LPS 3-16 - Registration for Securities and Insurance [Rescinded]
PART 1 IMPLEMENTATION
1.1 Effective date - Interim Local Policy Statement 3-16 dated March 7, 1990 is hereby rescinded and the following substituted therefor, effective August 14, 1990.
1.2 Terms defined in legislation - Terms defined in the Securities Act, S.B.C. 1985, c. 83 (the "Act"), the Securities Regulation, B.C. Reg. 270/86 (the "Regulation") and the Interpretation Act, R.S.B.C. 1979, c. 206 and used in this local policy statement have the same meaning as in the Act, the Regulation and the Interpretation Act.
PART 2 APPLICATION
2.1 Purpose - This local policy statement sets out the conditions under which an individual may be registered as a salesman of a registered dealer under the Act while also licensed as an insurance agent or salesperson under the Insurance Act, R.S.B.C. 1979, c. 200 (or as an insurance agent or salesperson under its successor, the Financial Institutions Act, S.B.C. 1989, c. 47) (both Acts referred to together as the "FIA").
2.2 Scope - Section 64 of the Regulation states that an individual who is registered under the Act as a salesman of a registered dealer must be employed full time in that capacity unless, among other things, the individual holds a licence as an insurance agent under the FIA.
This policy sets out only the requirements of the British Columbia Securities Commission (the "Commission"). Individuals who wish to be licensed under the FIA should refer to the FIA, the regulations under the FIA and the policies of the Financial Institutions Commission and the Insurance Council of British Columbia.
PART 3 CONDITIONS FOR OBTAINING REGISTRATION
3.1 Dealer's responsibility - A dealer has primary responsibility for deciding whether to permit its salesmen to apply to be licensed under the FIA.
3.2 Separate entity for insurance activities - A dealer that permits its salesmen to apply to be licensed under the FIA must ensure that insurance activities are carried on separately from securities activities, not through the dealer registered under the Act. For example, a dealer can create a subsidiary through which its insurance activities are carried on or a salesman may enter into a contract directly with an insurer, in accordance with the licensing requirements of the FIA.
3.3 Requirements for registration as salesman - Where an individual is licensed under the FIA, the Superintendent of Brokers (the "Superintendent") will register that individual as a salesman of a registered dealer under the Act, provided that the individual applying for registration:
(a) is employed by a dealer registered under the Act,
(b) advises the dealer and the Superintendent of the nature of the licence held under the FIA,
(c) delivers to the Superintendent a letter from the registered dealer employing the individual acknowledging the individual's registration under the Act and licensing under the FIA and not objecting to the dual registration,
(d) delivers to the Superintendent a copy of a letter notifying the Insurance Council that the individual is applying for registration under the Securities Act, and
(e) meets all requirements for registration set out in the Act, the Regulation and Local Policy Statement 3-22.
3.4 Superintendent's requirements for individuals applying for licensing under FIA - Where a salesman who is registered under the Act wishes to apply to the Insurance Council for a licence under the FIA, the salesman must
(a) first obtain the written approval of the dealer employing the salesman,
(b) at the time of making the application for the licence, file the dealer's approval with the Superintendent, and
(c) advise the Superintendent upon receipt of the licence.
3.5 Superintendent may impose conditions - In order to address the potential conflicts of interest arising from registration under the Act and licensing under the FIA, the Superintendent may impose conditions, in addition to those set out in this local policy statement, at the time of granting registration under the Act or when notified that a salesman has applied for licensing under the FIA.
PART 4 CONDITIONS FOR MAINTAINING REGISTRATION
4.1 General conditions - In order for an individual who is licensed under the FIA to maintain registration as a salesman under the Act
(a) the individual must comply with the conditions of registration in section 4.2, and
(b) the dealer employing the individual must comply with the dealer's conditions in section 4.3.
4.2 Salesman's conditions - In order to maintain the registration under the Act, a salesman registered under the Act and licensed under the FIA must comply with the following conditions:
(a) All letterhead, signs, business cards and other material used by the salesman in connection with a trade in securities must state prominently the name of the dealer that employs the salesman.
(b) The salesman must represent himself as a salesman of the dealer when acting in connection with a trade in securities.
(c) The salesman must ensure that all securities transactions involving the salesman are handled through the dealer and not through any other person.
(d) The salesman must notify the dealer and the Superintendent, as soon as practicable, of any disciplinary action commenced against the salesman under the FIA.
(e) The salesman must notify the dealer and the Superintendent, as soon as practicable, of any change in the status of a licence held by the salesman under the FIA.
4.3 Dealer's conditions - A dealer employing a salesman registered under the Act and licensed under the FIA must:
(a) monitor the activities of the salesman as they apply to trading in securities and ensure that all activities of the salesman are in compliance with the requirements of the Act, the Regulation, the Commission's policy statements and the rules of any self-regulatory body or stock exchange of which the dealer is a member,
(b) pay directly to the salesman and not to any other person all commissions earned by the salesman from securities transactions, and
(c) implement systems designed to ensure that members of the public dealing with the salesman understand
(i) that the salesman is employed by more than one entity,
(ii) that they will be dealing with two different entities depending on the product purchased from the salesman,
(iii) that the remuneration earned by the salesman from the sale of different products may vary,
(iv) the procedure for the handling of confidential client information, including the intended use of information a client has permitted to be transferred to another person, and
(v) the identity of the entity holding the client's funds.
PART 5 NOTICE
5.1 Where notice is required to be delivered to the Superintendent under this local policy statement and where responsibility for licensing a salesman has been delegated to a self-regulatory organization or stock exchange, a reference to the Superintendent should be read as a reference to the applicable self-regulatory organization or stock exchange.
DATED at Vancouver, British Columbia, this 14th day of August 1990.
Douglas M. Hyndman