Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- 1996 Securities Act s. 48 Dealer Obligations -- Exemption from obligations in Part 5 of the Act and Rules for registered dealers -- A registered firm wants to permit an individual to act as a dealing, advising or associate advising representative where the individual acts as an officer, partner or director of another firm registered in a jurisdiction of Canada that is not an affiliate -- The registered firms have valid business reasons for the individuals to be registered with both firms; the situation will last only until the registration of the acquired firm is surrendered and its membership with IIROC terminated; the individuals will have sufficient time to adequately serve both firms; the situation will last only until the earlier of one year from the date of the relief and the date that the registration of the acquired firm is surrendered or terminated; the firms have policies and procedures in place to manage potential conflicts of interest; the firms are able to deal with any potential conflicts, including by supervising how the individual will deal with these conflicts.
Applicable Legislative Provisions
Securities Act, R.S.B.C. 1996, c. 418, s. 48.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations,s. 4.1(1)(a).
April 24, 2015
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF RAYMOND JAMES LTD. (RJL) AND GARY BEAN SECURITIES LTD. (GBS) (together, the Filers)
1 The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) seeking an exemption under section 15.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) from the requirement in section 4.1(1)(a) of NI 31-103 to permit individuals to act as dealing representatives, while those individuals are also officers and directors of another registered firm that is not an affiliate (Relief Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the British Columbia Securities Commission (BCSC) is the principal regulator for this application;
(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, Saskatchewan, Manitoba, Quebec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Nunavut, Yukon and Northwest Territories; and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
2 Terms defined in National Instrument 14-101 Definitions, MI 11-102 and NI 31-103 have the same meaning if used in this decision, unless otherwise defined.
3 This decision is based on the following facts represented by the Filers:
1. RJL is a corporation governed by the Canada Business Corporations Act and is a subsidiary of Raymond James Financial, Inc. (RJF), a public company in the United States. The common shares of RJF are listed on the New York Stock Exchange;
2. RJL is registered as an investment dealer in all jurisdictions of Canada and is a member of the Investment Industry Regulatory Organization of Canada (IIROC);
3. the principal regulator of RJL is the BCSC because RJL's head office is located in Vancouver, British Columbia;
4. GBS is a corporation governed by the Business Corporations Act (Ontario);
5. GBS is registered as an investment dealer in Ontario and is a member of IIROC;
6. the principal regulator of GBS is the Ontario Securities Commission (OSC) because GBS' head office is located in Exeter, Ontario;
7. the Filers are not in default of securities legislation in any jurisdiction of Canada;
8. RJL has notified the BCSC and the OSC as required under section 11.9 of NI 31-103 that it proposes to acquire all or a substantial part of the assets of GBS;
9. clients of GBS were given notice of the transfer of client accounts to RJL as well as information that GBS will no longer offer services to its clients;
10. RJL received approval from IIROC for the bulk transfer of client accounts from GBS to RJL. The bulk transfer will start to take place on April 25, 2015, after which GBS will not conduct registerable activities or open new client accounts;
11. the registered dealing representatives of GBS will terminate their registrations as dealing representatives with GBS at the end of business on April 24, 2015 and immediately register as dealing representatives with RJL (the effective date);
12. the chief compliance officer (CCO) of GBS is also a dealing representative of GBS and chief financial officer; the chief executive officer (CEO) of GBS is also the ultimate designated person (UDP) and a dealing representative of GBS, as well as the president and director;
13. while the CCO will become a dealing representative, the CCO wishes to remain registered as the CCO of GBS and continue to be CFO to facilitate the orderly transition of the assets of GBS to RJL and to wind down the affairs of GBS; the dual registration in GBS will cease as soon as the affairs of GBS are wound down and it has surrendered its registration;
14. while the CEO will become a dealing representative of RJL, the CEO wishes to remain the UDP, CEO, president and director of GBS to facilitate the orderly transition of the assets of GBS to RJL and to wind down the affairs of GBS; the dual registration will cease as soon as the affairs of GBS are wound down and it has surrendered its registration;
15. GBS has agreed to terms and conditions being placed on its registration on the effective date which include that:
(a) GBS and all its registered individuals shall not trade in securities and will not open any new client accounts; and
(b) the CCO and the UDP will only act in these capacities for GBS in order to comply with regulatory requirements including as necessary to resign the membership of GBS with IIROC. The dual registrants have agreed to abide by, and ensure that GBS adheres to the terms and conditions imposed on the registration of GBS;
16. as the CCO and the UDP anticipate spending less time than they currently spend in their capacities as directors and officers of GBS, as applicable, they will have sufficient time and resources to adequately meet their obligations to each firm;
17. the Filers have in place policies and procedures to address any conflicts of interest that may arise as a result of the dual registrations;
18. RJL has compliance and supervisory policies and procedures in place to monitor the conduct of its representatives and to ensure that RJL can deal appropriately with any conflict of interest that may arise;
19. RJL will supervise the activities that the CCO and the UDP will conduct on behalf of RJL, including by holding meetings regularly with them and by obtaining regular status reports from them; and
20. in the absence of the relief sought, RJL would be prohibited under paragraph 4.1(1)(a) of NI 31-103 from permitting the CCO and the UDP to act as dealing representatives of RJL, while also acting as CCO and the UDP respectively of GBS.
4 Each of the Decision Makers 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 Makers under the Legislation is that the relief sought is granted provided that the relief sought shall expire on the earlier of the following:
(i) one year after the date hereof;
(ii) on the date that the registration of GBS is surrendered or terminated.