta and British Columbia. The head office of WFCCI is in Toronto, Ontario.

2. CPA is registered as an investment dealer in Alberta, British Columbia, Ontario and Quebec and is a member of the Investment Industry Regulatory Organization of Canada (IIROC). The head office of CPA is in Toronto, Ontario.

3. CPA and WFCCI are in the process of merging the two legal entities. It is anticipated that the merger will be completed in approximately 12 to 18 months.

4. Each of the Filers are wholly owned by the Bank of Nova Scotia, and are therefore affiliates.

5. Neither of the Filers is in default of any requirements of securities legislation in any jurisdiction of Canada.

6. Lydiatt is a resident of Alberta and is currently registered as an advising representative with WFCCI. Lydiatt is applying for registration as a registered representative with CPA to have the ability to accept client trade requests, provide advice on those requests, and assess trade and portfolio suitability at the time of the request and on an ongoing basis.

7. WFCCI manages accredited investor client accounts on a discretionary basis. WFCCI primarily employs sub-advisors to facilitate client portfolio construction and invests clients in sub-advisors pooled funds and in limited partnership units.

8. CPA is an investment dealer whose clients are invested in separately managed accounts and in mutual funds. CPA is one of several corporate entities which comprise WaterStreet Family Offices (WFO). WFO manages the wealth and affairs of its clients by providing personalized investment, accounting and tax advice. CPA's role is restricted to providing investment services to existing clients of WFO by facilitating investment in investment products offered by third party providers. CPA will only sell investment products approved by CPA.

9. Currently, CPA's clients in Alberta and in British Columbia are being serviced out of the Ontario office. This temporary dual registration would permit Lydiatt to service the clients in Alberta and British Columbia.

10. Lydiatt has the capacity, proficiency, skill and investment knowledge to service these clients. During the transition period, Lydiatt would not be actively soliciting CPA client orders, but would only help to facilitate client requests. He understands the product offering of CPA. At the same time, Lydiatt's current client account base with WFCCI is not overly time consuming as the business is still growing. Lydiatt would therefore be able to service the accounts with both Filers during the transition period.

11. During the transition period, Lydiatt will be subject to supervision by, and the applicable compliance requirements of, both Filers.

12. Both businesses operate from the same office location, they will be merging the legal entities but the business lines of CPA and WFCCI will continue to operate separately.

13. As Lydiatt will be advising and trading with different client bases in his dual role, there is minimal potential for conflicts of interest. Moreover, because the Filers are majority-owned subsidiaries of the same ultimate parent company, the Dual Registration of Lydiatt will not give rise to the conflicts of interest present in a similar arrangement involving unrelated, arms-length firms.

14. The Filers have in place written policies and procedures to address any potential conflicts of interest that may arise in their business, and believe that they will be able to appropriately deal with these conflicts.

15. The Dual Registration will be disclosed to clients of CPA and WFCCI.

16. In the absence of the Requested Relief, the Filers would be prohibited under paragraph 4.1(1)(b) of NI 31-103 from permitting an advising representative of WFCCI to act as a registered representative of CPA, even though CPA and WFCCI are affiliated.

Decision

The regulator is satisfied that the decision meets the test set out in the Legislation for the regulator to make the decision.

The decision of the regulator under the Legislation is that the Relief Sought is granted for a period of 18 months from the date of this decision