Under 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. The Filers are affiliated entities and have valid business reasons for the individuals to be registered with both firms. The Filers have policies in place to handle potential conflicts of interest. The Filers are exempted from the prohibition.
Applicable Legislative Provisions
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1, 15.1.
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
COUNSEL PORTFOLIO SERVICES INC.
IPC SECURITIES CORPORATION
(IPC) (collectively, the Filers)
The regulator in the Jurisdiction (the Decision Maker) has received an application from the Filers for a decision under the securities legislation of the Jurisdiction (the Legislation) for relief from the restriction under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) to permit Geoffrey Gordon Taylor (Taylor), who is currently registered as a dealing representative of IPC, to be registered as an advising representative of Counsel (the Dual Registration or Requested Relief).
Terms defined in National Instrument 14-101 Definitions have the same meaning in this decision unless otherwise defined.
This decision is based on the following facts represented by the Filers:
1. Counsel is registered as an investment fund manager in Ontario and Newfoundland and Labrador, and as an adviser in the category of portfolio manager in Ontario. The head office of Counsel is located in Ontario. Counsel manages 24 mutual funds offered by simplified prospectus.
2. IPC is registered as a dealer in the category of investment dealer in each of Ontario, British Columbia, Alberta, Manitoba, Saskatchewan, New Brunswick, Nova Scotia, Prince Edward Island, Québec and Newfoundland and Labrador. IPC is a member of the Investment Industry Regulatory Organization of Canada (IIROC). The head office of IPC is located in Ontario. IPC has a Private Wealth program with managed model portfolios.
3. Each of Counsel and IPC is a direct wholly-owned subsidiary of Investment Planning Counsel Inc.
4. The Filers are not, to the best of their knowledge, in default of any requirements of securities legislation in any jurisdiction of Canada.
5. Taylor is registered as a dealing representative of IPC. He is authorized by IIROC to manage investment portfolios on a discretionary basis and acts as a Portfolio Manager for the IPC Private Wealth program. He is resident in Ontario.
6. Taylor is familiar with the business model of the IPC group of companies, including that of Counsel.
7. IPC has engaged Counsel to monitor its sub-advisers' adherence to their mandates and to evaluate changes within their corporate structure or their investment management teams to determine if any such change(s) might impact their ability to meet stated investment objectives. As part of its service offering, Counsel also works closely with IPC dealing representatives to construct portfolios and conduct asset allocation analysis.
8. Taylor's role as an advising representative at Counsel would not involve advising clients directly but would be to:
(a) assist IPC dealing representatives with portfolio construction and asset allocation analysis;
(b) participate in Counsel's due diligence, selection and oversight of sub-advisers; and
(c) conduct asset allocation analysis and rebalancing in respect of portfolio services offered by Counsel.
9. The valid business reasons for Taylor to be registered with both Filers are for business logistics and succession planning.
10. Taylor will have sufficient time to adequately serve both Filers.
11. The Filers are each wholly-owned subsidiaries of Investment Planning Counsel Inc. and accordingly, the Dual Registration will not give rise to the conflicts of interest present in a similar arrangement involving unrelated, arm's length firms. The interests of Counsel and IPC are aligned, and as Taylor's role at Counsel would be to support the business activities and interest of both IPC and Counsel, the potential for conflicts of interest arising from the Dual Registration is remote.
12. Counsel and IPCs have in place written policies and procedures to address any potential conflicts of interest that may arise as a result of the Dual Registration, and believe that they will be able to appropriately deal with these conflicts.
13. The Dual Registration will be disclosed to clients of IPC. Counsel's unitholders are provided disclosure of its affiliated registrant relationship with IPC in its annual information form and in the simplified prospectus for its mutual funds.
14. In the absence of the Requested Relief, the Filers would be prohibited under paragraph 4.1(1)(b) of NI 31-103 from permitting Taylor to act as an advising representative of Counsel while he is registered as a dealing representative of IPC, even though Counsel and IPC are affiliated.
The Decision Maker is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Maker under the Legislation is that the Requested Relief is granted.