Blanket Order #33-504
IN THE MATTER OF
the Securities Act
R.S.P.E.I. 1988, CAP. S-3.1
- and -
IN THE MATTER OF
Registration Exemption Enabling a
Corporation of an Individual Registrant
of a Mutual Fund Dealer or Investment Dealer
to Receive Directed Sales Commissions or Fees
A commission or fee payable to an individual registrant by a registered dealer as a result of trading or advising in the trading in securities is an activity that requires the recipient of the commission or fee to be registered under the Act.
The Superintendent has received representations from industry that an individual registrant, if permitted, may choose to structure his or her business in a manner which would include the payment of commissions and fees paid by a dealer to a corporation controlled by the individual registrant.
The Superintendent has determined, subject to terms and conditions set out in this order, that it would not be prejudicial to the public interest to exempt a corporation controlled by an individual registrant of a Mutual Fund Dealer or Investment Dealer from the registration requirements of the Act for the sole purpose of permitting the corporation to receive commissions and fees from a registered dealer that is a member in good standing of a self-regulatory organization (“SRO”) as these commissions or fees relate to the individual registrant’s trading or advising in securities.
IT IS ORDERED pursuant to section16 of the Securities Act, R.S.P.E.I. 1988, Cap. S-3.1 (the “Act”), that:
PART 1 - EXEMPTION ORDER
1.1 A corporation of an individual registrant of a Mutual Fund Dealers Association of Canada approved Mutual Fund Dealer or an Investment Industry Regulatory Organization of Canada approved Investment Dealer is exempt from the registration requirement in section 86 of the Act, solely in connection with receiving an individual registrant’s commissions and fees from a registered dealer that is a member in good standing of a SRO, subject to the following terms and conditions:
(a) The corporation must be incorporated under the laws of Canada or a province or territory of Canada and all of its directors, officers and shareholders are individual registrants affiliated with the same dealer;
(b) Notwithstanding subsection (a), a family member of an individual registrant described in subsection (a) may be a director, officer or shareholder of the corporation. For the purposes of this paragraph, a family member includes a spouse, child, parent, grandparent, brother, sister, uncle, aunt, niece, or nephew of the individual registrant.
(c) The corporation and dealer must have a written contract under which the dealer is liable for the acts or omissions of the corporation and the individual registrant who is a director, officer or shareholder of the corporation if these acts or omissions are related to or arise from the business of dealing or advising in securities; and
(d) Upon the request of staff of the Superintendent, the corporation will make any and all of its books and records available for inspection by staff of the Superintendent.
(e) Neither the corporation nor the dealer will engage in any practice with respect to the payment or receipt of commissions or fees, as the case may be, that is prohibited by, or otherwise inconsistent with, any rule, regulation, by-law, policy, notice, practice, procedure, bulletin or other regulatory instrument (each a “Regulatory Instrument”) of the dealer’s SRO.
(f) Paragraph (e) of this Order does not apply to a Regulatory Instrument that is suspended by the Superintendent.
DATED at Charlottetown, Prince Edward Island, this 29th day of September, 2008.