Exemption Orders (Discretionary)
BMO NESBITT BURNS INC.
2001 BCSECCOM 486
Headnote:
Mutual Reliance Review System for Exemptive Relief Applications - Relief from certain disclosure statement and client consent requirements in National Instrument 81-105 regarding the purchase by two registered representatives of an equity interest in an entity that is a member of the organization of certain mutual funds.
Applicable British Columbia Provisions
National Instrument 81-105, ss. 8.2(3), 8.2(4), 9.1
IN THE MATTER OF THE CANADIAN SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO, NEW BRUNSWICK, NOVA SCOTIA, PRINCE EDWARD ISLAND, NEWFOUNDLAND, NORTHWEST TERRITORIES, YUKON TERRITORY AND NUNAVUT TERRITORY
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF NATIONAL INSTRUMENT NI 81-105 MUTUAL FUND SALES PRACTICES (the "NATIONAL INSTRUMENT")
AND
IN THE MATTER OF BMO NESBITT BURNS INC.
MRRS DECISION DOCUMENT
WHEREAS the Canadian securities regulatory authority or regulator (the “Decision Maker”) in each of the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and the Northwest Territories, Yukon Territory and Nunavut Territory (the “Jurisdictions”) has received an application (the “Application”) from BMO Nesbitt Burns Inc. ("Nesbitt") for a decision pursuant to Section 9.1 of the National Instrument that Section 8.2(3) and 8.2(4) of the National Instrument shall not apply with respect to the acquisition and holding of an equity interest in Clarington Funds Inc. (“Clarington”) by two registered representatives of Nesbitt in Alberta;
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission is the principal regulator for this application;
AND WHEREAS Nesbitt has represented to the Decision Makers that:
1. Nesbitt is registered as an investment dealer in Alberta, and is registered or may become registered in the future, as an investment dealer in all other provinces and territories of Canada. Nesbitt has, or may in the near future have, representatives at offices located in all such jurisdictions.
2. Two registered representatives of Nesbitt resident in Alberta and associated with a branch of Nesbitt in Calgary (the "Alberta Representatives") wish to acquire, in the aggregate, less than 1.00% of the outstanding shares of Clarington (the "Clarington Equity Interest"). The Alberta Representatives are not officers, directors or branch managers of Nesbitt and do not otherwise have a position of influence over other registered representatives of Nesbitt.
3. Clarington is a member of the organization (as that term is defined in the National Instrument) of the Clarington group of mutual funds (the "Clarington Funds"). The Clarington Funds are sold in all provinces and territories of Canada under a simplified prospectus.
4. No registered representative of Nesbitt holds units of Clarington or has an equity interest (as defined in the National Instrument) of any other member of the organization of the Clarington Funds. Upon completion of the proposed transactions the Alberta Representatives will hold shares of Clarington, but will not have an equity interest in any other member of the organization of the Clarington Funds.
5. Subsections 8.2(1) and (2) of the National Instrument require the Clarington Funds to disclose the Clarington Equity Interest held by the Alberta Representatives in its next renewal simplified prospectus. The current simplified prospectus contains disclosure which complies with the requirements of the National Instrument and Clarington will ensure that the disclosure also appears in any future simplified prospectuses for the Clarington Funds, subject to any changes as may be required by any of the securities regulatory authorities as part of the prospectus review process.
6. Subsection 8.2(3) of the National Instrument would require each registered representative of Nesbitt in all applicable jurisdictions of Canada to give those clients who wish to acquire securities of the Clarington Funds a disclosure statement outlining each Alberta Representative's Clarington Equity Interest. Subsection 8.2(4) of the National Instrument would require each registered representative of Nesbitt to obtain a consent from any client wishing to acquire securities of the Clarington Funds.
7. Nesbitt seeks an exemption from subsections 8.2(3) and (4) so that only the Alberta Representatives and Nesbitt itself will be required to give the required disclosure statement to clients of the Alberta Representatives who wish to acquire securities of the Clarington Funds. Similarly, only the Alberta Representatives and Nesbitt will obtain an applicable client's consent before finalizing any acquisition by the client of securities of the Clarington Funds.
8. Having regard to the size of the Clarington Equity Interest, each Alberta Representative's employment status with Nesbitt and the large number of representatives of Nesbitt located across Canada, Nesbitt submits that compliance with subsections 8.2(3) and (4) would be unduly onerous and is not necessary in order to meet the policy underpinning section 8.2.
AND WHEREAS pursuant to the System this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the “Decision”);
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the National Instrument that provides the Decision Maker with the jurisdiction to make the Decision has been met;
THE DECISION of the Decision Makers pursuant to section 9.1 of the National Instrument is that Nesbitt and its registered representatives are exempt from Sections 8.2(3) and 8.2(4) of the National Instrument with respect to the Clarington Equity Interests, provided that:
(i) each Alberta Representative complies with the requirements of subsection 8.2(3) and subsection 8.2(4) of the National Instrument;
(ii) Nesbitt complies with the requirements of subsection 8.2(3) and subsection 8.2(4) of the National Instrument in connection with clients of Nesbitt who deal with each Alberta Representative; and
(iii) in the event an Alberta Representative assumes a position of authority or supervision over other registered representatives of Nesbitt, those other registered representatives and Nesbitt comply with subsection 8.2(3) and subsection 8.2(4) of the National Instrument.
DATED this 26th day of April, 2001.
Paul M. Moore Stephen N. Adams