Securities Law & Instruments

Headnote

Relief for certain non-SRO mutual fund dealers and scholarship plan dealers, in connection with the wind-up of the Ontario Contingency Trust Fund, from the requirement that every registered dealer, other than an exempt market dealer as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, participate in a compensation fund or contingency trust fund that has been approved by the Commission and satisfies certain other requirements set out in that subsection -- Relief in accordance with that set out in Ontario Securities Commission Staff Notice 33-379 Termination of the Ontario Contingency Trust Fund -- Exemption granted from the activity fee required for filing an application for relief.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., s. 147.

Regulation made under the Securities Act, R.R.O. 1990, Reg, 1015, as am., Schedule 1, s. 110(1).

Rules Cited

Ontario Securities Commission Rule 13-502 Fees, ss. 4.1, 6.1.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED

(the "Act"),

REGULATION 1015

R.R.O. 1990, AS AMENDED, MADE UNDER THE ACT

(the "Regulation")

AND

ONTARIO SECURITIES COMMISSION RULE 13-502 FEES

(the "Fee Rule")

AND

IN THE MATTER OF

ONTARIO SECURITIES COMMISSION STAFF NOTICE 33-739

TERMINATION OF THE ONTARIO CONTINGENCY TRUST FUND

AND

CERTAIN REGISTERED DEALERS

COMMISSION ORDER

(Section 147 of the Act)

DIRECTOR EXEMPTION DECISION

(Section 6.1 of the Fee Rule)

Background

1. Subsection 110(1) of the Regulation requires every registered dealer, other than an exempt market dealer as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registration Obligations (NI 31-103), to participate in a compensation fund or contingency trust fund that has been approved by the Commission and satisfies certain other requirements set out in that subsection (the compensation fund participation requirement).

2. The Ontario Contingency Trust Fund (the OCTF or Plan) is one of three compensation funds or contingency trust funds that have been approved by the Commission for the purposes of subsection 110(1) of the Regulation.

3. The terms of the OCTF are set out in a form of trust agreement (theTrust Agreement) that has been entered into by each participant in the Plan with the trustee (the Trustee) of the Plan.

4. Twenty-nine registered dealers (OCTF Dealers) that are not members of the Investment Industry Regulatory Organization of Canada (IIROC) or the Mutual Fund Dealers Association of Canada (MFDA) participate in the OCTF, and as such do not participate in the corresponding approved compensation fund for members of these self-regulatory organizations.

5. OCTF Dealers comprise scholarship plan dealers and mutual fund dealers that obtained an exemption from the requirement in Ontario securities law to be a member of the MFDA.

6. As indicated in Ontario Securities Commission Staff Notice 33-739 Termination of the Ontario Contingency Trust Fund (the Notice), the continued operation of the Plan is not financially sustainable. The Trustee has proposed that the OCTF be wound up in accordance with advice and direction from the court and the Commission has advised the Trustee that it does not object to the Trustee pursuing such a wind-up.

Applications

Each of the OCTF Dealers (each, a Filer) listed in the attached Appendix has applied to the Commission for an order, under section 147 of the Act, exempting the Filer from the compensation fund participation requirement on the terms set out in this Order.

Each Filer has also applied to the Director, under section 6.1 of the Fee Rule, for an exemption from the requirement in section 4.1 to pay a fee for its filing of these exemption applications.

Representations of each Filer

Each Filer has represented to the Commission and the Director that:

a. The Filer is not a member of either IIROC or the MFDA, and the Filer is not required by Ontario securities law to be a member of either of these self-regulatory organizations.

b. The Filer does not now hold for its clients any funds, securities or other property (Client Assets).

c. So long as the Filer relies upon the exemption from the compensation fund participation requirement set out in this Order, the Filer will not hold any Client Assets.

d. Before any person or company that is not a client of the Filer on the Effective Date (defined below) becomes a client of the Filer, the Filer will provide to that person or company prominent written notice of the following:

The Filer has obtained an exemption from the requirement in Ontario securities law to participate in an approved compensation fund or contingency trust fund. These funds provide for certain compensation to eligible clients of a participating dealer who suffer a financial loss as a result of the dealer becoming insolvent and not being able to return assets which it was holding on behalf of clients.

It is a condition of the exemption that the Filer not hold any client assets.

e. Within 60 days of the Effective Date, the Filer will have provided to any person or company that is an existing client of the Filer prominent written notice of the following:

The Filer has obtained an exemption from the requirement in Ontario securities law to participate in an approved compensation fund or contingency trust fund. These funds provide for certain compensation to eligible clients of a participating dealer who suffer a financial loss as a result of the dealer becoming insolvent and not being able to return assets which it was holding on behalf of clients.

It is a condition of the exemption that the Filer not hold any client assets.

The Filer was a participant in the Ontario Contingency Trust Fund at the time it applied for this exemption. It applied for this exemption in response to the proposed wind-up of that fund, as discussed in Ontario Securities Commission Staff Notice 33-739 Termination of the Ontario Contingency Trust Fund.

f. The Filer will not rely upon the passport provisions of Canadian securities legislation to passport this Ontario Order into any other jurisdiction of Canada without the prior written consent of that other jurisdiction.

Commission Order

In the opinion of the Commission it is not prejudicial to the public interest to make this Order.

It is ordered by the Commission pursuant to section 147 of the Act that:

(i) beginning on the Effective Date (as defined below), each of the Filers is exempt from subsection 110(1) of the Regulation, but only so long as, in the case of that Filer:

A. the Filer is not required by Ontario securities law to be a member of either IIROC or the MFDA;

B. the Filer does not hold any Client Assets; and

C. the Filer provides the disclosure to its clients referred to in paragraph (d) above and has provided the disclosure to its clients referred to in the paragraph (e) above; and

(ii) this Order shall be effective on the day that is 30 calendar days after the date hereof (the "Effective Date").

DATED at Toronto, Ontario this 15 day of March, 2013.

"Mary Condon"
"James Turner"
Commissioner
Commissioner
Ontario Securities Commission
Ontario Securities Commission

Director Exemption Decision

The Director is satisfied that to grant this Exemption would not be prejudicial to the public interest.

It is the decision of the Director, pursuant to section 6.1 of the Fee Rule, that each Filer is exempt from the requirement in section 4.1 of the Fee Rule to pay an activity fee for the filing by the Filer of the above-referenced applications.

DATED at Toronto, Ontario this 15 day of March, 2013.

"Marrianne Bridge"
______________________________________
Marrianne Bridge, Deputy Director
Compliance and Registrant Regulation
Ontario Securities Commission

 

APPENDIX

1. AGF Investments Inc.

2. BluMont Capital Corporation

3. Brandes Investment Partners & Co.

4. Children's Education Funds Inc.

5. CI Funds Services Inc.

6. Citibank Canada Investment Funds Limited

7. C.S.T. Consultants Inc.

8. Equilife Investment Management Inc.

9. Fidelity Investments Canada ULC

10. Franklin Templeton Investments Corp.

11. FT Portfolios Canada Co.

12. Global RESP Corporation

13. Invesco Canada Ltd.

14. Knowledge First Financial Inc.

15. Matco Financial Inc.

16. Mawer Investment Management Ltd.

17. MFS McLean Budden Limited

18. NexGen Financial Limited Partnership

19. Portland Investment Counsel Inc.

20. Russell Investments Canada Limited

21. Sentry Invesments Inc.

22. Strathbridge Asset Management Inc.

23. Sun Life Global Investments (Canada) Inc.