Ontario Securities Commission Bulletin

Issue 42/06 - February 07, 2019

Ont. Sec. Bull. Issue 42/06

Table of Contents

Chapter 1 - Notices / News Releases

Notices

CSA Staff Notice 45-325 Filing Requirement and Fee Payable for Exempt Distributions involving Fully Managed Accounts

Notice of Ministerial Approval of Arrangements Regarding the Access, Collection, Storage and Use of Derivatives Data

Notices from the Office of the Secretary

Dennis L. Meharchand and Valt.X Holdings Inc.

Benedict Cheng et al.

Chapter 2 - Decisions, Orders and Rulings

Decisions

Mackenzie Financial Corporation et al.

Accelerate Financial Technologies Inc. et al.

Orders

Dennis L. Meharchand and Valt.X Holdings Inc. -- ss. 127(1), 127.1

NWQ Investment Management Company, LLC -- s. 80 of the CFA

Chapter 3 - Reasons: Decisions, Orders and Rulings

OSC Decisions

Dennis L. Meharchand and Valt.X Holdings Inc. -- ss. 127(1), 127.1

Benedict Cheng et al.

Chapter 4 - Cease Trading Orders

Temporary, Permanent & Rescinding Issuer Cease Trading Orders

Temporary, Permanent & Rescinding Management Cease Trading Orders

Outstanding Management & Insider Cease Trading Orders

Chapter 5 - Rules and Policies

Arrangements Regarding the Access, Collection, Storage and Use of Derivatives Data

Chapter 11 - IPOs, New Issues and Secondary Financings

Chapter 12 - Registrations

Registrants

Chapter 13 - SROs, Marketplaces, Clearing Agencies and Trade Repositories

Marketplaces

TSX Inc. -- Dark Trading Enhancements -- Notice of Approval

Chapter 25 - Other Information

Revocations

Husky Energy Inc.

 

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Chapter 1 -- Notices / News Releases

CSA Staff Notice 45-325 Filing Requirement and Fee Payable for Exempt Distributions involving Fully Managed Accounts

CSA Staff Notice 45-325 Filing Re quirement and Fee Payable for Exempt Distributions involving Fully Managed Accounts

February 7, 2019

Purpose

This notice is intended to clarify when Form 45-106F1 Report of Exempt Distribution (Form 45-106F1) of National Instrument 45-106 Prospectus Exemptions (NI 45-106) is required to be filed, and fees paid, for exempt distributions involving fully managed accounts.

Background

In 2016, the Canadian Securities Administrators (the CSA) introduced a streamlined and harmonized version of Form 45-106F1 as part of an effort to reduce the compliance burden for issuers and underwriters distributing securities under prospectus exemptions, while ensuring Form 45-106F1 continues to provide securities regulators with the necessary information to facilitate more effective regulatory oversight of the exempt market and improve analysis for policy development purposes.

Among other changes made, the reporting of exempt distributions involving fully managed accounts was simplified to reduce regulatory burden on issuers and underwriters. In all jurisdictions, Form 45-106F1 only requires issuers and underwriters to provide information on the trust company, trust corporation or registered adviser who had purchased securities on behalf of a fully managed account in item 7 and Schedule 1 and no longer requires information about the beneficial owners of the fully managed account.

While Form 45-106F1 has been harmonized, the requirement to file and pay filing fees for Form 45-106F1 continues to be governed by the securities legislation of each CSA jurisdiction.

Reporting requirement for exempt distributions involving fully managed accounts

Issuers and underwriters who rely on the accredited investor prospectus exemption (the AI Exemption) in section 2.3 of NI 45-106 to distribute securities are required to file a Form 45-106F1 within a prescribed timeframe.{1} An accredited investor includes:

• a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation;{2} and

• a person acting on behalf of a fully managed account managed by that person, if that person is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign issuer.{3}

Section 2.3(2) of NI 45-106 states that for the purpose of the AI Exemption, a trust company or trust corporation described in paragraph (p) of the definition of "accredited investor" in section 1.1 of NI 45-106 is deemed to be purchasing as principal. Similarly, section 2.3(4) of NI 45-106 states that for the purpose of the AI Exemption, a person described in paragraph (q) of the definition of "accredited investor" in section 1.1 of NI 45-106 is deemed to be purchasing as principal. Instruction 4 of Form 45-106F1 requires issuers and underwriters to provide information on the trust company, trust corporation or registered adviser who had purchased securities on behalf of a fully managed account and not the beneficial owners of the fully managed account.

Filing and Fee Requirements

In accordance with Instruction 1 of Form 45-106F1, if a distribution is made in more than one jurisdiction of Canada, the issuer may complete a single Form 45-106F1 and file it in each jurisdiction of Canada in which the distribution occurs. In order to determine the fee payable in each jurisdiction, please refer to Annex A.

In each jurisdiction other than Manitoba, Québec and Saskatchewan, the requirement to file Form 45-106F1 in respect of a distribution involving a fully managed account is based on the location of the trust company, trust corporation or registered adviser deemed to be purchasing the securities as principal in accordance with section 2.3(2) or 2.3(4) of NI 45-106, as applicable. The requirement to pay a fee in these jurisdictions is triggered by the requirement to file Form 45-106F1. Accordingly, there is no requirement to file Form 45-106F1 or to pay a fee in these jurisdictions based on the location of the beneficial owner of a fully managed account.

In Manitoba and Québec, the requirements to file Form 45-106F1 and pay fees are based on the location of the beneficial owner of a fully managed account. A Form 45-106F1 is not required to be filed in these jurisdictions if only the trust company, trust corporation or registered adviser who had purchased securities on behalf of a fully managed account is located in the jurisdiction and there are no beneficial owners in the jurisdiction. Because Form 45-106F1 does not require issuers to provide information on the beneficial owners of fully managed accounts, the regulators in these jurisdictions require that issuers file an accompanying letter with the Form 45-106F1 stating the gross value of securities distributed to beneficial owners located in those jurisdictions.

In Saskatchewan, the requirement to file Form 45-106F1 and pay a fee is based on the location of the distribution. This could mean that the form should be filed in Saskatchewan if the trust company, trust corporation or registered adviser who had purchased securities on behalf of a fully managed account and/or the beneficial owner of a fully managed account is located in Saskatchewan. The Financial and Consumer Affairs Authority of Saskatchewan has issued blanket relief to waive the filing requirements in respect of a distribution to the beneficial owner of a fully managed account where the trust company, trust corporation or registered adviser who had purchased securities on behalf of a fully managed account is not located in Saskatchewan. As no filing will be required in these cases, no fee is triggered.

Questions

Please refer your questions to any of the following:

Jo-Anne Matear
Yan Kiu Chan
Manager, Corporate Finance Branch
Legal Counsel, Corporate Finance Branch
Ontario Securities Commission
Ontario Securities Commission
416-593-2323
416-204-8971
<<jmatear@osc.gov.on.ca>>
<<ychan@osc.gov.on.ca>>
 
Frederick Gerra
Kevin Yang
Senior Legal Counsel, Investment Funds and Structured Products Branch
Senior Research Analyst, Strategy and Operations Branch
Ontario Securities Commission
Ontario Securities Commission
416-204-4956
416-204-8983
<<fgerra@osc.gov.on.ca>>
<<kyang@osc.gov.on.ca>>
 
Gloria Tsang
Gabriel Chénard
Senior Legal Counsel, Compliance and Registrant Regulation Branch
Senior Policy Analyst, Investment Funds
Ontario Securities Commission
Autorité des marchés financiers
416-593-8263
514 395-0337 ext : 4482
<<gtsang@osc.gov.on.ca>>
<<gabriel.chenard@lautorite.qc.ca>>
 
Jody-Ann Edman
Kristina Beauclair
Assistant Manager, Financial Reporting
Analyst, Corporate Finance
British Columbia Securities Commission
Autorité des marchés financiers
604-899-6698
514-395-0337 ext: 4397
<<jedman@bcsc.bc.ca>>
<<kristina.beauclair@lautorite.qc.ca>>
 
Leslie Rose
Victoria Steeves
Senior Legal Counsel, Corporate Finance
Senior Legal Counsel, Corporate Finance
British Columbia Securities Commission
British Columbia Securities Commission
604-899-6654
604-899-6791
<<lrose@bcsc.bc.ca>>
<<vsteeves@bcsc.bc.ca>>
 
Sonne Udemgba
Wayne Bridgeman
Deputy Director, Legal, Securities Division,
Deputy Director, Corporate Finance
Financial and Consumer Affairs Authority of Saskatchewan
Manitoba Securities Commission
306-787-5879
204-945-4905
<<sonne.udemgba@gov.sk.ca>>
<<wayne.bridgeman@gov.mb.ca>>
 
Steven Weimer
Ella-Jane Loomis
Team Lead, Compliance, Data & Risk
Senior Legal Counsel, Securities
Alberta Securities Commission
Financial and Consumer Services Commission (New Brunswick)
403-355-9035
506-453-6591
<<steven.weimer@asc.ca>>
<<ella-jane.loomis@fcnb.ca>>
 
Jack Jiang
Steven Dowling
Securities Analyst, Corporate Finance
Acting Director
Nova Scotia Securities Commission
Superintendent of Securities
902-424-7059
Government of Prince Edward Island
<<jack.jiang@novascotia.ca>>
902-368-4551
<<sddowling@gov.pe.ca>>
 
Renée Dyer
Rhonda Horte
Superintendent of Securities
Securities Officer
Office of the Superintendent of Securities
Office of the Yukon Superintendent of Securities
Service NL
867-667-5466
709-729-4909
<<rhonda.horte@gov.yk.ca>>
<<ReneeDyer@gov.nl.ca>>
 
Thomas Hall
Jeff Mason
Superintendent of Securities
Superintendent of Securities
Department of Justice
Department of Justice
Government of the Northwest Territories
Government of Nunavut
867-767-9305
867-975-6591
<<tom_hall@gov.nt.ca>>
<<jmason@gov.nu.ca>>

{1} In Ontario, the accredited investor exemption is set out under subsection 73.3(2) of the Securities Act (Ontario).

{2} See paragraph (p) of the definition of "accredited investor" in section 1.1 of NI 45-106.

{3} See paragraph (q) of the definition of "accredited investor" in section 1.1 of NI 45-106.

 

Annex A -- Fee payable in each jurisdiction

How to determine the fee payable in each jurisdiction

In Alberta: Please refer to Alberta Securities Commission Rule 13-501 Fees sec.11.

In British Columbia: Please refer to Securities Regulation, B.C. Reg. 196/97, sec. 22, item 16(1).

In Manitoba: Please refer to s.1(2)(z), Schedule A, of the Securities Regulation 491/88R.

In New Brunswick: Please refer to sections 2.5 and 2.19 of Local Rule 11-501.

In Newfoundland and Labrador: Please refer to section 7(2) of the fee schedule approved by s. 143 of the Securities Act.

In Nova Scotia: Please refer to section 24, Appendix A, of Rule 11-508.

In Northwest Territories: Please refer to Securities Fees Regulations R-066-2008 as amended, Schedule, Paragraph 1(p).

In Nunavut: Please refer to Local Rule 31-504, Schedule A, Item (p).

In Ontario: Please refer to Ontario Securities Commission Rule 13-502 Fees, Appendix C, Row B2.

In Prince Edward Island: Please refer to the Schedule to the Securities Act.

In Québec: Please refer to section 267(4) of Securities Regulation, CQLR, chapter V-1.1, r. 50. Fees are payable on the gross value of the securities distributed to beneficial owners located in Quebec.

In Saskatchewan: Please refer to Appendix A -- Table 1, s. 4(c) of The Securities Regulations.

In Yukon: Please refer to Securities Fee Regulation, (O.I.C. 2009/66), Schedule 1, para. 1(p).

 

Notice of Ministerial Approval of Arrangements Regarding the Access, Collection, Storage and Use of Derivatives Data

NOTICE OF MINISTERIAL APPROVAL OF ARRANGEMENTS REGARDING THE ACCESS, COLLECTION, STORAGE AND USE OF DERIVATIVES DATA

On January 24, 2019, the Minister of Finance approved, pursuant to section 143.10 of the Securities Act (Ontario), arrangements that the Ontario Securities Commission entered into with each of

• the Office of the Superintendent of Securities, Newfoundland and Labrador,

• the Office of the Superintendent of Securities, Prince Edward Island,

• the Office of the Superintendent of Securities, Northwest Territories,

• the Office of the Superintendent of Securities, Nunavut and

• the Office of the Superintendent of Securities, Yukon (each, a "Partner Jurisdiction").

The arrangements set out an understanding between the OSC and each Partner Jurisdiction that the OSC will act as an agent for the purposes of accessing, collecting, storing, analyzing and reporting on derivatives data, as collected by relevant trade repositories (together, the "Derivatives Data Arrangements"). The Derivatives Data Arrangements were published in the Bulletin on December 13, 2018 at (2018), 41 OSCB 9691. The Derivatives Data Arrangements are effective January 24, 2019. The text of the Derivatives Data Arrangements is reproduced in Chapter 5 of this Bulletin.

Questions may be referred to:

Kevin Fine
Director
Derivatives Branch
Tel: 416-593-8109
E-mail: kfine@osc.gov.on.ca

 

Dennis L. Meharchand and Valt.X Holdings Inc.

FOR IMMEDIATE RELEASE

January 31, 2019

DENNIS L. MEHARCHAND and VALT.X HOLDINGS INC., File No. 2017-4

TORONTO -- The Commission issued its Reasons and Decision on Sanctions and Costs and an Order in the above noted matter.

A copy of the Reasons and Decision on Sanctions and Costs and the Order dated January 30, 2019 are available at www.osc.gov.on.ca.

OFFICE OF THE SECRETARY
GRACE KNAKOWSKI
SECRETARY TO THE COMMISSION

For media inquiries:

media_inquiries@osc.gov.on.ca

For investor inquiries:

OSC Contact Centre
416-593-8314
1-877-785-1555 (Toll Free)

 

Benedict Cheng et al.

FOR IMMEDIATE RELEASE

February 5, 2019

BENEDICT CHENG, FRANK SOAVE, JOHN DAVID ROTHSTEIN and ERIC TREMBLAY, File No. 2017-1

TORONTO -- Following the hearing on the merits in the above noted matter, the Commission issued its Reasons and Decision.

A copy of the Reasons and Decision dated February 4, 2019 is available at www.osc.gov.on.ca.

OFFICE OF THE SECRETARY
GRACE KNAKOWSKI
SECRETARY TO THE COMMISSION

For media inquiries:

media_inquiries@osc.gov.on.ca

For investor inquiries:

OSC Contact Centre
416-593-8314
1-877-785-1555 (Toll Free)

 

Chapter 2 -- Decisions, Orders and Rulings

Mackenzie Financial Corporation et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted to exchange-traded mutual funds for extensions of the lapse date of their prospectus -- Filer will incorporate offering of the ETFs under the same offering documents as related family of funds when they are renewed -- Extension of lapse date will not affect the currency or accuracy of the information contained in the current prospectus.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).

January 28, 2019

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF MACKENZIE FINANCIAL CORPORATION (the Filer) AND MACKENZIE CANADIAN SHORT TERM FIXED INCOME ETF, MACKENZIE CORE PLUS CANADIAN FIXED INCOME ETF, MACKENZIE CORE PLUS GLOBAL FIXED INCOME ETF, MACKENZIE FLOATING RATE INCOME ETF, MACKENZIE GLOBAL HIGH YIELD FIXED INCOME ETF, MACKENZIE UNCONSTRAINED BOND ETF, MACKENZIE GLOBAL LEADERSHIP IMPACT ETF, MACKENZIE IVY GLOBAL EQUITY ETF AND MACKENZIE PORTFOLIO COMPLETION ETF (the Funds)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Funds for a decision under the securities legislation of the Jurisdiction (the Legislation) that the time limits for the renewal of the long form prospectus of the Funds dated April 3, 2018 (the Prospectus) be extended to those time limits that would apply if the lapse date of the Prospectus was June 20, 2019 (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(i) the Ontario Securities Commission is the principal regulator for this application; and

(ii) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with Ontario, the Canadian Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation existing under the laws of the Province of Ontario. The Filer's head office is located in Toronto, Ontario.

2. The Filer is registered as an investment fund manager, portfolio manager, exempt market dealer and commodity trading manager in Ontario. The Filer is also registered as a portfolio manager and exempt market dealer in the Canadian Jurisdictions and as an investment fund manager in Newfoundland and Labrador and Québec.

3. The Filer is the trustee and investment fund manager of the Funds.

4. Each of the Funds is an exchange-traded mutual fund (an ETF) established under the laws of Ontario, and is a reporting issuer as defined in the securities legislation of each of the Canadian Jurisdictions.

5. Neither the Filer nor any of the Funds are in default of securities legislation in any of the Canadian Jurisdictions.

6. The Funds currently distribute securities in the Canadian Jurisdictions under the Prospectus.

7. Pursuant to subsection 62(1) of the Securities Act (Ontario) (the Act), the lapse date of the Prospectus is April 3, 2019 (the Lapse Date). Accordingly, under subsection 62(2) of the Act, the distribution of securities of each of the Funds would have to cease on the Lapse Date unless: (i) the Funds file a pro forma prospectus at least 30 days prior to the Lapse Date; (ii) the final prospectus is filed no later than 10 days after the Current Lapse Date; and (iii) a receipt for the final prospectus is obtained within 20 days of the Lapse Date.

8. The Filer is the investment fund manager of 19 other ETFs as listed in Schedule "A" (the Other Funds) that currently distribute their securities under a prospectus with a lapse date of June 20, 2019 (the Other Funds Prospectus).

9. The Filer wishes to combine the Prospectus with the Other Funds Prospectus into a prospectus dated on or about June 20, 2019 in order to reduce renewal, printing and related costs. Offering the Funds and the Other Funds under one prospectus would facilitate the distribution of the Funds in the Canadian Jurisdictions under the same prospectus and enable the Filer to streamline disclosure across the Filer's fund platform. As the Funds and the Other Funds are managed by the Filer, offering them under the same prospectus would allow investors to more easily compare their features.

10. It would be unreasonable to incur the costs and expenses associated with preparing two separate renewal prospectuses given how close in proximity the Lapse Date is with the lapse date of the Other Funds Prospectus.

11. Except as otherwise disclosed within Amendment No. 1 to the Prospectus dated October 10, 2018 (Amendment No. 1), there have been no material changes in the affairs of the Funds since the date of the Prospectus. Amendment No. 1 was accompanied with the following amended ETF facts document filings: (i) for Mackenzie Unconstrained Bond ETF, Mackenzie Floating Rate Income ETF, Mackenzie Core Plus Canadian Fixed Income ETF, Mackenzie Global High Yield Fixed Income ETF, Mackenzie Global Leadership Impact ETF, Mackenzie Portfolio Completion ETF, Mackenzie Ivy Global Equity ETF and Mackenzie Canadian Short Term Fixed Income ETF, to announce a reduction in management fees, effective October 10, 2018; and (ii) for Mackenzie Unconstrained Bond ETF to reflect a change in its risk rating from "Low to Medium" to "Low" (together, the Amended ETF Facts). Accordingly, the Prospectus, Amendment No. 1, the Amended ETF Facts and the current ETF facts document of Mackenzie Core Plus Global Fixed Income ETF, represent the current information of the Funds.

12. Given the disclosure obligations of the Funds, should a material change in the affairs of any of the Funds occur, the Prospectus and the current ETF facts document(s) of the applicable Fund(s) will be amended as required under the Legislation.

13. New investors in the Funds will receive delivery of the most recently filed ETF facts document(s) of the applicable Fund(s). The Prospectus and Amendment No. 1 will still be available upon request.

14. The Exemption Sought will not affect the accuracy of the information contained in the Prospectus and therefore will not be prejudicial to the public interest.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted.

"Darren McKall"
Manager,
Investment Funds and Structured Products
Ontario Securities Commission

 

SCHEDULE "A"

THE OTHER FUNDS

Mackenzie Maximum Diversification Canada Index ETF
Mackenzie Maximum Diversification US Index ETF
Mackenzie Maximum Diversification Developed Europe Index ETF
Mackenzie Maximum Diversification All World Developed Index ETF
Mackenzie Maximum Diversification Emerging Markets Index ETF
Mackenzie Maximum Diversification All World Developed ex North America Index ETF
Mackenzie China A-Shares CSI 300 Index ETF
Mackenzie Canadian Large Cap Equity Index ETF
Mackenzie Canadian Equity Index ETF
Mackenzie US Large Cap Equity Index ETF
Mackenzie US Large Cap Equity Index ETF (CAD-Hedged)
Mackenzie International Equity Index ETF
Mackenzie International Equity Index ETF (CAD-Hedged)
Mackenzie Canadian Aggregate Bond Index ETF
Mackenzie Canadian Short-Term Bond Index ETF
Mackenzie Canadian All Corporate Bond Index ETF
Mackenzie US TIPS Index ETF (CAD-Hedged)
Mackenzie US Investment Grade Corporate Bond Index ETF (CAD-Hedged)
Mackenzie US High Yield Bond Index ETF (CAD-Hedged)

 

Accelerate Financial Technologies Inc. et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief to permit exchange-traded mutual fund prospectus to omit an underwriter's certificate -- Relief granted from take-over bid requirements for normal course purchases of securities on a marketplace -- Relief granted to facilitate the offering of exchange-traded mutual funds.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 59(1), 147.

National Instrument 62-104 Take-Over Bids and Issuer Bids, Part 2 and s. 6.1.

Citation: Re Accelerate Financial Technologies Inc., 2019 ABASC 13

January 18, 2019

IN THE MATTER OF THE SECURITIES LEGISLATION OF ALBERTA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF ACCELERATE FINANCIAL TECHNOLOGIES INC. (the Filer) AND ACCELERATE ABSOLUTE RETURN HEDGE FUND, ACCELERATE ENHANCED CANADIAN BENCHMARK ALTERNATIVE FUND, ACCELERATE PRIVATE EQUITY ALPHA FUND (the Proposed ETFs)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application from the Filer on behalf of the Proposed ETFs and such other exchange-traded mutual funds as may be managed by the Filer or an affiliate of the Filer in the future (the Future ETFs, and together with the Proposed ETFs, the ETFs and each an ETF) for a decision under the securities legislation of the Jurisdictions (the Legislation) that:

(a) exempts the Filer and each ETF from the requirement to include a certificate of an underwriter in an ETF's prospectus (the Underwriter's Certificate Requirement); and

(b) exempts a person or company purchasing Listed Securities (as defined below) in the normal course through the facilities of the Toronto Stock Exchange (TSX) or another Marketplace (as defined below) from the Take-over Bid Requirements (as defined below)

(collectively, the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the provinces and territories of Canada (the Offering Jurisdictions), other than Ontario; and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

Affiliate Dealer means a registered dealer that is an affiliate of an Authorized Dealer or Designated Broker and that participates in the resale of Creation Units (as defined below) from time to time.

Authorized Dealer means a registered dealer that has entered, or intends to enter, into an agreement with the manager of an ETF authorizing the dealer to subscribe for, purchase and redeem Creation Units from one or more ETFs on a continuous basis from time to time.

Basket of Securities means, in relation to the Listed Securities of an ETF, a group of securities identified from time to time that collectively reflect the constituents of the portfolio of an ETF.

Designated Broker means a registered dealer that has entered, or intends to enter, into an agreement with the manager of an ETF to perform certain duties in relation to the ETF, including the posting of a liquid two-way market for the trading of the ETF's Listed Securities on the TSX or another Marketplace.

Form 41-101F2 means Form 41-101F2 Information Required in an Investment Fund Prospectus.

Listed Securities means a series of securities of an ETF distributed pursuant to a long form prospectus prepared pursuant to NI 41-101 and Form 41-101F2 that is listed on the TSX or another Marketplace.

Marketplace means a "marketplace" as defined in National Instrument 21-101 Marketplace Operation that is located in Canada.

NI 41-101 means National Instrument 41-101 General Prospectus Requirements.

NI 81-102 means National Instrument 81-102 Investment Funds.

Other Dealer means a registered dealer that acts as authorized dealer or designated broker to exchange-traded funds that are not managed by the Filer.

Prescribed Number of Listed Securities means the number of Listed Securities of an ETF determined by the Filer from time to time for the purpose of subscription orders, exchanges, redemptions or for other purposes.

Securityholders means beneficial or registered holders of Listed Securities or Unlisted Securities (as defined below) as applicable.

Take-over Bid Requirements means the requirements of National Instrument 62-104 Take-Over Bids and Issuer Bids relating to take-over bids, including the requirement to file a report of a take-over bid and to pay the accompanying fee, in each Jurisdiction.

Unlisted Securities means a series of securities of an ETF offered only on a private placement basis pursuant to available prospectus exemptions, including the accredited investor exemption, under securities laws.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation incorporated under the Business Corporations Act (Alberta), with its head office located in Calgary, Alberta.

2. The Filer has applied for registration as an investment fund manager, portfolio manager and exempt market dealer in Alberta and Ontario.

3. The Filer will be the investment fund manager of the ETFs and will be the trustee of the ETFs where the ETF is a trust.

4. The Filer is not in default of securities legislation in any of the Offering Jurisdictions.

The ETFs

5. Each Proposed ETF will be an alternative mutual fund (as defined in NI 81-102) structured as a trust that is governed by the laws of a Jurisdiction. The Future ETFs will be either trusts or corporations or classes thereof governed by the laws of a Jurisdiction or the laws of Canada.

6. Subject to any exemptions that have been, or may be, granted by the applicable securities regulatory authorities, each ETF will be an open-ended mutual fund subject to NI 81-102, and Securityholders of each ETF will have the right to vote at a meeting of Securityholders in respect of matters prescribed by NI 81-102.

7. Each ETF may issue more than one series of securities, including, but not limited to Listed Securities and Unlisted Securities.

8. The Filer has filed, or will file, a long form prospectus prepared in accordance with NI 41-101 in respect of the Listed Securities, subject to any exemptions that may be granted by the applicable securities regulatory authorities.

9. Because the Listed Securities will be distributed pursuant to a long form prospectus prepared pursuant to NI 41-101 and Form 41-101F2, each ETF will be a reporting issuer in the Offering Jurisdictions in which its securities are distributed.

10. Listed Securities will be distributed on a continuous basis in one or more of the Offering Jurisdictions under a prospectus. Listed Securities may generally only be subscribed for or purchased directly from the ETFs (Creation Units) by Authorized Dealers or Designated Brokers. Generally, subscriptions or purchases may only be placed for a Prescribed Number of Listed Securities (or a multiple thereof) on any day when there is a trading session on the TSX or other Marketplace. Authorized Dealers or Designated Brokers subscribe for Creation Units for the purpose of facilitating investor purchases of Listed Securities on the TSX or another Marketplace.

11. In addition to subscribing for and reselling Creation Units, Authorized Dealers, Designated Brokers and Affiliate Dealers will also generally be engaged in purchasing and selling Listed Securities of the same class or series as the Creation Units in the secondary market. Other Dealers may also be engaged in purchasing and selling Listed Securities of the same class or series as the. Creation Units in the secondary market despite not being an Authorized Dealer, Designated Broker or Affiliate Dealer.

12. Each Designated Broker or Authorized Dealer that subscribes for Creation Units must deliver, in respect of each Prescribed Number of Listed Securities to be issued, payment consisting of, depending on the terms of the agreement with the Designated Broker or Authorized Dealer or at the Filer's discretion, a Basket of Securities and cash, cash only or a combination of securities and cash, in each case in an amount sufficient so that the value of the Basket of Securities and cash, cash or securities and cash delivered is equal to the net asset value of the Listed Securities subscribed for next determined following the receipt of the subscription order.

13. Upon notice given by the Filer from time to time and, in any event, not more than once quarterly, a Designated Broker may be contractually required to subscribe for Creation Units of an ETF for cash in an amount not to exceed a specified percentage of the net asset value of the ETF or such other amount established by the Filer.

14. The Designated Brokers and Authorized Dealers will not receive any fees or commissions in connection with the issuance of Creation Units to them. On the issuance of Creation Units, the Filer or the ETF may, at the Filer's discretion, charge a fee to a Designated Broker or an Authorized Dealer to offset the expenses incurred in issuing the Creation Units.

15. Each ETF will appoint a Designated Broker to perform certain other functions, which include standing in the market with a bid and ask price for Listed Securities for the purpose of maintaining liquidity for the Listed Securities.

16. Except for Authorized Dealer and Designated Broker subscriptions for Creation Units, as described above, and other distributions that are exempt from the prospectus requirement under the Legislation, Listed Securities generally will not be available for purchase directly from an ETF. Investors are generally expected to purchase and sell Listed Securities, directly or indirectly, through dealers executing trades through the facilities of the TSX or another Marketplace. Listed Securities may also be issued directly to Securityholders upon a reinvestment of distributions of income or capital gains.

17. Securityholders that are not Designated Brokers or Authorized Dealers that wish to dispose of their Listed Securities may generally do so by selling their Listed Securities on the TSX or other Marketplace, through a registered dealer, subject only to customary brokerage commissions. A Securityholder that holds a Prescribed Number of Listed Securities or multiple thereof may exchange such Listed Securities for, at the discretion of the Filer, Baskets of Securities or other securities and/or cash. Securityholders may also redeem Listed Securities for cash at a redemption price equal to 95% of the closing price of the Listed Securities on the TSX or other Marketplace on the date of redemption, subject to a maximum redemption price of the applicable net asset value per Listed Security.

18. Holders of Unlisted Securities may redeem such securities in any number for cash at a redemption price per Unlisted Security equal to the net asset value per Unlisted Security on the effective day of redemption.

Underwriter's Certificate Requirement

19. Authorized Dealers and Designated Brokers will not provide the same services in connection with a distribution of Creation Units as would typically be provided by an underwriter in a conventional underwriting.

20. The Filer will generally conduct its own marketing, advertising and promotion of the ETFs to the extent permitted by its registrations.

21. Authorized Dealers and Designated Brokers will not be involved in the preparation of an ETF's prospectus, will not perform any review or any independent due diligence as to the content of an ETF's prospectus, and will not incur any marketing costs or receive any underwriting fees or commissions from an ETF or the Filer in connection with the distribution of Listed Securities. The Authorized Dealers and Designated Brokers generally seek to profit from their ability to create and redeem Listed Securities by engaging in arbitrage trading to capture spreads between the trading prices of Listed Securities and their underlying securities and by making markets for their clients to facilitate client trading in Listed Securities.

Take-over Bid Requirements

22. As equity securities that will trade on the TSX or another Marketplace, it is possible for a person or company to acquire a percentage of the outstanding Listed Securities that will trigger the Take-over Bid Requirements. However:

(a) it will not be possible for one or more Securityholders to exercise control or direction over an ETF, as the constating documents of each ETF will provide that only the Filer may call a meeting of the Securityholders;

(b) it will be difficult for purchasers of Listed Securities to monitor compliance with the Take-over Bid Requirements because the number of outstanding Listed Securities will always be in flux as a result of the ongoing issuance and redemption of Listed Securities by each ETF; and

(c) the way in which the Listed Securities will be priced deters anyone from either seeking to acquire control, or offering to pay a control premium for outstanding Listed Securities because pricing for each Listed Security will generally reflect the net asset value of the Listed Securities.

23. The application of the Take-over Bid Requirements to the ETFs would have an adverse impact on the liquidity of the Listed Securities, because they could cause Designated Brokers and other large Securityholders to cease trading Listed Securities once a Securityholder has reached the prescribed threshold at which the Take-over Bid Requirements would apply. This, in turn, could serve to provide conventional mutual funds with a competitive advantage over the ETFs.

Decision

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 Exemption Sought is granted.

"Timothy Robson"
Manager, Legal
Corporate Finance
Alberta Securities Commission

 

Dennis L. Meharchand and Valt.X Holdings Inc. -- ss. 127(1), 127.1

FILE NO.: 2017-4

IN THE MATTER OF DENNIS L. MEHARCHAND and VALT.X HOLDINGS INC.

Timothy Moseley, Vice-Chair and Chair of the Panel
Deborah Leckman, Commissioner
Robert P. Hutchison, Commissioner

January 30, 2019

ORDER (Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990, c S.5)

WHEREAS on December 18, 2018, the Ontario Securities Commission held a hearing at the offices of the Commission, located at 20 Queen Street West, 17th Floor, Toronto, Ontario, to consider the sanctions and costs that the Commission should impose on the respondents as a result of the findings in the Commission's Reasons and Decision on the merits, issued on October 19, 2018;

ON READING the materials filed by Staff of the Commission (Staff), and on hearing the submissions of Staff and of Dennis L. Meharchand, appearing on his own behalf and on behalf of Valt.X Holdings Inc. (the Respondents);

IT IS ORDERED THAT:

1. pursuant to paragraph 2 of subsection 127(1) of the Act, trading in any securities by the Respondents shall cease permanently;

2. pursuant to paragraph 2.1 of subsection 127(1) of the Act, the Respondents are prohibited permanently from acquiring securities;

3. pursuant to paragraph 3 of subsection 127(1) of the Act, the exemptions contained in Ontario securities law shall not apply to the Respondents permanently;

4. pursuant to paragraphs 7 and 8.1 of subsection 127(1) of the Act, Mr. Meharchand shall resign any positions he holds as a director or officer of an issuer or a registrant;

5. pursuant to paragraphs 8 and 8.2 of subsection 127(1) of the Act, Mr. Meharchand is prohibited permanently from becoming or acting as a director or officer of any issuer or registrant;

6. pursuant to paragraph 8.5 of subsection 127(1) of the Act, Mr. Meharchand is prohibited permanently from becoming or acting as a registrant or as a promoter;

7. pursuant to paragraph 9 of subsection 127(1) of the Act, Mr. Meharchand shall pay an administrative penalty of $550,000, which amount shall be designated for allocation or use by the Commission in accordance with subclause 3.4(2)(b)(i) or (ii) of the Act;

8. pursuant to paragraph 10 of subsection 127(1) of the Act, the Respondents shall be required, jointly and severally, to disgorge to the Commission the sums of C$1.45 million and US$140,000, which amounts shall be designated for allocation or use by the Commission in accordance with subclause 3.4(2)(b)(i) or (ii) of the Act;

9. pursuant to section 127.1 of the Act, Mr. Meharchand shall pay costs of $165,083.17 to the Commission; and

10. pursuant to section 127.1 of the Act, Valt.X shall pay costs of $110,055.45 to the Commission.

"Timothy Moseley"
 
"Deborah Leckman"
 
"Robert P. Hutchison"

 

NWQ Investment Management Company, LLC -- s. 80 of the CFA

Headnote

Section 80 of the Commodity Futures Act (Ontario) -- Foreign adviser exempted from the adviser registration requirement in paragraph 22(1)(b) of the CFA where such adviser acts as an adviser in respect of commodity futures contracts or commodity futures options (Contracts) for certain investors in Ontario who meet the definition of "permitted client" in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations -- Contracts are primarily traded on commodity futures exchanges outside of Canada and primarily cleared outside of Canada.

Terms and conditions of exemption correspond to the relevant terms and conditions of the comparable exemption from the adviser registration requirement available to international advisers in respect of securities set out in section 8.26 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations -- Exemption also subject to a "sunset clause" condition.

Applicable Legislative Provisions

Commodity Futures Act, R.S.O. 1990, c. C.20. as am., ss. 1(1), 22(1)(b), 80.

Securities Act, R.S.O. 1990, c. S.5, as am., s. 25(3).

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 1.1, 8.26.

Ontario Securities Commission Rule 13-502 Fees.

January 15, 2019

IN THE MATTER OF THE COMMODITY FUTURES ACT, R.S.O. 1990, CHAPTER C.20, AS AMENDED (the CFA) AND IN THE MATTER OF NWQ INVESTMENT MANAGEMENT COMPANY, LLC

ORDER (Section 80 of the CFA)

UPON the application (the Application) of NWQ Investment Management Company, LLC (the Applicant) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 80 of the CFA (the Order), that the Applicant, and any individuals engaging in, or holding themselves out as engaging in, the business of advising others as to trading in Contracts (as defined below) on the Applicant's behalf (the Representatives), be exempt, for a specified period of time, from the adviser registration requirement in paragraph 22(1)(b) of the CFA, subject to certain terms and conditions;

AND UPON considering the Application and the recommendation of staff of the Commission;

AND WHEREAS for the purposes of this Order:

"CFA Adviser Registration Requirement" means the provisions of section 22 of the CFA that prohibit a person or company from acting as an adviser with respect to trading in Contracts unless the person or company is registered in the appropriate category of registration under the CFA;

"CFTC" means the Commodity Futures Trading Commission of the United States;

"Contract" has the meaning ascribed to that term in subsection 1(1) of the CFA;

"Foreign Contract" means a Contract that is primarily traded on one or more organized exchanges that are located outside of Canada and primarily cleared through one or more clearing corporations that are located outside of Canada;

"International Adviser Exemption" means the exemption set out in section 8.26 of NI 31-103 from the OSA Adviser Registration Requirement;

"NI 31-103" means National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, as amended from time to time;

"OSA" means the Securities Act, R.S.O. 1990, c. S.5, as amended from time to time;

"OSA Adviser Registration Requirement" means the provisions of section 25 of the OSA that prohibit a person or company from acting as an adviser with respect to investing in, buying or selling securities unless the person or company is registered in the appropriate category of registration under the OSA;

"Permitted Client" means a client in Ontario that is a "permitted client", as that term is defined in section 1.1. of NI 31-103, except that for purposes of this Order such definition shall exclude a person or company registered under the securities or commodities futures legislation of a jurisdiction of Canada as an adviser or dealer;

"Previous Order" means the exemption from the CFA Adviser Registration Requirement in respect of providing advice to Permitted Clients as to the trading of Foreign Contracts (subject to certain terms and conditions), granted by the Commission to the Applicant on January 17, 2014, and expiring on January 17, 2019;

"SEC" means the Securities and Exchange Commission of the United States;

"specified affiliate" has the meaning ascribed to that term in Form 33-109F6 to National Instrument 33-109 Registration Information;

"U.S. or United States" means the United States of America; and

"U.S. Advisers Act" means the Investment Advisers Act of 1940 of the United States, as amended from time to time.

AND UPON the Applicant having represented to the Commission that:

1. The Applicant is a limited liability company organized under the laws of the State of Delaware, United States. The Applicant's principal place of business is located in Los Angeles, California.

2. The Applicant is an indirect, wholly-owned, subsidiary of Teachers Insurance and Annuity Association of America, the principal office of which is located in New York, New York.

3. The Applicant is registered in the United States with the SEC as an investment adviser under the U.S. Advisers Act and is exempted from registration as a commodity trading adviser with the CFTC.

4. The Applicant engages in the business of an adviser with respect to securities and with respect to other investments, including Contracts, in California and its other offices in the United States. As of December 31, 2017, the Applicant managed approximately U.S.$12.2 billion in assets.

5. The Applicant provides its advisory services in a broad array of fixed income, equity and other investment strategies, including: government securities of the U.S. and other countries; debt securities, preferred securities, and equity securities of U.S. and non-U.S. companies, including depository receipts of these securities; convertible securities; exchange traded funds and shares of mutual funds; securities of master limited partnerships; shares of business development companies; and money market instruments including certificates of deposit, time deposits, bankers acceptances notes, commercial paper, repurchase agreements, and money market funds. Depending on the particular strategy, the Applicant may invest in a variety of securities and other financial instruments, including, in certain cases, derivatives, and employ various methods of analysis and investment techniques. In the United States, the Applicant instructs trades for fixed income futures, commodity futures, options on equity securities, options on commodity futures, and credit default swaps, all on a limited basis for a variety of strategies.

6. The Applicant is registered in a category of registration, or operates under an exemption from registration, under the applicable securities legislation or commodity futures legislation of the United States that permits it to carry on the activities in the United States that registration as an adviser under the CFA in the category of commodity trading manager would permit it to carry on in Ontario.

7. The Applicant advises Permitted Clients with respect to foreign securities in reliance on the International Adviser Exemption and therefore is not registered under the OSA.

8. The Applicant is not registered in any capacity under the CFA.

9. In reliance on, and in accordance with the terms and conditions of, the Previous Order, the Applicant provides discretionary advisory services to Permitted Clients in respect of Foreign Contracts in connection principally with respect to foreign currency and interest rate futures, options, and forwards.

10. As it does pursuant to the Previous Order, the Applicant proposes to continue providing advisory services in respect of Foreign Contracts to Permitted Clients (Advisory Services).

11. The Applicant is not in default of securities legislation, commodity futures legislation, or derivatives legislation of any jurisdiction in Canada. The Applicant is in compliance in all material respects with the securities laws, commodity futures laws, and derivatives laws of the United States.

12. If the advisory services were being provided by the Applicant with respect to securities (as defined in subsection 1(1) of the OSA), the Applicant would be able to rely on the International Adviser Exemption to provide such services to Permitted Clients on a basis that would be exempt from the OSA Adviser Registration Requirement.

13. There is currently no exemption from the CFA Adviser Registration Requirement that is equivalent to the International Adviser Exemption. Consequently, in the absence of the Order, the Applicant would be required to satisfy the CFA Adviser Registration Requirement to provide the Advisory Services by applying for and obtaining registration in Ontario as an adviser under the CFA in the category of commodity trading manager.

14. In connection with the Previous Order, the Applicant has submitted to the Commission a completed Submission to Jurisdiction and Appointment of Agent for Service substantially in the form attached as Appendix "A" to the Order.

15. To the best of the Applicant's knowledge, the Applicant confirms that there are currently no regulatory actions of the type contemplated by the Notice of Regulatory Action attached as Appendix "B" to the Order, except as otherwise disclosed to the Commission.

AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to make this Order.

IT IS ORDERED, pursuant to section 80 of the CFA, that the Applicant and the Representatives are exempt from the adviser registration requirement in paragraph 22(1)(b) of the CFA in respect of providing advice to Permitted Clients as to the trading of Foreign Contracts, provided that:

(a) the Applicant provides advice to Permitted Clients only as to trading in Foreign Contracts and does not advise any Permitted Client as to trading in Contracts that are not Foreign Contracts, unless providing such advice is incidental to its providing advice on Foreign Contracts;

(b) the Applicant's head office or principal place of business remains in the United States;

(c) the Applicant is registered in a category of registration, or operates under an exemption from registration, under the applicable securities legislation or commodity futures legislation of the United States, that permits it to carry on the activities in the United States that registration as an adviser under the CFA in the category of commodity trading manager would permit it to carry on in Ontario;

(d) the Applicant continues to engage in the business of an adviser, as defined in the CFA, in the United States;

(e) as at the end of the Applicant's most recently completed financial year, not more than 10% of the aggregate consolidated gross revenue of the Applicant, its affiliates, and its affiliated partnerships (excluding the gross revenue of an affiliate or affiliated partnership of the Applicant if the affiliate or affiliated partnership is registered under securities legislation, commodity futures legislation, or derivatives legislation of a jurisdiction of Canada) was derived from the portfolio management activities of the Applicant, its affiliates, and its affiliated partnerships in Canada (which, for greater certainty, includes both securities-related and commodity futures-related activities);

(f) before advising a Permitted Client with respect to Foreign Contracts, the Applicant notifies the Permitted Client of all of the following:

(i) the Applicant is not registered in Ontario to provide the advice described under paragraph (a) of this Order;

(ii) the foreign jurisdiction in which the Applicant's head office or principal place of business is located;

(iii) all, or substantially all, of the Applicant's assets may be situated outside of Canada;

(iv) there may be difficulty enforcing legal rights against the Applicant because of the above; and

(v) the name and address of the Applicant's agent for service of process in Ontario;

(g) the Applicant has submitted to the Commission a completed Submission to Jurisdiction and Appointment of Agent for Service in the form attached as Appendix "A";

(h) the Applicant notifies the Commission of any regulatory action initiated after the date of this Order with respect to the Applicant or, to the best of the Applicant's knowledge and after reasonable inquiry, any predecessors or the specified affiliates of the Applicant by filing Appendix "B" within 10 days of the commencement of each such action; and

(i) if the Applicant is not subject to the requirement to pay a participation fee in Ontario because it is not registered under the OSA and does not rely on the International Adviser Exemption, by December 31st of each year, the Applicant pays a participation fee based on its specified Ontario revenues for its previous financial year in compliance with the requirements of Part 3 and section 6.4 of Ontario Securities Commission Rule 13-502 Fees as if the Applicant relied on the International Adviser Exemption; and

IT IS FURTHER ORDERED that this Order will terminate on the earliest of:

(a) the expiry of any transition period as may be provided by law, after the effective date of the repeal of the CFA;

(b) six months, or such other transition period as may be provided by law, after the coming into force of any amendment to Ontario commodity futures law (as defined in the CFA) or Ontario securities law (as defined in the OSA) that affects the ability of the Applicant to act as an adviser to a Permitted Client; and

(c) five years after the date of this Order.

DATED at Toronto, Ontario this 15th day of January, 2019.

"Cecilia Williams"
Commissioner
Ontario Securities Commission
 
"AnneMarie Ryan"
Commissioner
Ontario Securities Commission

 

APPENDIX "A"

SUBMISSION TO JURISDICTION AND APPOINTMENT OF AGENT FOR SERVICE

INTERNATIONAL DEALER OR INTERNATIONAL ADVISER EXEMPTED FROM REGISTRATION UNDER THE COMMODITY FUTURES ACT, ONTARIO

1. Name of person or company ("International Firm"):

2. If the International Firm was previously assigned an NRD number as a registered firm or an unregistered exempt international firm, provide the NRD number of the firm:

3. Jurisdiction of incorporation of the International Firm:

4. Head office address of the International Firm:

5. The name, e-mail address, phone number and fax number of the International Firm's individual(s) responsible for the supervisory procedure of the International Firm, its chief compliance officer, or equivalent.

Name:
E-mail address:
Phone:
Fax:

6. The International Firm is relying on an exemption order under section 38 or section 80 of theCommodity Futures Act (Ontario) that is similar to the following exemption in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (the "Relief Order"):

[ ] Section 8.18 [international dealer]

[ ] Section 8.26 [international adviser]

[ ] Other [specify]:

7. Name of agent for service of process (the "Agent for Service"):

8. Address for service of process on the Agent for Service:

9. The International Firm designates and appoints the Agent for Service at the address stated above as its agent upon whom may be served a notice, pleading, subpoena, summons or other process in any action, investigation or administrative, criminal, quasi-criminal or other proceeding (a "Proceeding") arising out of or relating to or concerning the International Firm's activities in the local jurisdiction and irrevocably waives any right to raise as a defence in any such proceeding any alleged lack of jurisdiction to bring such Proceeding.

10. The International Firm irrevocably and unconditionally submits to the non-exclusive jurisdiction of the judicial, quasi-judicial and administrative tribunals of the local jurisdiction in any Proceeding arising out of or related to or concerning the International Firm's activities in the local jurisdiction.

11. Until 6 years after the International Firm ceases to rely on the Relief Order, the International Firm must submit to the regulator:

(a) a new Submission to Jurisdiction and Appointment of Agent for Service in this form no later than the 30th day before the date this Submission to Jurisdiction and Appointment of Agent for Service is terminated;

(b) an amended Submission to Jurisdiction and Appointment of Agent for Service no later than the 30th day before any change in the name or above address of the Agent for Service;

(c) a notice detailing a change to any information submitted in this form, other than the name or above address of the Agent for Service, no later than the 30th day after the change.

12. This Submission to Jurisdiction and Appointment of Agent for Service is governed by and construed in accordance with the laws of the local jurisdiction.

Dated: ____________________

______________________________

(Signature of the International Firm or authorized signatory)

______________________________

(Name of signatory)

______________________________

(Title of signatory)

Acceptance

The undersigned accepts the appointment as Agent for Service of ____________________ [Insert name of International Firm] under the terms and conditions of the foregoing Submission to Jurisdiction and Appointment of Agent for Service.

Dated: ____________________

______________________________

(Signature of the Agent for Service or authorized signatory)

______________________________

(Name of signatory)

______________________________

(Title of signatory)

This form, and notice of a change to any information submitted in this form, is to be submitted through the Ontario Securities Commission's Electronic Filing Portal:

https://www.osc.gov.on.ca/filings

 

APPENDIX "B"

NOTICE OF REGULATORY ACTION

1. Settlement agreements

Has the firm, or any predecessors or specified affiliates{1} of the firm entered into a settlement agreement with any financial services regulator, securities or derivatives exchange, SRO or similar agreement with any financial services regulator, securities or derivatives exchange, SRO or similar organization?

Yes _____ No _____

If yes, provide the following information for each settlement agreement:

- - - - - - - - - - - - - - - - - - - -

Name of entity

Regulator/organization

Date of settlement (yyyy/mm/dd)

Details of settlement

Jurisdiction

- - - - - - - - - - - - - - - - - - - -

2. Disciplinary history

Has any financial services regulator, securities or derivatives exchange, SRO or similar organization:

Yes

No

 

(a)

Determined that the firm, or any predecessors or specified affiliates of the firm violated any securities regulations or any rules of a securities or derivatives exchange, SRO or similar organization?

_____

_____

 

(b)

Determined that the firm, or any predecessors or specified affiliates of the firm made a false statement or omission?

_____

_____

 

(c)

Issued a warning or requested an undertaking by the firm, or any predecessors or specified affiliates of the firm?

_____

_____

 

(d)

Suspended or terminated any registration, licensing or membership of the firm, or any predecessors or specified affiliates of the firm?

_____

_____

 

(e)

Imposed terms or conditions on any registration or membership of the firm, or predecessors or specified affiliates of the firm?

_____

_____

 

(f)

Conducted a proceeding or investigation involving the firm, or any predecessors or specified affiliates of the firm?

_____

_____

 

(g)

Issued an order (other than an exemption order) or a sanction to the firm, or any predecessors or specified affiliates of the firm for securities or derivatives-related activity (e.g., cease trade order)?

_____

_____

If yes, provide the following information for each action:

Name of entity

 

Type of action

 

Regulator/organization

 

Date of action (yyyy/mm/dd)

Reason for action

 

Jurisdiction

3. Ongoing investigations

Is the firm aware of any ongoing investigation of which the firm or any of its specified affiliate is the subject?

Yes _____ No _____

If yes, provide the following information for each investigation:

- - - - - - - - - - - - - - - - - - - -

Name of entity

Reason or purpose of investigation

Regulator/organization

Date investigation commenced (yyyy/mm/dd)

Jurisdiction

- - - - - - - - - - - - - - - - - - - -

Authorized signing officer or partner

- - - - - - - - - - - - - - - - - - - -

Name of firm

Name of firm's authorized signing officer or partner

Title of firm's authorized signing officer or partner

Signature

Date (yyyy/mm/dd)

- - - - - - - - - - - - - - - - - - - -

Witness

The witness must be a lawyer, notary public or commissioner of oaths.

- - - - - - - - - - - - - - - - - - - -

Name of witness

Title of witness

Signature

Date (yyyy/mm/dd)

- - - - - - - - - - - - - - - - - - - -

This form is to be submitted through the Ontario Securities Commission's Electronic Filing Portal:

https://www.osc.gov.on.ca/filings

{1} Terms defined in Form 33-506F6 Firm Registration to Ontario Securities Commission Rule 33-506 (Commodity Futures Act) Registration Information have the same meaning if used in this Appendix except that any reference to "firm" means the person or company relying on relief from the requirement to register as an adviser or dealer under the Commodity Futures Act (Ontario).

 

Chapter 3 -- Reasons: Decisions, Orders and Rulings

Dennis L. Meharchand and Valt.X Holdings Inc. -- ss. 127(1), 127.1

IN THE MATTER OF DENNIS L. MEHARCHAND and VALT.X HOLDINGS INC.

REASONS AND DECISION ON SANCTIONS AND COSTS (Subsection 127(1) and section 127.1 of the Securities Act, RSO 1990, c S.5)

Citation: Meharchand (Re), 2019 ONSEC 7

Date: 2019-01-30

File No. 2017-4

Hearing:

December 18, 2018

 

Decision:

January 30, 2019

 

Panel:

Timothy Moseley

Vice-Chair and Chair of the Panel

Deborah Leckman

Commissioner

Robert P. Hutchison

Commissioner

 

Appearances:

Dennis L. Meharchand

For himself and Valt.X Holdings Inc.

 

Kate McGrann

For Staff of the Commission

TABLE OF CONTENTS

I.

OVERVIEW

 

II.

PRELIMINARY MATTERS

A.

Scheduling the sanctions and costs hearing

B.

Interim order

1.

Background

2.

Legal framework

3.

Analysis

C.

Respondents' participation in the sanctions and costs hearing

D.

Representation of Valt.X

 

III.

ANALYSIS -- SANCTIONS

A.

Introduction

B.

Contraventions of the Act

1.

Illegal distribution of securities

2.

Engaging in the business of trading securities without being registered

3.

Fraud

C.

Application of the relevant factors

D.

Sanctions sought by Staff

1.

Introduction

2.

Market bans

3.

Disgorgement

(a)

Did the Respondents obtain an amount as a result of the non-compliance with Ontario securities law?

(b)

Seriousness of the misconduct and whether the misconduct caused serious harm

(c)

Is the amount obtained as a result of the non-compliance reasonably ascertainable?

(d)

Are those who suffered losses likely to be able to obtain redress?

(e)

Deterrent effect on the Respondents and others

4.

Administrative penalty

 

IV.

ANALYSIS -- COSTS

A.

Introduction

B.

Relevant factors

C.

Staff's request

D.

Conclusion as to costs

 

V.

CONCLUSION

REASONS AND DECISION

I. OVERVIEW

[1] In a merits decision dated October 19, 2018 (the Merits Decision),{1} the Ontario Securities Commission (the Commission) found that the respondents Dennis L. Meharchand and Valt.X Holdings Inc. (Valt.X; together, the Respondents) illegally distributed securities of Valt.X and engaged in the business of trading in securities of Valt.X without being registered.

[2] Through these activities, the Respondents raised at least C$1.5 million and US$140,000 from investors. Less than C$50,000 was returned to investors.

[3] The Commission also found that Mr. Meharchand defrauded existing and potential investors by making false statements to them regarding the use of their funds, and by using invested funds for improper purposes.

[4] At a first attendance to schedule the sanctions and costs hearing, Staff of the Commission (Staff) brought a motion for an interim order, pending the release of this decision, prohibiting the Respondents from trading in or acquiring securities, and denying the availability of exemptions provided for under Ontario securities law. We granted that order, with reasons to follow. Our reasons for that decision are set out in paragraphs [22] to [31] below.

[5] At the sanctions and costs hearing, Staff requested an order that:

a. the Respondents be removed permanently from Ontario's capital markets, as more particularly described below;

b. the Respondents be required to disgorge C$1,450,000 and US$140,000;

c. Mr. Meharchand pay an administrative penalty in the range of $500,000 to $700,000; and

d. Mr. Meharchand and Valt.X be required to pay costs of $165,083.17 and $110,055.45, respectively.

[6] For the reasons that follow, we find that it is in the public interest to order:

a. the permanent bans requested by Staff;

b. that the Respondents be required, jointly and severally, to disgorge C$1,450,000 and US$140,000; and

c. that Mr. Meharchand pay an administrative penalty of $550,000.

[7] We also find that the Respondents should be required to pay the costs requested by Staff.

II. PRELIMINARY MATTERS

[8] Before beginning our analysis of the appropriate sanctions and costs, we address several preliminary matters, beginning with the events leading up to the sanctions and costs hearing.

A. Scheduling the sanctions and costs hearing

[9] On November 9, 2018, the Commission held a hearing to schedule the sanctions and costs hearing. At that hearing, we ordered that the sanctions and costs hearing proceed on December 19, 2018, despite Mr. Meharchand's request for more time so that he could retain counsel. The relevant facts, and our reasons for making that order, are as follows.

[10] The Merits Decision, which was delivered to the parties on October 19, 2018, required that the parties contact the Registrar to arrange a first attendance to deal with scheduling a sanctions and costs hearing. The following day, Mr. Meharchand wrote to the Registrar and to Staff to advise that he was available any day between November 5 and 9, 2018.

[11] By email dated October 24, 2018, the Registrar advised that the first attendance hearing would take place at 8:30am on November 9, 2018.

[12] On November 5, 2018, Staff wrote to the Respondents, proposing that the sanctions and costs hearing take place between December 13 and 21, 2018, with Staff's and the Respondents' materials to be delivered by November 23 and December 7, respectively.

[13] On November 7, 2018, Mr. Meharchand replied to Staff. He proposed to retain counsel by December 21, 2018, and to deliver his materials by January 21, 2019. He also suggested that the sanctions and costs hearing take place in late February 2019. On November 8, 2018, Staff replied to Mr. Meharchand, advising that it was concerned about the delay that would result from his proposed schedule, and that the matter would be raised at the first attendance hearing the following day.

[14] At 8:23am on November 9, seven minutes before the first attendance hearing was to begin, Mr. Meharchand sent an email to the Registrar and to Staff. In the email, Mr. Meharchand stated: "As I previously indicated [in his email of November 7 to Staff] I am no longer resident in Ontario and unable to attend in person. Please re-schedule so that I can attend via phone."

[15] Seven minutes later, at 8:30am, the scheduled start time of the first attendance hearing, Mr. Meharchand sent another email to the Registrar and to Staff. In that email, Mr. Meharchand stated: "I wish to be represented by Counsel. Suggesting a 6 week adjournment to seek representation via the Legal Assistance program."

[16] The hearing commenced at 8:35am in the absence of the Respondents. Staff made brief submissions to this Panel as to how Staff wished to proceed. We marked three documents as exhibits, including the two emails from Mr. Meharchand referred to above. At 8:43am, the hearing was recessed briefly so that the Registrar could attempt to contact Mr. Meharchand by telephone.

[17] The Registrar was successful. At 8:57am, the hearing resumed with Mr. Meharchand present by telephone. Mr. Meharchand advised that he was not prepared to "discuss anything with the Commission" unless he was represented by counsel.{2} He stated that he wanted an opportunity to apply to the Commission's Litigation Assistance Program, which offers the services of lawyers acting pro bono, and through which the Respondents had received representation for attendances leading up to the merits hearing.

[18] In response to questions from the Panel, Mr. Meharchand advised that he had not yet applied to the program for representation in connection with the sanctions and costs hearing.

[19] After hearing submissions from the parties, we decided to fix December 18, 2018, as the date for the sanctions and costs hearing. We were not prepared to await the Respondents' retaining counsel before fixing a date, for numerous reasons:

a. in the three weeks since Mr. Meharchand had received the Merits Decision, he had taken no steps to retain counsel;

b. even if the Respondents had insufficient funds to pay for counsel (a position not asserted by the Respondents), Mr. Meharchand was fully familiar with the Commission's Litigation Assistance Program, having benefited from it many months earlier, and having referred to it in his second email on November 9, 2018;

c. despite that familiarity, Mr. Meharchand had not applied to the program for representation in connection with the sanctions and costs hearing, and he offered no explanation for not having done so;

d. the content of Mr. Meharchand's two emails, the timing of those emails, the fact that the Registrar was able to reach Mr. Meharchand immediately, and the fact that Mr. Meharchand was able to participate in the hearing despite his request to "re-schedule so that [he could] attend via phone" all demonstrated to us that Mr. Meharchand was simply seeking to delay this proceeding;

e. Staff confirmed that for the purposes of sanctions, it would rely on the Merits Decision and the evidentiary record from the merits hearing, and would adduce no additional evidence;

f. it was in the public interest for this proceeding to move forward without unreasonable or unnecessary delay; and

g. in all the circumstances, a two-month period between the issuance of the Merits Decision and the sanctions and costs hearing allowed more than enough time for the Respondents to retain and instruct counsel, if they chose to do so.

[20] We note that at no time following the attendance on November 9, up to and including the sanctions and costs hearing on December 18, did the Respondents or anyone on their behalf suggest that the Respondents were in fact taking steps to retain counsel, through the Litigation Assistance Program or otherwise.

B. Interim order

[21] The second preliminary matter arises from Staff's request that the Commission issue an interim order, pending the release of these reasons, that would restrict the Respondents' participation in the capital markets.

1. Background

[22] On October 26, 2018, Staff served the Respondents, by email and by courier, with a motion record in support of Staff's request for an interim order pending the release of this decision. During the first attendance hearing on November 9, 2018, Mr. Meharchand initially claimed that he had not received the motion record. However, after a further exchange, Mr. Meharchand confirmed that he had received the motion record by email. We find that the Respondents were properly served with the motion record.

[23] Staff's requested order would, pending the release of this decision:

a. prohibit the Respondents from trading in or acquiring any securities, pursuant to paragraphs 2 and 2.1 of subsection 127(1) of the Securities Act{3} (the Act); and

b. deny the availability of any exemptions provided for under Ontario securities law, pursuant to paragraph 3 of subsection 127(1) of the Act.

[24] In support of its request, Staff relied not only on the Merits Decision, but also on evidence that the Respondents continued to solicit investments in Valt.X on the company's website since the release of the Merits Decision. Between the conclusion of the merits hearing and the release of the Merits Decision, the Respondents also continued to solicit investments in Valt.X by email.

[25] The Respondents offered no evidence to contradict the evidence presented by Staff; nor did they deny its accuracy. We accept Staff's evidence in this regard. We find that the Respondents continued to solicit investments following the conclusion of the merits hearing and following the release of the Merits Decision.

2. Legal framework

[26] Subsection 127(1) of the Act lists orders that the Commission may make where it is in the public interest to do so. The Commission must exercise this jurisdiction in a manner consistent with the purposes of the Act, including the protection of investors from unfair, improper or fraudulent practices, and the fostering of fair and efficient capital markets and confidence in the capital markets.{4}

[27] The Supreme Court of Canada has held that the public interest jurisdiction and the orders listed in subsection 127(1) of the Act are protective and preventative and are intended to be exercised to prevent future harm to Ontario's capital markets.{5}

3. Analysis

[28] Typically, the measures listed in subsection 127(1) of the Act are imposed either following the conclusion of a sanctions and costs hearing, or through a temporary order granted under subsection 127(5) or extended under subsections 127(7) or 127(8). Staff's request for an interim order pending the release of the sanctions and costs decision is atypical. However, the scope of section 127 permits such an order to be made. There is nothing in the section to suggest otherwise and no statutory impediment to our issuing such an order.

[29] The interim order sought by Staff would not impose sanctions for past conduct. Rather, Staff sought an order protecting investors pending a determination of what the appropriate sanctions will be. While Staff's request is not made pursuant to the temporary order provisions in subsections 127(5), (7) and (8), we consider the purposes of such a temporary order, and of the interim order sought here, to be similar. Both forms of order seek to protect investors and the capital markets by restricting activity temporarily.

[30] The Respondents benefitted from the same procedural protections in connection with the requested interim order as any respondent would receive relating to sanctions requested at the conclusion of a full sanctions and costs hearing. The Respondents received notice of Staff's request, and they had the opportunity to attend at and fully participate in the hearing regarding that request, including by adducing evidence and making submissions. Staff's request was properly made, at an appropriate stage of the proceeding.

[31] As to the merits of Staff's request, given the particularly serious findings in the Merits Decision, the Respondents' apparent unwillingness to abide by Ontario securities law, and the risk to investors and the capital markets, we concluded that it was in the public interest to issue the order sought.

C. Respondents' participation in the sanctions and costs hearing

[32] The sanctions and costs hearing proceeded as scheduled on December 18, 2018. Mr. Meharchand participated, at least initially, by telephone.

[33] Staff began by filing an affidavit that established proper service on the Respondents of Staff's written submissions, authorities, and affidavit evidence relating to costs. In an email sent to Staff and to the Registrar in the early morning hours of December 18, and at the sanctions and costs hearing itself, Mr. Meharchand claimed not to have received the materials.

[34] We reject Mr. Meharchand's assertion. He claimed that the email address used by Staff "is not approved in our system for receiving emails", even though he previously exchanged emails with Staff at that same address. He also previously denied receiving emails relating to this proceeding, even though that denial also proved to be untrue (see paragraph [22] above). Further, despite knowing that Staff was required to serve materials by November 23, Mr. Meharchand did not attempt to contact Staff to find out where those materials were. Finally, Mr. Meharchand asserted in the hearing that he had asked Staff to serve him at a business location in the United States of America; however, he offered no evidence of that request and Staff advised that no such request was received. We find that he indeed received Staff's materials in a timely way.

[35] Following that discussion with the Panel, Mr. Meharchand advised that he would not participate any further, stating "You can continue without me."{6} He disconnected from the telephone call. At the Panel's request, the Registrar immediately sent an email to the Respondents, advising that the line would remain open should Mr. Meharchand wish to call back. The hearing proceeded in his absence and concluded without Mr. Meharchand rejoining the call.

[36] The Respondents did not file written submissions. Mr. Meharchand disconnected from the call without making any oral submissions regarding specific sanctions or Staff's request for costs. We were therefore left without any submissions on the Respondents' behalf.

D. Representation of Valt.X

[37] The final preliminary matter relates to the representation of Valt.X in this proceeding.

[38] At the beginning of the merits hearing on May 14, 2018, Mr. Meharchand explicitly confirmed that he was representing Valt.X at the hearing.{7}

[39] No contrary advice was provided to the Commission, by Mr. Meharchand or anyone else, at any time, until November 10, 2018, the day following the first attendance hearing. Upon receipt of the Commission's order resulting from that attendance, Mr. Meharchand sent an email to the Registrar and to Staff, advising "yet again that At [sic] no time in any of the Hearings have I represented Valt.X Holdings Inc.". This assertion was clearly incorrect.

[40] At the beginning of the sanctions and costs hearing, Mr. Meharchand explicitly confirmed that he was representing Valt.X at that hearing,{8} although as noted above, Mr. Meharchand disconnected from the call shortly thereafter.

III. ANALYSIS -- SANCTIONS

[41] We turn now to consider what sanctions would be in the public interest.

A. Introduction

[42] The sanctions listed in subsection 127(1) of the Act are protective and are intended to be exercised to prevent future harm to Ontario's capital markets.

[43] The Commission has identified a non-exhaustive list of factors to be considered with respect to sanctions generally, including the seriousness of the misconduct, the size of the profit made from the illegal conduct, any mitigating factors, and the likely effect that any sanction would have on the respondent ("specific deterrence") as well as on others ("general deterrence"). Sanctions must be proportionate to the respondent's conduct in the circumstances of the case.{9}

B. Contraventions of the Act

1. Illegal distribution of securities

[44] The requirement to provide sufficient disclosure to those who are investing in securities is a cornerstone of Ontario securities law. The delivery of a proper prospectus that reviews the risks associated with an investment helps investors make an informed decision about that investment.{10}

[45] In this case, the Respondents traded in securities of Valt.X, where such trades were distributions. No prospectus was ever filed or delivered. The distributions, which were contrary to subsection 53(1) of the Act, raised at least C$1.5 million and US$140,000 from more than 100 investors.

[46] The Respondents attempted to avail themselves of the accredited investor exemption from the prospectus requirement. However, as the Commission found in the Merits Decision, the Respondents relied entirely on the investors' self-certification as to their own qualifications as accredited investors. The Respondents undertook no inquiry to assess whether a particular investor's circumstances were sufficient to justify that investor not receiving prospectus disclosure. The accredited investor exemption was therefore improperly relied upon by the Respondents.

2. Engaging in the business of trading securities without being registered

[47] Registration is another cornerstone of Ontario securities law. It protects investors and promotes confidence in the capital markets by seeking to ensure that those who sell or promote securities are proficient and solvent and that they act with integrity. When an unregistered individual or firm engages in activity that requires registration, the individual or firm defeats some of the necessary legal protections, shields the activity somewhat from regulatory monitoring, puts investors at risk, and undermines the integrity of the capital markets.

[48] The Commission found that the Respondents engaged in the business of trading in securities of Valt.X, without being registered, contrary to subsection 25(1) of the Act. The Respondents did so regularly and continuously over many years.

3. Fraud

[49] Mr. Meharchand engaged in fraudulent conduct contrary to clause 126.1(1)(b) of the Act, by making false statements to existing and potential investors about the use to which invested funds would be put, and by using invested funds for improper purposes. In doing so, he knowingly put investors' funds at risk.

[50] Specifically, the Commission found in the Merits Decision that:

a. Mr. Meharchand actively and repeatedly solicited investor funds over a number of years;

b. contrary to Mr. Meharchand's representations, the Respondents did not meaningfully carry on a legitimate cybersecurity business during the relevant time period;

c. Mr. Meharchand used investor funds to bet on horses, to pay the mortgage on his home, to pay credit card bills, to satisfy what he claimed were debts owing to him, and for other unknown and undocumented purposes;

d. Mr. Meharchand adduced no documentary evidence, and no reliable oral evidence, to establish that investor funds were used for legitimate purposes;

e. as Mr. Meharchand admitted, he routinely commingled investor funds with his own personal funds; and

f. Mr. Meharchand's activities resulted in a loss of virtually all of the investor funds.

[51] The circumstances of this case amply demonstrate why the Commission has consistently held that fraud is "one of the most egregious securities regulatory violations".{11} Typically, fraudulent activity causes direct and immediate harm to its victims, many of whom entrust a substantial portion of their savings to those who abuse that trust. Fraud significantly undermines confidence in the capital markets and therefore has wide-ranging negative effects on investor interests and on capital formation.

[52] Mr. Meharchand's conduct showed callous disregard for the financial security of existing and potential investors in Valt.X.

C. Application of the relevant factors

[53] The misconduct in this case was very serious. It was recurring, it extended over many years, and it affected many investors. The manner in which the Respondents raised funds denied investors the protections to which they were entitled. In addition, the Respondents exerted pressure on potential investors, both by imposing artificial deadlines for investment opportunities, and by urging investors to borrow against their homes to invest in the CrowdBuy program.

[54] We consider the Respondents' admitted and cavalier commingling of funds, the absence of any records, and the failure to engage even rudimentary bookkeeping assistance, to be aggravating circumstances that increase the seriousness of the misconduct. These factors preclude a reliable and complete accounting of the extent of investor losses. The Respondents ought not to be able to benefit from the uncertainty that they themselves created.

[55] As explained above, Mr. Meharchand's conduct was particularly serious, given its fraudulent nature and his callous disregard for investors' interests.

[56] As a result of the Respondents' misconduct, they obtained at least C$1.5 million and US$140,000 from investors. That is a significant sum. Less than $50,000 was returned to investors.

[57] Mr. Meharchand expressed no remorse. While there is no obligation on a respondent to express remorse, and a respondent's failure to express remorse is not an aggravating factor, we note the absence of remorse in this case. Mr. Meharchand has neither recognized the seriousness of his misconduct nor shown any concern for the harm he has caused.

[58] There are no mitigating factors.

D. Sanctions sought by Staff

1. Introduction

[59] Staff seeks market bans, disgorgement of the funds obtained by the Respondents and an administrative penalty.

2. Market bans

[60] Staff asks that the Commission:

a. permanently prohibit the Respondents from acquiring or trading in securities or derivatives;

b. order that the exemptions contained in Ontario securities law shall not apply to the Respondents permanently;

c. require Mr. Meharchand to resign any position he holds as a director or officer of an issuer, registrant or investment fund manager, and prohibit him from ever holding any such position; and

d. permanently prohibit Mr. Meharchand from becoming or acting as a registrant, as an investment fund manager or as a promoter.

[61] Participation in the capital markets is a privilege, not a right.{12} Staff's requested order would essentially deny that privilege to the Respondents.

[62] The Commission's role is to deny that privilege where it concludes, based on a respondent's past conduct, that the respondent's continued participation in the capital markets "may well be detrimental to the integrity of [the] capital markets."{13}

[63] Mr. Meharchand's egregious and fraudulent conduct, and his refusal to accept responsibility for his actions, lead us to conclude that he cannot be trusted to participate in those markets in any way. His conduct demonstrates a serious risk to the public.

[64] As the Commission has found in similar circumstances,{14} only a permanent removal from the capital markets would be proportionate to the type of misconduct found in this case, would be sufficient to protect investors from Mr. Meharchand, and would deliver the necessary deterrent message to others who might contemplate similar misconduct.

[65] We note Staff's requested order would refer explicitly to both "registrants" and to "investment fund managers". We adopt the Commission's reasons in Inverlake Property Investment Group Inc (Re){15} and Vantooren (Re),{16} in which the Commission found such a distinction unnecessary, given that the definition of "registrant" in subsection 1(1) of the Act includes an investment fund manager, by virtue of subsection 25(4) of the Act. As a result, the order we shall issue refers to registrants, which term includes investment fund managers.

3. Disgorgement

[66] Paragraph 10 of subsection 127(1) of the Act provides that if "a person or company has not complied with Ontario securities law", the Commission may, if it determines it to be in the public interest to do so, issue "an order requiring the person or company to disgorge to the Commission any amounts obtained as a result of the non-compliance."

[67] The purpose of a disgorgement order is not to provide restitution; rather, it is a remedy that seeks to prevent wrongdoers from benefiting from their breaches of Ontario securities law, and to deter those wrongdoers and others from engaging in similar misconduct.{17}

[68] While the Commission is authorized to order disgorgement of the full amount obtained by respondents, it need not do so. The Commission has set out various factors that it will take into account in determining whether a disgorgement order is appropriate, and if so, in what amount:

a. whether an amount was obtained by a respondent as a result of the non-compliance with Ontario securities law;

b. the seriousness of the misconduct and whether that misconduct caused serious harm, whether directly to original investors or otherwise;

c. whether the amount obtained as a result of the non-compliance is reasonably ascertainable;

d. whether those who suffered losses are likely to be able to obtain redress; and

e. the deterrent effect of a disgorgement order on the respondents and on other market participants.{18}

[69] We will now apply each of those factors to the circumstances of this case.

(a) Did the Respondents obtain an amount as a result of the non-compliance with Ontario securities law?

[70] In the Merits Decision, the Commission found that the Respondents obtained investor funds in a manner that contravened Ontario securities law. We therefore conclude that both Respondents may be subject to a disgorgement order in respect of the funds raised.

(b) Seriousness of the misconduct and whether the misconduct caused serious harm

[71] As noted above, the Respondents' conduct was very serious. Mr. Meharchand perpetrated a fraud on investors, and the misconduct of both Respondents caused investors to lose virtually all of their funds.

(c) Is the amount obtained as a result of the non-compliance reasonably ascertainable?

[72] As Mr. Meharchand admitted, his personal funds and those of Valt.X were commingled. There are no records that would permit a proper accounting. While the absence of records precludes a precise accounting, the evidence does clearly establish that the amounts obtained were at least C$1.5 million and US$140,000. Staff limits its requested disgorgement order to those amounts, less C$50,000 that was returned to investors.

(d) Are those who suffered losses likely to be able to obtain redress?

[73] The onus does not lie on Staff to demonstrate that victims of misconduct are unlikely to obtain redress. The difficulties inherent in such a determination would impose a burden that is inconsistent with the Commission's investor protection mandate. Rather, if the Respondents were to show that those who suffered losses are likely to obtain redress, the Commission might reduce the disgorgement amount, or not order any disgorgement at all.{19}

[74] The Respondents adduced no such evidence.

(e) Deterrent effect on the Respondents and others

[75] It is essential both for the protection of investors and for the promotion of confidence in the capital markets that those entrusted with investor money strictly adhere to sound practices that reflect the importance of that trust.

[76] The Respondents disregarded their obligations to investors in Valt.X. Their repeated, deliberate and dishonest conduct, and the need to deter them and others from engaging in similar conduct, require us to demonstrate unequivocally, to the Respondents and others, that such behaviour is unacceptable. It is in the public interest to require the Respondents, jointly and severally, to disgorge the sums of C$1,450,000 and US$140,000, being the amount that the Respondents obtained as a result of their contraventions of sections 25 and 53 of the Act less the amount of funds returned to investors.

4. Administrative penalty

[77] Staff proposes an administrative penalty of between $500,000 and $700,000 against Mr. Meharchand. Staff submits that an administrative penalty in this range would be appropriate and proportionate due to the seriousness of the breaches and the fact that the breaches, including the fraud, occurred over a prolonged period of time.

[78] The Commission has stated in previous decisions that the purpose of administrative penalties is to "deter the particular respondents from engaging in the same or similar conduct in the future and to send a clear deterrent message to other market participants that the conduct in question will not be tolerated in Ontario capital markets."{20} Thus, the Commission intends that administrative penalties will achieve both specific and general deterrence.

[79] In support of its position, Staff directed our attention in particular to six previous decisions of the Commission.

[80] In Maple Leaf Investment Fund Corp (Re) (Maple Leaf),{21} an individual respondent engaged in unregistered trading and illegal distribution of securities of a corporate respondent. The two respondents purported to rely on the accredited investor exemption but made no effort to determine whether the investors were qualified. They also perpetrated a fraud on the investors by providing false information regarding the use of investor funds and the activities of the corporate respondent. Of the $4.5 million that the respondents raised from 80 investors over a period of 19 months, $1.3 million was returned to investors. The Commission ordered that the individual respondent pay an administrative penalty of $450,000.{22}

[81] We note that Maple Leaf did involve an additional breach not applicable in this case, i.e., making prohibited representations to potential investors about a future listing on a stock exchange.

[82] In Lyndz, the Commission imposed administrative penalties of $500,000 and $600,000 on two individual respondents, following findings that the corporate respondent had no true underlying business, and that the individual respondents had fraudulently used a substantial portion of the approximately $2.1 million raised from investors for personal expenses. The respondents' activities in Lyndz extended over ten years, involving investors in Ontario and the United Kingdom.

[83] New Found Freedom Financial (Re){23} resulted in administrative penalties of $250,000 against each of two individual respondents who persuaded investors to advance funds for foreign exchange trading on the promise of unrealistic returns. Instead, the respondents used the funds to pay earlier investors and themselves. The Commission found that the respondents had engaged in the business of trading in securities and had conducted illegal distributions, through which they perpetrated a fraud, depriving investors of at least $1.1 million.

[84] In Bradon Technologies Ltd (Re) (Bradon),{24} the Commission found that the two individual respondents had perpetrated a fraud on investors by purporting to sell securities of one of the corporate respondents to at least 46 investors, causing a net aggregate loss to those investors of approximately $1.6 million. In doing so, the respondents engaged in the business of trading securities without being registered, and illegally distributed those securities. As in Maple Leaf, the Bradon respondents committed a breach not present in this case, i.e., making a prohibited representation regarding listing on an exchange. The Commission imposed administrative penalties of $500,000 and $300,000 on the individual respondents, taking into account the differing extent of each respondent's contact with investors.

[85] Portfolio Capital Inc (Re) (Portfolio){25} also involved respondents who engaged in the business of trading securities without being registered and who conducted illegal distributions of securities. The respondents raised approximately US$980,000 and C$544,000 from more than 200 investors over almost five years. Even though the Portfolio respondents were not found to have defrauded investors, the Commission imposed administrative penalties of $500,000 and $150,000 on the two individual respondents. Once again, the differing amounts reflected the role that each respondent played.

[86] Finally, the respondents in Black Panther Trading Co{26} raised more than $425,000 from 16 individuals, on promises to invest the funds and produce specified returns. Instead, the respondents fraudulently used the funds to pay earlier investors and family members, or for personal expenses. The Commission ordered that the respondents be jointly and severally liable for an administrative penalty of $300,000.

[87] In our view, given the seriousness of Mr. Meharchand's misconduct, an administrative penalty of $550,000 is proportionate, is sufficient to act as a specific and general deterrent, and is appropriate in all the circumstances. That amount lies within the range of the administrative penalties referred to above. Its location toward the high end of that range reflects the aggravating factors we have cited.

IV. ANALYSIS -- COSTS

A. Introduction

[88] We turn now to consider Staff's request that the Respondents pay some of the costs associated with this matter.

[89] Given the Commission's finding that the Respondents did not comply with Ontario securities law, section 127.1 of the Act empowers the Commission to order them to pay the costs of the investigation and/or hearings in this matter. Such an order is not a sanction; instead it allows the Commission to recover some of the costs expended in connection with the investigation and hearings.

B. Relevant factors

[90] The issues at stake in this proceeding are important. While there is little about the Respondents' conduct that was novel or precedent-setting, the misconduct that occurred was very serious and had a significant effect on numerous investors. It was important that there be an appropriate regulatory response.

[91] There was nothing about Staff's conduct that unduly lengthened the proceeding. The Commission found that the Respondents contravened the Act in all of the ways alleged by Staff. Both of Staff's witnesses were required in order to prove Staff's case, and Staff delivered both witnesses' evidence in writing, greatly contributing to a shorter hearing.

[92] We do not find the Respondents' conduct during this proceeding to be a relevant factor in determining costs. While we have been critical of that conduct when addressing adjournment requests and evidentiary issues, we recognize that the Respondents were unrepresented by counsel for some of the preliminary attendances and throughout the merits hearing. Staff does not seek an adjustment to whatever costs order we might otherwise make, based on the Respondents' conduct. We need not make any such adjustment.

C. Staff's request

[93] Staff submitted evidence supporting total costs of the investigation and proceeding in this matter of $892,629.47. That sum is made up of Staff time of $880,412.50 and disbursements of $12,216.97. The amount for Staff time is based on hourly rates previously approved by the Commission, and excludes, among other things, time spent by law clerks, students-at-law, and members of Staff who recorded 35 or fewer hours on the file.

[94] Staff seeks costs of $275,138.62, which represents a discount of 69% from the total recorded. Staff submits that the total should be divided so that Mr. Meharchand and Valt.X pay costs of $165,083.17 and $110,055.45, respectively. These amounts are 60% and 40% of the total, based on three contraventions having been proven against Mr. Meharchand (being engaged in the business of trading, illegal distributions, and fraud), and two contraventions having been proven against Valt.X (being engaged in the business of trading, and illegal distributions).

D. Conclusion as to costs

[95] The total amount sought by Staff is both appropriate and proportionate. It reflects a significant discount from the total costs recorded, but adequately respects the principle that wrongdoers ought to pay some portion of the costs associated with investigations and proceedings.

[96] In our view, Staff's proposed basis for apportionment of costs between the two Respondents is reasonable. We will therefore make the order requested.

V. CONCLUSION

[97] For the reasons set out above, we shall issue an order as follows:

a. pursuant to paragraph 2 of subsection 127(1) of the Act, trading in any securities by the Respondents shall cease permanently;

b. pursuant to paragraph 2.1 of subsection 127(1) of the Act, the Respondents are prohibited permanently from acquiring securities;

c. pursuant to paragraph 3 of subsection 127(1) of the Act, the exemptions contained in Ontario securities law shall not apply to the Respondents permanently;

d. pursuant to paragraphs 7 and 8.1 of subsection 127(1) of the Act, Mr. Meharchand shall resign any positions he holds as a director or officer of an issuer or a registrant;

e. pursuant to paragraphs 8 and 8.2 of subsection 127(1) of the Act, Mr. Meharchand is prohibited permanently from becoming or acting as a director or officer of any issuer or registrant;

f. pursuant to paragraph 8.5 of subsection 127(1) of the Act, Mr. Meharchand is prohibited permanently from becoming or acting as a registrant or as a promoter;

g. pursuant to paragraph 9 of subsection 127(1) of the Act, Mr. Meharchand shall pay an administrative penalty of $550,000, which amount shall be designated for allocation or use by the Commission in accordance with subclause 3.4(2)(b)(i) or (ii) of the Act;

h. pursuant to paragraph 10 of subsection 127(1) of the Act, the Respondents shall be required, jointly and severally, to disgorge to the Commission the sums of C$1.45 million and US$140,000, which amounts shall be designated for allocation or use by the Commission in accordance with subclause 3.4(2)(b)(i) or (ii) of the Act;

i. pursuant to section 127.1 of the Act, Mr. Meharchand shall pay costs of $165,083.17 to the Commission; and

j. pursuant to section 127.1 of the Act, Valt.X shall pay costs of $110,055.45 to the Commission.

Dated at Toronto this 30th day of January, 2019.

"Timothy Moseley"
 
"Deborah Leckman"
 
"Robert P. Hutchison"

{1} Meharchand (Re), 2018 ONSEC 51, (2018) 41 OSCB 8434.

{2} Hearing transcript, Meharchand (Re), November 9, 2018, at 12 line 16-17.

{3} RSO 1990, c S.5.

{4} The Act, s 1.1.

{5} Committee for Equal Treatment of Asbestos Minority Shareholders v Ontario (Securities Commission), 2001 SCC 37 at paras 42-43.

{6} Hearing transcript, Meharchand (Re), December 18, 2018, at 9 line 27.

{7} Hearing transcript, Meharchand (Re), May 14, 2018, at 5 line 27.

{8} Hearing transcript, Meharchand (Re), December 18, 2018, at 6 line 21.

{9} Bradon Technologies Ltd (Re), 2016 ONSEC 19, (2016) 39 OSCB 4907 at para 28; and at para 47, citing Cartaway Resources Corp (Re), 2004 SCC 26 at para 60.

{10} M P Global Financial Ltd (Re), 2011 ONSEC 22, (2011) 34 OSCB 8897 at para 117.

{11} Al-Tar Energy Corp (Re), 2010 ONSEC 11, (2010) 33 OSCB 5535 at para 214, quoting D. Johnston & K.D. Rockwell, Canadian Securities Regulation, (4th ed., Markham: LexisNexis, 2007) at 420.

{12} Erikson v Ontario (Securities Commission), 2003 CanLII 2451, [2003] OJ No 593 (Div Ct) at paras 55-56.

{13} Mithras Management Ltd (Re) (1990), 13 OSCB 1600 at 1610-11.

{14} 2196768 Ontario Ltd (Re), 2015 ONSEC 9, (2015) 38 OSCB 2374 at para 51; Lyndz Pharmaceuticals Inc (Re), 2012 ONSEC 25, (2012) 35 OSCB 7357(Lyndz) at para 80.

{15} Inverlake Property Investment Group Inc (Re), 2018 ONSEC 35, (2018) 41 OSCB 5309 at para 39.

{16} Vantooren (Re), 2018 ONSEC 36, (2018) 41 OSCB 5603 at para 30.

{17} Pro-Financial Asset Management (Re), 2018 ONSEC 18, (2018) 41 OSCB 3512 (PFAM) at para 48.

{18} PFAM at para 56.

{19} PFAM at para 70.

{20} Limelight Entertainment Inc (Re), 2008 ONSEC 28, (2008) 31 OSCB 12030 at para 67.

{21} Maple Leaf Investment Fund Corp (Re), 2012 ONSEC 8, (2012) 35 OSCB 3075.

{22} Maple Leaf at para 44.

{23} New Found Freedom Financial (Re), 2013 ONSEC 26, (2013) 36 OSCB 6758.

{24} Bradon Technologies Ltd (Re), 2016 ONSEC 19, (2016) 39 OSCB 4907.

{25} Portfolio Capital Inc (Re), 2015 ONSEC 27, (2015) 38 OSCB 7357.

{26} Black Panther Trading Co (Re), 2017 ONSEC 8, (2017) 40 OSCB 3727.

 

Benedict Cheng et al.

IN THE MATTER OF BENEDICT CHENG, FRANK SOAVE, JOHN DAVID ROTHSTEIN and ERIC TREMBLAY

REASONS AND DECISION

Citation: Cheng (Re), 2019 ONSEC 8

Date: 2019-02-04

File No. 2017-13

Hearing:

September 4, 6, 7, 10, 11, 13, 14, 18, 21, 24 and November 9, 2018

 

Decision:

February 4, 2019

 

Panel:

Philip Anisman

Commissioner and Chair of the Panel

Deborah Leckman

Commissioner

Robert P. Hutchison

Commissioner

 

Appearances:

Yvonne B. Chisholm

For Staff of the Commission

Jennifer M. Lynch

Christina C. Galbraith

Ryan M. Lapensee (student-at-law)

 

David Hausman

For the respondent, Frank Soave

Brad Moore

Jonathan Wansbrough

TABLE OF CONTENTS

I.

INTRODUCTION

 

II.

BACKGROUND

A.

Amaya's Acquisition

B.

AHAM and Mr. Rothstein

C.

The Respondent

D.

The Tip

 

III.

ISSUES

 

IV.

EVIDENCE AND FINDINGS

A.

Knowledge of a Material Fact

1.

Evidence

(a)

Mr. Cheng's Testimony

(b)

Mr. Killeen's Testimony

(c)

Mr. Rothstein's Testimony

(d)

Mr. Soave's Testimony

2.

Findings

B.

General Disclosure

1.

Evidence

2.

Expert Evidence

3.

Findings

C.

Special Relationship

1.

Mr. Soave's Knowledge

(a)

Evidence

(b)

Findings

2.

Whether Mr. Soave should have known

D.

Misrepresentations to Staff

 

V.

STAFF CONDUCT

 

APPENDIX CHRONOLOGY OF EVENTS, JUNE 11-13, 2014

REASONS AND DECISION

I. INTRODUCTION

[1] The fair and efficient operation of securities markets requires timely disclosure of information that is likely to affect the value of securities that are traded so that investors have equal access to it when they make investment decisions. Trading by persons who have material information about an issuer that is not generally available to investors is inconsistent with this goal; it erodes market integrity and confidence in the fairness of our securities market.

[2] Accordingly the Securities Act (Ontario) (the Act) prohibits any "person in a special relationship with an issuer" whose securities are publicly traded from purchasing or selling the issuer's securities with knowledge of a material fact with respect to the issuer that has not been generally disclosed.{1} As information is easily transmissible, the Act also prohibits a person in a special relationship from informing another person (a tippee) of an undisclosed material fact, except in the necessary course of business, and includes the tippee as a "person in a special relationship" so that the tippee cannot trade with or further disseminate the information.

[3] A "special relationship" thus includes persons in a direct relationship with an issuer, such as directors, officers, employees and persons conducting business with the issuer, and a potentially unending chain of tippees and subtippees. To avoid catching persons who trade innocently, the definition of "person in a special relationship with an issuer" includes only tippees who know or reasonably ought to know that their informer is in a special relationship with the issuer.{2}

[4] As knowledge is subjective, direct evidence of knowledge is often not available, and proof of insider trading and a person's status as a tippee must be based on circumstantial evidence. For this reason, and because information may be conveyed in many, sometimes subtle ways, it may be difficult for staff of the Commission (Staff) to prove improper insider trading, especially by a tippee.

[5] This proceeding, relating to the purchase by the respondent, Frank Soave, of shares in Amaya Gaming Group Inc. (Amaya) shortly before it announced an acquisition that would make it the world's largest online gaming company (the Acquisition), provides an example of this difficulty. Staff allege that John David Rothstein, an officer of Aston Hill Asset Management Inc. (AHAM) which was participating in the financing of Amaya's Acquisition, informed Mr. Soave of AHAM's participation and the imminent announcement of the Acquisition and that Mr. Soave purchased 5,000 shares of Amaya following receipt of this information, which he sold the day after the announcement at a profit of $38,166.{3} For the reasons that follow, the Commission hearing panel (the Panel) have concluded that Staff have not proved that Mr. Soave knew or should have known that Mr. Rothstein was in a special relationship with Amaya when he purchased the shares and that the case against him must be dismissed.

II. BACKGROUND

A. Amaya's Acquisition

[6] At 9:24 p.m. on June 12, 2014, Amaya announced that it had reached an agreement to acquire Oldford Group Limited (Oldford), the parent company of Rational Group Ltd., the world's largest poker business, which owned PokerStars, the world's largest online poker site, for cash consideration of US$4.9 billion.{4} The purchase price was to be financed through a combination of (i) cash on hand, (ii) senior secured credit facilities of US$2.1 billion underwritten by three large banks, (iii) US$800 million senior secured term loans from these banks and affiliates of GSO Capital Partners LP (GSO), the credit division of The Blackstone Group (Blackstone), and an investment manager subsequently identified as BlackRock Financial Management, Inc. (BlackRock), and (iv) a convertible preferred share private placement of US$1 billion in which GSO and the investment manager would participate. Amaya would also receive (v) $500 million through the issuance, in an underwritten bought-deal private placement, of subscription rights priced at $20 and convertible into common shares on a one-for-one basis upon completion of the Acquisition, with an additional $140 million underwriter's option, and (vi) a commitment from GSO to purchase common shares for gross proceeds of up to US$55 million.

[7] At the time of the announcement, Amaya's business was primarily providing technology-based gaming solutions to the regulated gaming industry, with an online poker outlet that was ranked nearly 30th in online poker traffic. The Acquisition would make it the world's largest publicly traded online gaming company, would provide strong cash flow from its combined operations, and was expected immediately to increase its combined earnings significantly.

[8] Discussions leading to the announcement began over six months earlier, in December, 2013, and Amaya, Oldford and holders of a majority of its shares entered a letter of intent on January 13, 2014. In the six months leading up to the announcement, the parties to the proposed agreement conducted due diligence and negotiated the terms of the Acquisition and its financing, and the underwriter sought purchasers of the subscription rights.

[9] During this period there was speculation among analysts and in blogs about Amaya's prospects and a possible acquisition. Analysts commented on Amaya having pursued an acquisition strategy in developing its business. In late May, rumours of the possibility of an acquisition of PokerStars were published on websites and in market blogs, accompanied by increases in the market price and trading volume of Amaya shares. In response to these rumours and trading activity, Amaya published a press release on May 26, 2014 stating that while acquisitions were a part of its growth strategy, it did not publicly comment on potential acquisitions before there was a binding legal agreement and that it would not comment further on the current rumours unless and until comment was warranted.

[10] Between May 26 and June 10, 2014, Amaya's shares traded between approximately $10 and $11 with relatively consistent trading volumes. On June 11, the volume increased substantially and its shares closed at just over $12.

[11] On June 12, Bloomberg News Service published an article (the Bloomberg Article) at 9:07 a.m. announcing a $1 billion financing by Blackstone for an acquisition by an existing client that would make the client a global player in its industry; this information was repeated in an email from a blog known as "SeekingAlpha.com" (SeekingAlpha) sent at 10:15 a.m. Mr. Soave purchased 5,000 shares of Amaya for $60,755 ($12.15 per share) at 10:35 a.m. The price of Amaya's shares rose to $14.08 by 12:22 p.m., when trading was halted by the Investment Industry Regulatory Organization of Canada (IIROC). Amaya published its press release announcing the Acquisition that evening, and its shares opened the following day at $19.05 and closed at $20, the offering price of Amaya's subscription rights.

B. AHAM and Mr. Rothstein

[12] On April 29, 2014, AHAM signed a non-disclosure agreement to enable it to receive information about and participate in the private placement of Amaya's subscription rights for common shares. AHAM was a registered investment fund manager, exempt market dealer and portfolio manager specializing in mutual funds. It managed its own funds and third-party mutual funds under a subadvisory contract with Industrial Alliance Clarington (Clarington), a mutual fund company.

[13] AHAM was a subsidiary of Aston Hill Financial Inc. (AHF), a financial company that managed, marketed, distributed and administered mutual funds, private equity funds, hedge funds, segregated institutional funds and other investment products.

[14] Benedict Cheng, a respondent in this proceeding, was the president and chief investment officer of AHF and the co-chief investment officer at AHAM and was responsible for managing AHAM's staff. He was registered as a portfolio manager, managed the Clarington mutual funds and authorized the signing of the non-disclosure agreement by AHAM; he also supervised the management of other funds and the general operations of AHAM. In June, 2018, Mr. Cheng entered a settlement agreement with Staff in which he admitted that he told Mr. Rothstein of the Acquisition and suggested that Mr. Rothstein inform Mr. Soave.{5} He testified as a Staff witness at the hearing.

[15] AHAM's president was Michael Killeen, a lawyer, who was also AHF's chief operating officer. Mr. Killeen was a Staff witness at the hearing.

[16] The chief executive officer and chair of AHF was Eric Tremblay. Mr. Tremblay was also the chair of Argent Energy Trust (Argent), a public trust that held oil and gas assets, whose units traded on the Toronto Stock Exchange. AHF was responsible for Argent's general administration; Mr. Tremblay was in charge of AHF's management and administration contract with Argent and his primary responsibility as CEO and chair of AHF was dealing with Argent. Mr. Tremblay also entered a settlement agreement with Staff in this proceeding.

[17] John David Rothstein was AHAM's senior vice president and national sales manager. Mr. Rothstein managed AHAM's internal and external sales teams and reported to Mr. Cheng. His primary functions were to act as a "wholesaler", engaging with investment advisers, mainly in the greater Toronto area, to encourage them to invest funds they managed for clients in AHAM's mutual funds. To this end, he facilitated contact between AHAM's portfolio managers and these investment advisers by arranging meetings in which AHAM portfolio managers would discuss the market, AHAM's mutual funds and their favourite securities holdings. These meetings occurred at the offices of the investment advisers and at lunches and dinners elsewhere. If an investment adviser was interested in information on an issuer covered by the portfolio managers, Mr. Rothstein attempted to ensure that a portfolio manager addressed the investment adviser's questions. He also conveyed recommendations and analyses of portfolio managers to these advisers in emails and orally.

[18] Mr. Rothstein was interviewed by Staff in compelled examinations pursuant to a summons under section 13 of the Act on three occasions. On June 15, 2016, in his first interview, although he admitted that he might have given Mr. Soave a "heads up", he denied having been told of the Acquisition by Mr. Cheng and denied any knowledge of Mr. Soave's purchase of Amaya shares. In his second interview, on January 24, 2017, he admitted that he lied in his first interview, that Mr. Cheng had told him about the Acquisition and told him to inform Mr. Soave and that he did so in a telephone conversation on June 12, 2014. On April 12, 2017, Mr. Rothstein entered a settlement agreement with Staff based on his evidence in this interview.{6} In his third interview, on October 23, 2017, Mr. Rothstein corrected his statement that he spoke to Mr. Soave and other statements in his second interview and in his settlement agreement.

C. The Respondent

[19] Mr. Soave was a registered investment adviser and vice president at CIBC World Markets Inc. (CIBC) who was initially registered in 1986. He joined CIBC's Thornhill branch in 2001. In June, 2014, he had assets under management of approximately $175 million, most of which were invested in managed funds, including AHAM's mutual funds. Other than in this matter, he has not been the subject of discipline by an employer or of a regulatory proceeding.

[20] Mr. Soave had known Mr. Rothstein for over ten years and had recommended him to Mr. Cheng for his position with AHAM. CIBC's Thornhill branch was Mr. Rothstein's most significant firm by holdings and Mr. Soave was Mr. Rothstein's most significant investment adviser.

D. The Tip

[21] Mr. Soave had invested approximately $1 million of his clients' money and had invested personally in Argent on the basis of a presentation by Mr. Tremblay. Other investment advisers at the CIBC Thornhill branch also invested in Argent. In 2014 Argent's securities deteriorated significantly; Mr. Soave and other investment advisers in his branch became dissatisfied with their investment and with the information they were receiving from Mr. Tremblay. Mr. Soave, particularly, expressed strong dissatisfaction to Mr. Rothstein, who was concerned that Mr. Soave would cease to invest in and withdraw his investments from AHAM's mutual funds because of Mr. Tremblay's association with AHAM.

[22] Mr. Rothstein expressed these concerns to Mr. Cheng. As a result, Mr. Cheng told Mr. Rothstein of Amaya's impending Acquisition and suggested he tell Mr. Soave and the other investment advisers at his branch to purchase shares in Amaya. Mr. Cheng testified that he told Mr. Rothstein in late May or early June; Mr. Rothstein testified that he received the information on or about June 11, as he himself purchased Amaya shares immediately after he received the information from Mr. Cheng. While it is likely Mr. Rothstein's recollection is accurate, when he received this information is less significant than what he did with it.

[23] On June 11, 2014, Mr. Rothstein sent Mr. Soave text messages recommending that he purchase shares in Amaya. He testified that in the morning of June 12, 2014, he telephoned Mr. Soave and left a voicemail message informing him of the impending Acquisition. Although it is clear that Mr. Rothstein said something about the Acquisition -- in June and July, 2014, he told Mr. Cheng and Mr. Killeen that he had done so, as both testified -- he does not remember specifically what he said in his voicemail message. As a result, Staff bases much of their case on records of communications between Mr. Rothstein and Mr. Soave on June 11 and 12, 2014, on the timing and amount of Mr. Soave's purchase of Amaya shares and on his sale the following day at a significant profit, none of which is contested.

[24] Staff prepared a chronology of events on June 11, 12 and 13, 2014 that included telephone calls, emails and text messages between Mr. Rothstein, Mr. Soave and other persons at CIBC's Thornhill branch and elsewhere with whom they communicated.{7} The communications between Mr. Rothstein and Mr. Soave, which form the central elements of Staff's case, and Mr. Soave's trades in Amaya follow:

June 11, 2014

-- at 11:54 a.m., Mr. Rothstein called Mr. Soave's cell phone, but there is no record of the call having been received;

-- at 11:55 a.m., Mr. Rothstein sent Mr. Soave a text saying "Call me if you get a chance. Thx";

-- at 2:56 p.m., Mr. Rothstein telephoned Mr. Soave's cell phone, but there is no record of the call having been received;

-- at 4:05 p.m., Mr. Rothstein sent Mr. Soave a text saying "AYA", which was Amaya's trading symbol;

-- at 7:58 p.m., Mr. Soave texted Mr. Rothstein, saying "Sorry never owned it should I";

-- at 8:13 p.m., Mr. Rothstein sent a reply text saying "Yes";

June 12, 2014

-- at 9:45 a.m., Mr. Rothstein telephoned Mr. Soave's cell phone and left a voicemail message; the call lasted 1 minute and 19 seconds;

-- at 10:10 a.m., Mr. Soave telephoned his cell phone from his office phone; the call lasted 1 minute and 4 seconds;

-- at 10:15 a.m., Mr. Soave sent an email to Mr. Rothstein saying "Thanks";

-- at 10:18 a.m., Mr. Rothstein sent a reply email to Mr. Soave saying "Blackrock, blackstone and another huge one behind it";

-- at 10:35 a.m., Mr. Soave purchased 5,000 shares of Amaya for $60,755 (at $12.10 per share);

-- at 12:22 p.m., IIROC halted trading in Amaya shares;

-- at 1:23 p.m., Mr. Soave sent a text to Mr. Rothstein saying "Wholy [sic] Shit";

July 13, 2014

-- before the markets opened, Mr. Soave reallocated the Amaya shares to three trading accounts in his wife's and his name;

-- at 9:32 a.m., Mr. Soave sold the 1,780 Amaya shares in one of these trading accounts for $20 per share;

-- at 9:33 a.m., Mr. Soave sold the 2,370 Amaya shares in a second trading account for an average price of $19.73 per share;

-- at 9:38 a.m., Mr. Soave sent Mr. Rothstein a text saying "Thank You";

-- at 10:31 a.m., Mr. Rothstein phoned Mr. Soave's cell phone, but there is no record of the call having been received;

-- at 10:54 a.m., Mr. Rothstein sent a text to Mr. Soave saying "Unbelievable";

-- at 12:16 p.m., Mr. Soave sold the 850 Amaya shares in the third trading account for $19.77 per share;

-- at 12:18 p.m., Mr. Soave sent Mr. Rothstein a text saying "What fund won on the Trade";

-- at 12:21 p.m., Mr. Rothstein sent an email to the gaming industry analyst at AHAM asking "Which funds got an allotment to Amaya?"

[25] These facts are not contested. The inferences to be drawn from the messages between Mr. Rothstein and Mr. Soave are key questions in this proceeding.

III. ISSUES

[26] Section 76 of the Act prohibits a person in a special relationship with an issuer from purchasing or selling securities of the issuer with knowledge of a material fact with respect to the issuer that has not been generally disclosed.

[27] The questions in this proceeding are whether Mr. Soave was in a special relationship with Amaya and contravened section 76 when he purchased shares in Amaya on June 12, 2014. The definition of a "person in a special relationship with an issuer" includes a person who learns of a material fact with respect to the issuer from any other person in a special relationship with it and who "knows or ought reasonably to have known that the other person" was in a special relationship.

[28] As AHAM had entered into a non-disclosure agreement on April 29, 2014, it was engaging in a business activity or was considering or evaluating whether or proposing to engage in a business activity with Amaya and was therefore in a special relationship with Amaya.{8} As officers and employees of AHAM, Mr. Cheng and Mr. Rothstein were also in a special relationship with Amaya.{9}

[29] The issues to be resolved are thus whether Mr. Soave received from Mr. Rothstein a material fact, whether the material fact had been generally disclosed by 10:35 a.m. on June 12, 2014, when he purchased shares in Amaya, and whether he knew or should have known that Mr. Rothstein was in a special relationship with Amaya. The first two issues are components of the alleged prohibited conduct, that Mr. Soave purchased shares in Amaya with knowledge of a material fact that was not generally disclosed; the third issue, his knowledge of Mr. Rothstein's special relationship, determines whether he was subject to the prohibition in subsection 76(1).{10}

[30] Staff has the onus of proving each of these matters on a balance of probabilities.{11} If it is necessary to draw inferences, both the facts on which the inferences are based and the facts inferred must satisfy this same standard of proof; it must be more likely than not that they occurred.{12}

IV. EVIDENCE AND FINDINGS

A. Knowledge of a Material Fact

[31] A material fact is "a fact that would reasonably be expected to have a significant effect on the market price or value" of the securities to which it relates.{13} Materiality is thus an objective standard, based on the likely market impact of an event and its effect on investor expectations and investment decisions, influenced by the probability of the event occurring and its magnitude with respect to the securities' value if it occurs.{14} Such facts are commonly understood to include facts relating to a possible merger, takeover bid, other corporate acquisition and other significant changes in a business's operations.{15}

[32] The parties do not contest that Amaya's proposed acquisition of PokerStars was a material fact; in light of its impact on Amaya's position in the internet gaming industry and on its income, there is no doubt that it was. The question is whether Mr. Soave was informed of it in the messages from Mr. Rothstein before his purchase of shares at 10:35 a.m. on June 12, 2014.

1. Evidence

[33] Whether Mr. Soave was informed of a material fact must be determined in the context of the facts identified in Staff's chronology.{16} To summarize, in the afternoon and evening of June 11, 2014, Mr. Rothstein sent Mr. Soave text messages identifying Amaya and recommending that he purchase its shares. The following morning at 9:45 a.m., Mr. Rothstein called Mr. Soave's cell phone and left a voicemail message; the call lasted 1 minute and 19 seconds. Mr. Soave called his cell phone from his office at 10:10 a.m.; this call lasted 1 minute and 4 seconds.{17} Four minutes later, at 10:15 a.m., Mr. Soave sent Mr. Rothstein an email saying "Thanks". Three minutes after this, at 10:18 a.m., Mr. Rothstein sent a reply email saying "Blackrock, blackstone and another huge one behind it". Seventeen minutes later, at 10:35 a.m., Mr. Soave purchased 5,000 Amaya shares, which he sold the following day.

[34] The content of Mr. Rothstein's voicemail message is central to whether Mr. Soave had knowledge of a material fact.

(a) Mr. Cheng's Testimony

[35] Mr. Cheng testified that he told Mr. Rothstein of AHAM's participation in financing the Acquisition and that he could tell Mr. Soave and other individuals at CIBC's Thornhill branch who had invested in Argent to purchase shares of Amaya. He said Mr. Rothstein subsequently asked him about the financial backers of the Acquisition and he identified Blackstone and BlackRock. After the announcement, Mr. Rothstein told him he had informed Mr. Soave of the deal. Mr. Cheng so informed Mr. Tremblay and Mr. Killeen in late June and July. Mr. Cheng's evidence, however, does not indicate what Mr. Rothstein said in his voicemail message to Mr. Soave.

(b) Mr. Killeen's Testimony

[36] In late June, Mr. Killeen informed Mr. Cheng and Mr. Tremblay that he was conducting a compliance review of possible trading by employees of AHAM and another AHF affiliate in shares of Amaya before the announcement. He then learned from Mr. Tremblay that Mr. Cheng told Mr. Rothstein "to tell Frank Soave to buy the stock".{18} Mr. Cheng confirmed that following his request, Mr. Rothstein "passed on the tip" to Mr. Soave "who then traded and made large profits."{19} After learning this, Mr. Killeen questioned Mr. Rothstein, who said that he had traded personally "shortly after Ben [Cheng] asked him to tell Frank Soave to buy the stock."{20} Mr. Killeen testified that he wrote his two memoranda shortly after receiving this information. His evidence, however, does not address what Mr. Rothstein actually said, beyond indicating that he "passed on the tip" and told Mr. Soave to buy Amaya shares.

(c) Mr. Rothstein's Testimony

[37] As neither Mr. Cheng nor Mr. Killeen was able to provide direct evidence of what Mr. Soave was told, Mr. Rothstein's evidence is the most relevant. This brings Mr. Rothstein's credibility into issue. Mr. Rothstein, as he admitted in his testimony, has a poor memory and lied to Staff in his first interview. In that interview, although he admitted that he might have given Mr. Soave a "heads up", he denied that Mr. Cheng told him of the Acquisition, denied tipping Mr. Soave and denied knowing that Mr. Soave purchased shares.{21}

[38] In his second interview, he admitted having lied about each of these matters and said that Mr. Cheng told him to tell Mr. Soave and others in CIBC's Thornhill branch to buy shares in Amaya. He said he spoke with Mr. Soave by telephone on June 12, 2014 and had no specific recollection of the conversation, but probably told Mr. Soave that Mr. Cheng said to call and inform him of Amaya's Acquisition and the urgency of his purchasing. He said Mr. Soave asked him who was involved in financing Amaya's Acquisition and that he obtained that information and subsequently sent the email identifying BlackRock and Blackstone to Mr. Soave. Basing his evidence on the information provided to him by Staff concerning the timing of his telephone call to Mr. Soave that afternoon, the content of his texts to Mr. Soave and a telephone call from Mr. Cheng inviting him to a meeting in AHAM's boardroom, he said Mr. Cheng gave him the information in the boardroom around noon on June 11. He had no recollection of speaking to anyone else at CIBC's Thornhill branch.{22}

[39] In his third interview, Staff informed Mr. Rothstein that they had new information showing that his telephone call to Mr. Soave resulted in a voicemail message and that he could not have spoken to him on his 9:45 a.m. call on June 12. Mr. Rothstein then said that the information he gave Mr. Soave could have been in a voicemail. Mr. Rothstein was also informed that Staff had seen calendar entries relating to his visit to AHAM's boardroom on June 11, which showed that he was called to a meeting in the boardroom with a third party relating to an acquisition of AHAM; as a result, Mr. Rothstein said he was likely not informed of the Acquisition by Mr. Cheng in that meeting, but must have been informed of it that day, as he recalled purchasing shares of Amaya immediately after receiving the information. In addition, Staff informed Mr. Rothstein that they had recently obtained telephone records showing that he had three calls with the Thornhill branch manager on June 11, 2014; Mr. Rothstein said he had not recalled them, but he thought the discussion with the branch manager was limited to Argent.{23}

[40] In his testimony in the hearing, Mr. Rothstein said he lied in his first interview because he was trying to protect Mr. Cheng, who was his supervisor at AHAM, and Mr. Soave. He testified that Mr. Cheng informed him of the Acquisition and AHAM's participation in it and told him to pass the information on to Mr. Soave and other investment advisers at CIBC's Thornhill branch who had invested in Argent. He testified that in his voicemail message on June 12, he informed Mr. Soave of the fact that Amaya had a deal and of the immediacy to make sure Mr. Soave would buy shares and told him that AHAM funds were participating in the transaction.

[41] On cross-examination, he admitted that his evidence in his interviews about being informed of the Acquisition in AHAM's boardroom on June 11 was an assumption. He also admitted that his statement about having spoken with Mr. Soave was incorrect; he said he had remembered that there was a telephone call, but not that he had left a voicemail message. He said again that he could not be sure what he said; his best recollection was that he said there was a deal, conveyed the immediacy of the situation and said that Mr. Soave should buy Amaya shares. He admitted his testimony that he informed Mr. Soave of AHAM's participation in the transaction was only an assumption. He also admitted that because he had left a voicemail message, Mr. Soave could not have talked to him. He could not explain his subsequent email concerning BlackRock and Blackstone.

(d) Mr. Soave's Testimony

[42] Mr. Soave testified that after he received Mr. Rothstein's recommendation to purchase shares of Amaya on the evening of June 11, he conducted research into Amaya on his computer, looking at two websites, and was aware of the published rumours of Amaya's Acquisition of PokerStars. He said that the following morning, June 12, 2014, he reviewed newswire information, spoke to another adviser in his office who was familiar with Amaya and who himself owned Amaya shares and that his decision to purchase shares was based on Mr. Rothstein's June 11 recommendation, his own research, his discussion with the other adviser and the increase in Amaya's share price. He did not see the Bloomberg Article; he received the email from SeekingAlpha because he held shares in Blackstone, but said he did not connect it to Amaya.{24} He had no recollection of the voicemail message or of having listened to it and said his email thanking Mr. Rothstein at 10:15 a.m., four minutes after his call to his cell phone, related to the recommendation on June 11. He also said he did not connect Mr. Rothstein's 10:18 a.m. email about BlackRock and Blackstone to Amaya.

2. Findings

[43] Mr. Hausman, counsel for Mr. Soave, submitted that in view of Mr. Rothstein having lied on his first interview, his poor memory and his assumptions, Mr. Rothstein's evidence concerning what he told Mr. Soave in his voicemail message should not be relied on in any manner.

[44] There is no doubt that Mr. Rothstein's memory was poor. For example, he did not recall having spoken to the Thornhill branch manager on June 11 and even when shown the three calls with the branch manager, his recollection of their content was based on assumption, as he admitted in cross-examination. He had no recollection of the specifics of any of his conversations and was often mistaken about events. Much of his evidence in his second and third interviews and in the hearing reflected assumptions based on the undisputed facts concerning his telephone, email and other messages and the responses to them. These included his initial evidence about where Mr. Cheng informed him of the Acquisition, his statement that he spoke to Mr. Soave on June 12 and that Mr. Soave asked him about Amaya's financial supporters, again as he admitted in cross-examination.

[45] After his first interview, Mr. Rothstein acknowledged these failings. Overall, he attempted to be honest in the hearing and his evidence, including his admissions on cross-examination, was credible with respect to his recollection that he informed Mr. Soave of the Acquisition and its imminent announcement and encouraged him to buy shares immediately. His testimony to this effect was consistent, including his statements in his three interviews. In his first interview, although denying almost everything about his conduct, he said he may have given Mr. Soave a "heads up". Following this interview, he consistently testified to a telephone call and to telling Mr. Soave that there was a deal, of its immediacy and that he should trade. This evidence was not shaken on cross-examination.

[46] It was also consistent with the telephone calls and messages between Mr. Rothstein and Mr. Soave and with Mr. Soave's conduct. On June 11, Mr. Rothstein recommended that Mr. Soave purchase shares in Amaya. In view of the reason for the tip and the length of the voicemail message which followed this recommendation on June 12, it is reasonable to infer that more was said in explanation. Mr. Rothstein's recollection that he informed Mr. Soave of the impending transaction and the imminence of the announcement so that he would buy shares is credible. Despite his failure to remember doing so, it is much more likely than not that Mr. Soave listened to this message at 10:10 a.m. His 10:15 a.m. email thanking Mr. Rothstein is best understood as a response to Mr. Rothstein's voicemail message.

[47] Mr. Rothstein replied three minutes later saying in his email, "Blackrock, blackstone and another huge one behind it". Staff argued that this email itself disclosed a material fact by identifying BlackRock because BlackRock's identity was not disclosed by Amaya until its management information circular was published on June 30, 2014. Although identification of a participant in a financing may provide additional certainty about the probability of a transaction and therefore be a material fact,{25} it need not be determined whether it was in this instance. In the context of the email from SeekingAlpha received by Mr. Soave at 10:15 a.m., which reported Blackstone's US$1 billion financing for an existing client, Mr. Rothstein's 10:18 a.m. email clearly linked BlackRock and Blackstone to the Acquisition; it said they and "another huge one" were "behind it". This email thus confirmed the material fact, namely, the Acquisition, disclosed in his voicemail message.

[48] Even though Mr. Soave had received the 10:15 a.m. SeekingAlpha email, he testified that he did not connect Mr. Rothstein's 10:18 a.m. email with the Amaya transaction. He said he found it "a bit weird". This is not surprising in view of the fact that he had no recollection of the voicemail message. Whether or not he associated the email with Mr. Rothstein's preceding voicemail message, the only reasonable inference, on a balance of probabilities, is that Mr. Soave's purchase seventeen minutes later was motivated by the information he received from Mr. Rothstein. In all of the circumstances, there can be little doubt that Mr. Soave was informed of the impending announcement of Amaya's Acquisition of PokerStars.

B. General Disclosure

[49] A person with privileged access to material facts about an issuer who trades with an informational advantage does not incur the same risks as investors who do not have equal access to the information. With equal access, that is, once information is equally available to public investors, the information will generally be reflected in the market price of securities. The Act therefore prohibits insider trading only when the material facts known to an insider have not been generally disclosed.{26}

[50] General disclosure, however, is not defined in the Act or the regulations and rules under it. Reflecting the policy in the Act, regulators have consistently held that a material fact has not been generally disclosed until it has been disseminated in a manner that ensures it reaches the marketplace and public investors have had reasonable time to consider its implications.{27} This has long been the Commission's position,{28} and is reflected in NP 51-201.{29} While disclosure originates with and is usually made by issuers, it is possible that material information may be generally disclosed by others.{30}

1. Evidence

[51] There were rumours of an acquisition by Amaya in May, 2014, which appear to have resulted in increased trading volume and prices for Amaya's shares. On May 23, 2014, for example, a blogger called "goldencalf" wrote a three-line post headed "fact or fiction" on Stockhouse, an internet site with market information about securities; it asked whether anyone had heard the rumour that Amaya might be buying PokerStars.net, stating "someone I know high up at a major brokerage firm mentioned this to me the other day."{31} This was followed by a second post by "solarman2013" the same day which suggested that the trading in Amaya's shares supported the rumour, concluding "I suspect they have the biggest acquisition yet lined up and that the current level of $10+ will be far surpassed when they announce."{32}

[52] On May 24, 2014, a website called "CalvinAyre.com" (CalvinAyre) published an article referring to unidentified sources that said "that an agreement is in place that would see Amaya assume ownership of the Isle of Man-based online poker colossus" that owned PokerStars. This article stated, however, that on its face, the "mechanics of the deal don't seem feasible ... [PokerStars'] asking price would presumably be seriously out of Amaya's budget." It concluded with a question as to whether this was smoke or fire or a towering inferno.{33} Another internet article the same day was entitled "Amaya Gaming Soaring share price triggers takeover speculation", but it did not contain additional information.{34}

[53] A subsequent post on May 26, 2014, again by goldencalf, reasserted the rumours and concluded that the only possible buyer of PokerStars was a gambling enterprise other than Amaya. In response to these rumours, Amaya published its May 26 press release stating that it did not comment on acquisitions unless and until there was a binding legal agreement.{35} And on May 29, 2014, poker-online.com, an internet website, published an article entitled "Rumored Amaya-PokerStars Merger Might Not Happen."{36}

[54] There were no further significant reports until June 12, 2014, when at 9:07 a.m., the Bloomberg Article was published online stating that at an investor conference in New York, the head of Blackstone's credit business said Blackstone was preparing to announce its largest ever credit deal with a commitment of over US$1 billion for an acquisition financing deal with a North American company that was an existing client of GSO to which it had lent funds two years previously and that the acquisition would make the company a global player in its industry.{37} This information was circulated later that morning by SeekingAlpha in the email received by Mr. Soave at 10:15 a.m.{38} Although neither of these reports identified Amaya or PokerStars, Amaya was GSO's existing client.

[55] An article published in the Financial Post at 1:54 p.m., after the trading halt, said PokerStars was "near a deal to be acquired by" Amaya and that a knowledgeable person who asked not to be named "because the talks aren't public" said it might be announced that day. The article referred to GSO as among Amaya's backers, to the US$1 billion financing amount and to the purchase of PokerStars' parent corporation. It also said a spokesman for Amaya declined to comment, "citing company policy not to comment on rumours or speculation" and that spokespersons for PokerStars and Blackstone also declined to comment.{39}

2. Expert Evidence

[56] Dr. Jennifer Marietta-Westberg, a senior economist at Cornerstone Research and a member of the Investor Advisory Committee of the US Securities and Exchange Commission (SEC), was called as an expert witness on behalf of Mr. Soave. Prior to joining Cornerstone Research, Dr. Marietta-Westberg obtained a Ph.D. in finance, was an assistant professor at Michigan State University, and worked for ten years at the SEC, ultimately as deputy chief economist/deputy director from 2013 to 2016. Dr. Marietta-Westberg's testimony was advanced to provide context to assist the Commission in determining what information was available in the market and not to provide an opinion on general disclosure. A majority of the Panel qualified Dr. Marietta-Westberg to provide expert evidence, primarily to ensure that Mr. Soave had a full opportunity to present his defence.{40}

[57] Dr. Marietta-Westberg's report and testimony were based on her review of information relating to Amaya contained in analyst and news reports, including websites and blogs, that were published between March, 2013 and June 12, 2014, and her analysis of trading volumes and prices of Amaya's shares during this period. Characterizing the publications as "public speculation of the likelihood, timing, financing and target of an upcoming Amaya acquisition", she concluded that prior to Amaya's announcement on June 12, 2014, "a reasonably informed market participant would have been able to obtain from multiple public sources, including analyst reports and message boards, relevant information related to the likelihood, timing, financial and ultimate target of Amaya's acquisition of ... [PokerStars and that this] information would have been available to traders and other market participants trading in Amaya's common stock prior to the official announcement date."{41} She also concluded that the daily market movements in Amaya's common stock were "consistent with market participants trading on the early public news dissemination regarding Amaya's potential upcoming acquisition."{42}

[58] Having heard this evidence, the Panel concluded that it was of little assistance in determining whether Amaya's imminent announcement of the Acquisition was generally disclosed when Mr. Soave purchased its shares; nor did it assist in determining whether Mr. Soave was aware that he was receiving inside information from Mr. Rothstein.

3. Findings

[59] Mr. Hausman submitted that the publications preceding Amaya's announcement contained sufficient information to disclose generally Amaya's Acquisition of PokerStars and its imminent announcement. He argued that this was supported by the increase in Amaya's trading volume and price in May and June and, particularly, by the increases on June 12, following publication of the Bloomberg Article and the SeekingAlpha email. He argued that the Financial Post article in the afternoon of June 12 indicated that the information about Amaya's Acquisition had been generally disclosed prior to IIROC's trading halt. In his submission, the one-day waiting period suggested by the Commission in its 1976 Connor decision is neither appropriate nor necessary in the internet age.

[60] The Panel does not agree that the Acquisition was generally disclosed when Mr. Soave made his purchase. Rumours are not themselves facts; they lack the certainty required to be factual rather than speculative.{43} While the reports in May drew attention to the possibility of an acquisition by Amaya, none of them contained any specific information and none suggested that the Acquisition would actually occur or even that it was likely. They did not constitute general disclosure of a transaction that Amaya itself refused to acknowledge on May 26, 2014, when it issued a press release saying it did not as a matter of policy confirm rumours and that if there were a transaction to announce, it would be announced only when an agreement was signed.

[61] Mr. Hausman characterized Amaya's May 26 press release as a "non-denial denial". Although the existence of negotiations relating to the Acquisition may have been a material fact, Amaya was not required to disclose them until they constituted a material change in its business, operations or capital, and a denial of ongoing negotiations would have been a misrepresentation.{44} Amaya's press release reflected its policy concerning its timely disclosure obligations for acquisitions. The prohibition against insider trading applies in such circumstances so that persons who are aware of the negotiations may not trade before the fact that negotiations are being conducted has been generally disclosed. In the context of the Act's provisions, the characterization of Amaya's press release as a "non-denial denial" highlights the fact that the Acquisition was not then generally disclosed.

[62] The Bloomberg Article and SeekingAlpha email on June 12 also did not generally disclose the Acquisition. While a sophisticated investor might have been able to draw inferences from them, they did not provide sufficient certainty or specificity to generally disclose the imminent announcement of the Acquisition to the public marketplace, let alone to give public investors adequate time to assess it with a view to making their own investment determinations.{45} This is evident from the fact that Mr. Soave himself did not relate Mr. Rothstein's 10:18 a.m. email identifying BlackRock and Blackstone to Amaya's Acquisition, even though he had received the SeekingAlpha email three minutes earlier. It is reinforced by the characterization of these reports by Amaya's spokesman in the subsequent Financial Post article as rumours and speculation. In any event, as the Financial Post article followed IIROC's trading halt, it does not reflect general disclosure of the Acquisition prior to Mr. Soave's purchase of Amaya shares over three hours earlier.

[63] As a result, it is not necessary to address the appropriate waiting period in light of the development of the internet. Nevertheless, it should be noted that the minimum one-day waiting period suggested in the Connor decision to ensure public investors have an opportunity to analyze material information published by an issuer before its insiders can trade was a guideline, not a mandatory requirement applicable in all cases. As the Commission said in Connor:

[t]here can be no firm rule as to what time interval this will normally be. It very much depends upon the nature and complexity of the information, the nature of the market for the stock, the place of the market for the stock, the place of the company's operations and the place of the dissemination of the news release. We do feel confident in saying, however, that an insider may not trade with the release of the news ...{46}

In other words, each case must turn on its own facts. While the principle concerning the timing of trading by insiders is well-established, the implications of electronic communications for the length of the one-day minimum waiting period must await a proceeding in which a determination is required on the facts presented.

[64] On the facts in this proceeding, the Panel find that Mr. Soave purchased the Amaya shares with knowledge of a material fact that had not been generally disclosed at the time of his purchase. This finding, however, does not resolve this matter. Whether Mr. Soave was in a special relationship with Amaya when he made the purchase must now be addressed.

C. Special Relationship

[65] The prohibition against insider trading is intended to prevent insiders from taking advantage of material information that is not available to other market participants and thus engaging in potentially riskless trading to obtain an unfair advantage from their privileged access to the information. Because of the difficulties of demonstrating use of such information or intention, the prohibition is premised on the insiders' "special relationship" with the issuer and knowledge of a material fact.{47} A person not in a direct fiduciary, professional or business relationship with an issuer who receives material information is defined by the Act as being in a special relationship only if the recipient "knows or ought reasonably to have known" that the person providing the information is a person in a special relationship.

[66] Mr. Soave would thus have been in a special relationship with Amaya only if he knew or reasonably should have known that Mr. Rothstein was in such a relationship when he delivered the voicemail and other messages. Mr. Soave would have known this if Mr. Rothstein had informed him that AHAM signed the non-disclosure agreement or was participating in the financing of Amaya's Acquisition or had provided other information that clearly indicated its derivation from a privileged source,{48} however that information was conveyed.

1. Mr. Soave's Knowledge

(a) Evidence

[67] Although Mr. Rothstein testified that he told Mr. Soave that AHAM funds were participating in the financing of Amaya's Acquisition, he did not recall the specific content of his voicemail message and he said in cross-examination that his testimony concerning this information was not a recollection but was an assumption. Mr. Soave was aware that insider trading was prohibited under the Act and in CIBC's policy manual. He testified that he had no recollection of receiving or listening to the voicemail message. While he knew that a mutual fund could participate in a private placement, he testified that he did not know when this occurred and that he was not aware that AHAM was participating in the financing of Amaya's Acquisition until he was examined by Staff in the course of their investigation. He knew that AHAM funds held shares in Amaya and said he believed Mr. Rothstein's recommendation and messages came from a portfolio manager or analyst at AHAM. There is thus no direct evidence that Mr. Soave was told that AHAM was participating in Amaya's Acquisition or that he knew that Mr. Rothstein was in a special relationship with Amaya.

[68] Much of the evidence related to Mr. Rothstein's activities as a wholesaler and his efforts to encourage Mr. Soave and other investment advisers to invest in AHAM's mutual funds. Mr. Rothstein arranged meetings with portfolio managers who provided information about their top holdings to investment advisers. Mr. Soave said that wholesalers passed on such recommendations to him all the time, that Mr. Rothstein and other wholesalers provided access to recommendations from their portfolio managers and often summarized the recommendations of their portfolio managers outside of meetings, primarily by email. Mr. Cheng identified such an email about an issuer other than Amaya that was sent to colleagues of Mr. Soave by Mr. Rothstein on May 13, 2014 as typical.{49}

[69] Mr. Soave often invested in securities based on such recommendations, sometimes placing his order during a portfolio manager's presentation in a meeting. Jordan Zale, a former colleague at CIBC's Thornhill branch, testified that Mr. Soave had a large risk appetite. Mr. Soave said he accepted greater personal risks than he would for his clients and adduced evidence concerning his personal investments. He produced and reviewed a number of statements from 2014 and 2015 for his and his family's accounts, which he administered, and identified twenty-two purchases between approximately $28,000 and $300,000, twenty of which were based on recommendations from portfolio managers. Of these twenty, twelve purchases were greater than $60,000 and six of these were $100,000 and more. All purchases in these "pro accounts" had to be reviewed by a branch administrator and his branch manager.{50}

[70] Although he had not previously held shares in Amaya, Mr. Soave had invested in two gaming companies, one of which had been acquired by Amaya. After Amaya's announcement he sent emails to AHAM's gaming analyst inquiring whether the Amaya transaction would be beneficial for the gaming company in which he still held securities; the book value of this investment was approximately $92,000.{51} In March, 2015, he purchased shares of NYX Gaming Group Ltd. for over $70,000 for his wife's account after a luncheon meeting in which it was recommended by a non-AHAM portfolio manager.

[71] Following his Amaya purchase and the trading halt, Mr. Soave sent a number of emails to Mr. Rothstein and to colleagues concerning Amaya. The first was to Mr. Rothstein at 1:23 p.m. on June 12, 2014, in which Mr. Soave simply said "Wholy [sic] Shit". He explained this email as a response to the price increase in Amaya's shares after his purchase and the fact that by the time of the trading halt he had made $10,000. He subsequently sent emails to Mr. Zale and to his assistant about Amaya; after he informed Mr. Zale at 1:24 p.m. that it was up $2, he asked his assistant how many shares he had purchased and when told 5,000, he responded "Shit I wish I had bought more".{52}

[72] The next morning, prior to the opening of the market, he reallocated his Amaya shares to three different accounts before selling the shares; the reallocation required approval by a CIBC Thornhill branch administrator who could refer it to his branch manager. Mr. Soave also sent texts or email messages to a colleague at CIBC informing her of his purchase, to others in the industry asking whether they held Amaya shares, to a client who held shares in Amaya asking about his holdings, and to his branch manager, whom he told he had held 5,000 Amaya shares.{53}

[73] Mr. Soave also sent a text message to Mr. Rothstein at 12:18 p.m. on June 13 asking him "What fund won on the Trade". Mr. Rothstein interpreted this question as relating to Amaya's private placement and at 12:21 p.m. sent an email to AHAM's gaming analyst asking which funds received an allotment. Mr. Rothstein testified that this was his understanding, but on cross-examination, he admitted that in his second interview by Staff, he had interpreted this question as meaning which AHAM fund held Amaya shares and that he could not be sure that his initial understanding was accurate. Mr. Soave testified that he was asking which fund benefitted from the price increase as a result of its holdings in Amaya.

(b) Findings

[74] Mr. Hausman submitted that knowledge of Mr. Rothstein's special relationship can only be demonstrated by direct evidence. This is not the case. Knowledge of a tipper's relationship with an issuer, like knowledge of a material fact, is frequently a matter of inference.{54} It goes without saying that any such inference must reasonably flow from facts that are proved in evidence.{55}

[75] Factors that are relevant to such an inference are the tippee's position and knowledge, the tipper's position and relationship with the tippee, the nature of the disclosed information, the timing of the receipt of the information and the tippee's trades, whether the tippee conducts any research or makes inquiries of the tipper, the tippee's prior ownership of the securities traded, the significance of the trade in light of the tippee's prior trading, portfolio and assets, and any attempt by the tippee to conceal the trading. An inference of knowledge must take these factors into account, to the extent they are relevant, in the context of all of the evidence.

[76] At the time of his purchase, Mr. Soave had been a registrant for twenty-eight years and had managed client accounts at CIBC's Thornhill branch since 2001. He knew that mutual funds receive confidential information in connection with private placement transactions in which they participate and that Mr. Rothstein was employed by a fund manager. Mr. Rothstein had never previously recommended a specific security in the manner he recommended Amaya in his text messages on June 11, 2014, and Mr. Soave received material information in Mr. Rothstein's voicemail and subsequent email the following morning, which led him to purchase the Amaya shares.{56} Although he looked at two websites to obtain information on Amaya the night before, looked at newswire information and spoke to another investment adviser in the morning on June 12, and was aware of the rumours of the Acquisition, he did not ask Mr. Rothstein how he knew there was a deal. Instead he made a $60,000 purchase almost immediately after he received Mr. Rothstein's email at 10:18 a.m., and he sold the shares the next day at a substantial profit. These facts, taken alone, could lead to an inference that he knew that Mr. Rothstein was in a special relationship with Amaya, as Staff submitted.

[77] When viewed in light of all the evidence, however, this inference is less than compelling. Mr. Soave had dealt with Mr. Rothstein as a wholesaler for AHAM and other fund managers for over ten years and he had not received inside information from him during that time. He customarily received recommendations from Mr. Rothstein and other wholesalers that reflected the views of their portfolio managers. Although he had never before received a recommendation from Mr. Rothstein like the one on June 11, the manner in which it was sent was not sufficiently different from other recommendations to lead him to believe that Mr. Rothstein was in a special relationship with the issuer.

[78] The information he received in Mr. Rothstein's voicemail and subsequent email was also not sufficient to alert him to Mr. Rothstein's special relationship. Mr. Rothstein told him in the voicemail that a deal was about to be announced in which he should invest quickly. While this was a material fact that influenced his purchase,{57} it was not information that could only have come from a confidential source in a special relationship with the issuer. In this respect, it is unlike detailed, very specific information such as the price and timing of a future takeover bid, which could only come from an insider source, as was the case in the Commission's Azeff decision.{58} It should be noted in this context that the Commission in Azeff suggested that on the facts of that case, a tip that the target was "in play" could have been based on a rumour.{59} In short, the information in Mr. Rothstein's voicemail message would not necessarily lead to an inference by Mr. Soave that it came from a person in a special relationship with Amaya.

[79] Nor would Mr. Rothstein's subsequent email identifying BlackRock and Blackstone. Although the identification of BlackRock might provide a basis for an inference of knowledge, it was not sufficient in the context to inform Mr. Soave of a special relationship in view of his belief that the source of Mr. Rothstein's information was a portfolio manager conveying information about an issuer whose securities were held by AHAM and followed by its portfolio managers and its gaming analyst. This belief could also explain why he did not ask Mr. Rothstein where he obtained the information, especially as Mr. Rothstein's position as a sales manager and wholesaler would not ordinarily be expected to give him access to confidential information relating to a proposed private placement or non-disclosure agreement.

[80] Although Mr. Soave purchased Amaya shares virtually immediately following his receipt of Mr. Rothstein's information, the purchase was consistent with his trading practice. The uncontroverted evidence was that he had an appetite for risk and often purchased securities quickly after receiving a recommendation from a portfolio manager, sometimes during the course of the manager's presentation. The size of his Amaya purchase was also not out of the ordinary; he frequently made such investments in amounts greater than $60,000. The amount of this one was in the middle of those presented in evidence. There was also evidence of his selling securities quickly to obtain a relatively small profit. In light of this evidence, the fact that he had not purchased shares in Amaya previously is not a sufficient basis for an inference of knowledge, especially as he had previously made equally significant investments in issuers in the gaming industry and did so again the following year.

[81] Staff argued that Mr. Soave's texted query, "What fund won on the Trade", demonstrated his awareness of AHAM's participation in Amaya's financing. Although Mr. Rothstein so understood it, as is clear from his email to AHAM's gaming analyst three minutes later, Mr. Soave testified that he was asking which mutual fund held Amaya shares and benefitted from the increase in their trading price. Both understandings are possible in view of the ambiguity of Mr. Soave's question. Mr. Rothstein's understanding, and Staff's reading, interprets "won" as meaning which fund received an allotment of subscription rights. On the other hand, Mr. Soave's evidence interprets "won on" to mean "benefitted from" and "trade" to mean Amaya's transaction. Both interpretations are equally difficult and equally plausible.

[82] Finally, Mr. Soave's conduct on June 12 and 13 following his purchase is relevant to his knowledge when he traded. Conduct that attempts to conceal a trade, including after the trade occurred, suggests a consciousness of impropriety and may indicate knowledge that a tippee's informer was in a special relationship.{60} Although the converse will not always reflect a lack of knowledge, conduct following a trade that suggests a lack of awareness of impropriety may be taken into account when considering whether knowledge should be inferred.

[83] Mr. Soave's conduct following his purchase must be considered. His first response to Mr. Rothstein at 1:23 p.m., following the $2 price increase and the trading halt, "Wholy [sic] Shit", suggests surprise and is inconsistent with his knowing he received inside information, which goes with knowledge of a special relationship. Had he known this, the price increase would likely have been expected. His comment to his assistant at 1:28 p.m. that he should have bought more is to the same effect. Mr. Soave's communications with colleagues and others on June 13 revealing that he owned Amaya shares also suggest no consciousness of impropriety. This is especially so with respect to his emails to his branch manager about his Amaya holding, as the purchase and his reallocation of Amaya shares earlier that day had to be reviewed and his email on June 13 would have drawn the branch manager's attention to Mr. Soave's purchase the day before.

[84] Although an inference of knowledge is possible, taking into account all the evidence, it has not been shown on a balance of probabilities that Mr. Soave knew that Mr. Rothstein was in a special relationship with Amaya. There is no direct evidence to so link him, as the recommendation and other information received by Mr. Soave from Mr. Rothstein did not indicate that AHAM had signed a non-disclosure agreement or was participating in the financing of Amaya's Acquisition. Nor is an inference of knowledge compelled by the facts, as Mr. Rothstein's recommendation and other messages were consistent with his activities as a wholesaler. It was not unreasonable in the circumstances for Mr. Soave to have believed that these communications reflected recommendations from a portfolio manager as his post-purchase conduct suggests and as he testified.

[85] The Panel find, therefore, that it has not been proved that Mr. Soave knew that Mr. Rothstein was in a special relationship with Amaya when he purchased Amaya shares.

2. Whether Mr. Soave should have known

[86] The same factors apply to a determination of whether Mr. Soave ought reasonably to have known that Mr. Rothstein was in a special relationship.{61} Unlike actual knowledge, this is an objective standard based on what a reasonable person with Mr. Soave's knowledge and experience should have inferred in the circumstances.{62}

[87] Under this standard Mr. Soave's status as a registrant and his experience in the industry should be given greater weight, as "a higher standard of alertness is expected of" a registrant than of a member of the general public.{63} Although section 76 does not expressly impose a positive obligation to conduct due diligence, this higher standard reflects the expectations that accompany registration, namely, that the training, experience and ethical conduct required of registrants will be taken into account.{64} For example, a registrant's failure to ask questions may be more significant when determining what the registrant ought to have understood from information of which he or she was aware when trading.

[88] In light of his experience as a registrant and having received material information about Amaya's Acquisition and its immediacy in the voicemail message, the SeekingAlpha email and the subsequent email identifying BlackRock and Blackstone, which information triggered his purchase, it can be concluded that Mr. Soave should have known that Mr. Rothstein was in a special relationship. Even though he did not, it is arguable that a reasonable securities professional in his position, knowing what he knew, should have realized that it came from a privileged source and special relationship.

[89] Mr. Soave's experience as a registrant, however, includes his relationships with wholesalers for fund managers and their practice. In the circumstances, it was not unreasonable for him to believe that the information came from a portfolio manager or analyst who was following Amaya for the reasons expressed above with respect to his actual knowledge.{65} A portfolio manager or gaming sector analyst following Amaya would be expected to know of rumours and other developments, including information in the SeekingAlpha email that Blackstone was financing the transaction.{66} The additional identification of BlackRock in Mr. Rothstein's 10:18 a.m. email would likely not have indicated to a person who was not following Amaya with the same intensity that its source must have been a person in a special relationship.

[90] As a result, whether Mr. Soave should have known of Mr. Rothstein's special relationship with Amaya is a close question, with the evidence permitting either inference. This does not satisfy the standard of proof. In the Panel's view, Staff have not proved on a balance of probabilities that Mr. Soave should have known of Mr. Rothstein's relationship.

[91] For these reasons, the Panel find that Mr. Soave was not in a special relationship with Amaya when he purchased its shares on June 12, 2014.

D. Misrepresentations to Staff

[92] Staff also alleged that Mr. Soave made misrepresentations in his compelled examination when he denied that Mr. Rothstein informed him of material facts on the basis of which he purchased shares in Amaya and when he provided false explanations of texts and emails.{67} In their oral submissions, Staff conceded that if Mr. Soave is not found to have contravened section 76 of the Act, these allegations cannot be maintained.

[93] For all of these reasons, the proceeding against Mr. Soave is dismissed.

V. STAFF CONDUCT

[94] In his submissions, Mr. Hausman alleged that Staff unfairly published Mr. Rothstein's settlement agreement and the initial Statement of Allegations in this proceeding, both dated April 12, 2017, because they incorrectly said that Mr. Rothstein had spoken with Mr. Soave when he had not and that Staff had not disclosed this fact to the Commission panel that approved Mr. Rothstein's settlement. He argued that publication of the incorrect statements damaged Mr. Soave's reputation and should not have occurred. Although he did not request any form of relief, he submitted that the Panel should address this alleged unfairness. Although this submission does not affect the merits of this proceeding, it involves a serious allegation and should be addressed.

[95] Staff have an obligation to act honestly and fairly in all their enforcement activities, and the Commission relies on Staff to do so.{68} If Staff fail to conduct themselves in accordance with these standards, any unfairness can be addressed on an application or a motion by a person who is affected, assuming that a remedy is sought.{69}

[96] Mr. Hausman's submission is premised on Staff having been aware at the time of Mr. Rothstein's settlement that Mr. Rothstein had not spoken to Mr. Soave. The record in this case does not support this premise. Mr. Rothstein's settlement agreement was consistent with the evidence he provided to Staff in his second interview on January 24, 2017.{70} Christine George, a senior forensic accountant in the Enforcement Branch of the Commission who was the primary investigator in this matter and was called by Staff as a witness, testified that at the time of Mr. Rothstein's second interview, she did not have all the office telephone lines from CIBC's Thornhill branch.{71} In Mr. Rothstein's third interview on October 23, 2017, Staff said that since his prior interview, they had made further inquiries of CIBC and had obtained information which indicated that he had left a voicemail message on June 12, 2014 and had not spoken with Mr. Soave.{72} They then questioned him concerning this new information.

[97] Following this third interview, Staff amended the Statement of Allegations to delete the references to a telephone conversation, as well as making other corrections.{73} In the circumstances, this was the appropriate action. On the basis of the record in this proceeding, there is no support for Mr. Hausman's allegation concerning Staff's conduct.

Dated at Toronto this 4th day of February, 2019.

"Philip Anisman"
 
"Deborah Leckman"
 
"Robert P. Hutchison"

{1} RSO 1990, c S.5, s 76(1). The section says "knowledge of a material fact or material change". A material change relates to an issuer's timely disclosure obligations and is invariably a material fact as well; see AiT Advanced Information Technologies Corp (Re), 2008 ONSEC 3, (2008) 31 OSCB 712 at paras 209-215 (AiT). As the distinction between the two is not relevant in this proceeding, these reasons use only "material fact".

{2} Act, s 76(5) "person in a special relationship" (e).

{3} They also allege that Mr. Soave made misrepresentations to Staff in a compelled examination, when he denied these allegations.

{4} Unless otherwise indicated, all references to currency in these reasons are to Canadian dollars.

{5} Exhibit 240, Settlement Agreement with Mr. Cheng; (2018) 41 OSCB 5131.

{6} Exhibit 234, Settlement Agreement with Mr. Rothstein; (2017) 40 OSCB 3718.

{7} Exhibit 57, Staff Chronology of Events. This chronology with the Panel's addition of other significant events on June 11, 12 and 13 accompanies these reasons as an appendix.

{8} Act, s 76(5) "person in a special relationship with an issuer" (b).

{9} Act, s 76(5) "person in a special relationship with an issuer" (c)(iv).

{10} Mr. Soave's knowledge of a material fact is addressed in section IV.A of these Reasons; general disclosure is addressed in section IV.B; and Mr. Soave's knowledge of Mr. Rothstein's status is addressed in section IV.C.

{11} F.H. v McDougall, 2008 SCC 53 at para 40; Azeff (Re), 2015 ONSEC 11, (2015) 38 OSCB 2983 at paras 41-42, affirmed 2018 ONCA 61 (CanLII), leave to appeal denied 2017 CanLII 84246 (SCC) (Azeff). This standard is often described as requiring clear, cogent and convincing evidence. This does not indicate a standard of proof other than a balance of probabilities. The Commission previously applied a standard that required clear, cogent and convincing evidence in proceedings for serious offences like insider trading and proceedings affecting a person's livelihood, which standard was treated as more onerous than a balance of probabilities and less than the criminal beyond-a-reasonable-doubt; see e.g. Donnini (Re), (2002) 25 OSCB 6225 at paras 100-101 and 229, affirmed 76 OR (3d) 43, 2005 CanLII 1622 (CA); ATI Technologies Inc (Re), 2005 ONSEC 14, (2005) 28 OSCB 8558 at paras 13-15 (ATI Technologies); AiT at para 196. The Supreme Court's 2008 decision determined that there is only one civil standard of proof; clear, cogent and convincing evidence means only sufficient evidence to prove a fact on a balance of probabilities; McDougall at paras 45-46.

{12} R v Munoz, (2006) 86 OR (3d) 134; Walton v Alberta (Securities Commission), 2014 ABCA 273, leave to appeal denied, 2015 CanLII 14759 (SCC); Azeff at paras 43-49.

{13} Act, s 1(1) "material fact".

{14} The Commission's decisions on this standard are summarized in Canaco Resources Inc (Re), 2013 BCSECCOM 310 at para 84; see also SEC v Texas Gulf Sulphur Co, (1968) 401 F2d 978 (2d Cir) at 985, cert denied (1969) 394 US 976.

{15} See e.g. National Policy 51-201 -- Disclosure Standards (NP 51-201), para 4.2.

{16} See para 24, above.

{17} The fifteen-second difference was likely the time required for Mr. Rothstein to listen to the voicemail greeting on Mr. Soave's cell phone before he left his message.

{18} Exhibit 201, Killeen Memorandum, July 2, 2014.

{19} Exhibit 202, Killeen Memorandum, July 12, 2014.

{20} Ibid.

{21} Exhibit 241, Compelled Interview of John David Rothstein, June 15, 2016.

{22} Exhibit 235, Continued Compelled Interview of J D Rothstein, January 24, 2017.

{23} Exhibit 236, Continuing Compelled Interview of John David Rothstein, October 23, 2017.

{24} See para 11, above.

{25} See e.g. SEC v Mayhew, (1997) 121 F3d 44 at 51 (2d Cir) (Mayhew).

{26} Act, s 76(1).

{27} See e.g. Faberge, Inc, Securities Exchange Act Release No 10174, May 25, 1973, [1973] CCH Fed Sec L Rep, ¶ 79,378 (SEC).

{28} See Connor (Re), [1976] OSCB 149 at 174-177 (suggesting a minimum one-day waiting period) (Connor).

{29} NP 51-201, para 3.5.

{30} See e.g. Lum (Re), 2015 BCSECCOM 189 at paras 70-73.

{31} Exhibit 190, Stockhouse post, May 23, 2014 (goldencalf).

{32} Exhibit 191, Stockhouse post, May 23, 2014 (solarman2013).

{33} Exhibit 182, CalvinAyre article, May 24, 2014.

{34} Exhibit 183, Recentpoker.com article, May 24, 2014.

{35} Exhibit 54, Amaya Press Release, May 26, 2014 at 388; see para 9, above.

{36} Exhibit 187, poker-online.com article, May 29, 2014.

{37} Exhibit 193, Email from AHAM gaming analyst to AHAM portfolio manager.

{38} Exhibit 62, Soave documents at 55.

{39} Exhibit 224, "Amaya Gaming said to be near takeover deal of PokerStars gambling site", June 12, 2014.

{40} Commissioner Anisman would not have qualified Dr. Marietta-Westberg. In his view, her evidence was not necessary to assist the Panel in determining whether Amaya's intended Acquisition of PokerStars was generally disclosed or with respect to Mr. Soave's knowledge; see White Burgess Langille Inman v Abbott and Haliburton Co, 2015 SCC 23 at paras 19-23; R v Mohan, [1994] 2 SCR 9 at paras 21-22.

{41} Exhibit 308, Expert Report of Jennifer Marietta-Westberg, Ph.d., paras 8(a) and 15.

{42} Ibid, paras 8(h) and 19.

{43} See e.g. Compact Edition of the Oxford English Dictionary (OUP 1971) at 2601 ("statement or report circulating in a community, of the truth of which there is no clear evidence"); Oxford Living Dictionaries English, https://en.oxforddictionaries.com/definition/rumour ("currently circulating story or report of uncertain or doubtful truth"); Oxford Living Dictionaries, English: Thesaurus, https://en.oxforddictionaries.com/thesaurus/rumour (synonym: speculation; antonym: hard facts).

{44} Act, s 1(1) "material fact" and ss 75 (timely disclosure "where a material change occurs") and 126.2 (misleading statements); and see AiT at paras 209-223.

{45} See Waheed (Re), 2014 ONSEC 23, (2014) 37 OSCB 8007 at para 396; see also Mayhew at 50-51.

{46} Connor at 174. It is also worth noting that Connor was decided when the Act contained only a civil remedy for persons harmed when an insider made use of undisclosed specific confidential information for his or her own benefit or advantage and did not prohibit insider trading; Securities Act, RSO 1970, c 426, s 113. "Insider" was then defined as a director, senior officer or ten-per-cent shareholder of a public corporation; ss 109(1)(b) and (c). See also NP 51-201 at para 3.5 n 21 (time parameters in Connor may not be "appropriate for modern technology").

{47} The Act's original prohibition against improper insider trading contained a defence if a person proved "that he did not make use of [his] knowledge of the material fact" in selling or purchasing a security; Securities Act, 1978, SO 1978, c 47, s 75. The "make use of" standard enabled a person who traded with knowledge of an undisclosed material fact to avoid liability on the basis that the knowledge did not influence his or her decision to purchase or sell and was therefore not used; see e.g. Green v Charterhouse Group Canada Ltd, (1976) 12 OR (2d) 280 (CA) at 306-308; Connor at 169-170. The Act was amended in 1987 to adopt the approach in section 76; see Securities Act, RSO 1980, c 466, s 75, as amended by SO 1987, c 7, s 7.1. Tippees were added to the definition of "special relationship" at this time.

{48} It is not necessary that the ultimate source be identified; see e.g. Azeff at paras 177, 180 and 202-205.

{49} Exhibit 254, Email from Mr. Rothstein to CIBC investment advisers, May 13, 2014.

{50} A "pro account" is an account of a registrant or a member of the registrant's family with the same residence as the registrant.

{51} Exhibit 294, Soave CIBC Account Statement, June 2014, Tab 2A.

{52} Exhibit 57, Staff Chronology of Events; see Appendix, below.

{53} Exhibit 239, Emails with Mr. Soave at 110-111 (branch manager); and see Appendix, below.

{54} See e.g. Suman (Re), 2012 ONSEC 29, (2012) 35 OSCB 2809 at para 307 (Suman); Azeff at para 43; see also e.g. SEC v Michel, (2007) 521 F Supp 2d 795 at 823-825.

{55} Suman at paras 305-309; the use of circumstantial evidence is fully discussed in Suman at paras 288-304; see also para 30, above.

{56} See paras 45-48, above.

{57} See ibid; see also Mayhew at 51 (confirmation of rumours "transformed the likelihood of a ... merger from one that was ... possible to one that was highly probable quite soon").

{58} Azeff at paras 138, 146-148, 197 and 203(d).

{59} Ibid at para 203(d). This was a determination which reflected the facts before the Commission panel; a different conclusion might be reached in other circumstances.

{60} See e.g. ATI Technologies at para 71. On the use of post-offence circumstantial evidence to support an inference of intention or knowledge, see e.g. R v S.B.1, 2018 ONCA 807.

{61} See para 75, above; Azeff at paras 43 and 64-65; see also Re Investors Management Co, Inc, Securities Exchange Act Release No 9267, July 29, 1971, [1970-1971] CCH Fed Sec C Rep, 78,163 at 80,520-80,521.

{62} Azeff at para 63.

{63} Ibid at para 64(c).

{64} See e.g. Danuke (Re), (1981) 2 OSCB 31C (September 18) at 40C-41C.

{65} See paras 77-79, above.

{66} In fact, AHAM's gaming analyst was aware of this information, as he sent an email with a copy of the 9:07 a.m. Bloomberg Article to an AHAM portfolio manager at 9:11 a.m.; Exhibit 193, Email from AHAM gaming analyst to AHAM portfolio manager.

{67} Exhibit 212, Amended Statement of Allegations, October 26, 2017, (2017) 40 OSCB 8817.

{68} See e.g. RBC Dominion Securities Inc (Re), 2017 ONSEC 24, (2017) 40 OSCB 5551 at para 13; Assante Capital Management Ltd (Re), 2017 ONSEC 45, (2018) 41 OSCB 99 at para 7(h).

{69} See Ontario Securities Commission Rules of Procedure and Forms, (2017) 40 OSCB 8988, rr 17 and 28. An application or motion would require a full record. For example, the Panel was not provided with the panel's reasons for approving Mr. Rothstein's settlement; see Cheng (Re), 2017 ONSEC 14, (2017) 40 OSCB 4451. When referring to the facts admitted in the settlement agreement, the panel said those "facts remain unproven against the remaining respondents" (para 3). In summarizing the facts, they said only that Mr. Rothstein "contacted Frank Soave" and the following day "provided further confidential information" to him (para 8).

{70} Exhibit 234, Settlement Agreement with Mr. Rothstein; (2017) 40 OSCB 3718; and see para 38, above.

{71} Transcript, September 7, 2018 at 150, lines 1-11.

{72} See para 39, above.

{73} Exhibit 212, Amended Statement of Allegations, October 26, 2017; (2017) 40 OSCB 8817; Exhibit 213, Blacklined Amended Statement of Allegations.

 

APPENDIX

Chronology of Events, June 11-13, 2014{*}

Wednesday, June 11, 2014 -- JD Rothstein Contacts Frank Soave

Time

Event

From

To

Description

 

11:49 AM

Email

JD Rothstein

CIBC Thornhill Branch Manager (BM)

Re: Could we have a chat today? "Hope you are well. Cheers, JD"

 

11:54 AM

Call

JD Rothstein

Frank Soave

Call from Rothstein (office) (1 minute) to Soave (cell) (no record of call received)

 

11:55 AM

SMS

JD Rothstein

Frank Soave

"Call me if you get a chance. Thx"

 

12:00 PM

Lunch

Ben Cheng, JD Rothstein and others attended lunch with [{*}third party] at Aston Hill offices

 

12:12 PM

Email

Ben Cheng

JD Rothstein

"Boardroom. Come on down."

 

12:16 PM

Email

BMO InvestorLine

JD Rothstein

Re: Your email address has been updated

 

1:00 PM

Email

BM

JD Rothstein

Re: Could we have a chat today? "At my desk"

 

2:09 PM

Call

JD Rothstein

BM

Call from Rothstein (office) (15 minutes) to BM (office)

 

2:49 PM

Trade

JD Rothstein buys 700 Amaya shares in Rothstein trading account at BMO InvestorLine [Market order filled at $11.875 for $8,322]

 

2:50 PM

Call

JD Rothstein

BM

Call from Rothstein (office) (1 minute) to BM (office)

 

2:56 PM

Call

JD Rothstein

Frank Soave

Call from Rothstein (office) (1 minute) to Soave (cell) (no record of call received)

 

3:30 PM

Taxi

Cheng taxi pickup for airport

 

3:49 PM

Email

JD Rothstein

Eric Tremblay

Re: Argent Feedback "Eric, I ain't going to lie that I'm doing some damage control at CIBC currently ... I am doing my best to ease the situation so that these guys will be more receptive in a few months from now."

 

4:05 PM

SMS

JD Rothstein

Frank Soave

"AYA"

 

4:09 PM

Call

JD Rothstein

BM

Call from Rothstein (office) (3 minutes) to BM (office)

 

5:40 PM

Flight

Cheng/Killeen/LT [{*}LT was an AHAM employee]/Tremblay flight Toronto to New York

 

7:04 PM

Email

JD Rothstein

LA [{*}LA was an employee at AHAM]

JD Rothstein just left the Aston office

 

7:35 PM

Arrival

Cheng/Killeen/LT/Tremblay -- arrival in New York

 

7:58 PM

SMS

Frank Soave

JD Rothstein

"Sorry never owned it should I"

 

8:13 PM

SMS

JD Rothstein

Frank Soave

"Yes"

 

9:25 PM

Flight

Cheng/Killeen/LT/Tremblay flight from New York to Brazil

Thursday, June 12, 2014 -- Frank Soave Buys Amaya Shares

Time

Event

From

To

Description

 

7:55 AM

Flight

JD Rothstein -- Toronto to Sudbury

 

8:20 AM

Arrival

Cheng/Killeen/LT/Tremblay -- arrival in Brazil

 

9:01 AM

Arrival

JD Rothstein -- arrival in Sudbury

 

9:07 AM{*}

News

Bloomberg Article

 

9:45 AM

Call

JD Rothstein

Frank Soave

JD Rothstein (cell) (1 minute, 19 seconds) calls Frank Soave (cell) (voicemail message)

 

10:10 AM

Call

Frank Soave

Frank Soave

Frank Soave (office) (1 minute, 4 seconds) calls Frank Soave (cell)

 

10:15 AM

Email

Frank Soave

JD Rothstein

Re: Thanks

 

10:15 AM{*}

Email

SeekingAlpha

Frank Soave

"Blackstone investor day: Rooting for a correction"

 

10:18 AM

Email

JD Rothstein

Frank Soave

Re: Thanks "Blackrock, blackstone and another huge one behind it"

 

10:35 AM

Trade

Frank Soave bought 5,000 shares for $60,755

 

12:22 PM

News

Amaya Gaming Group Inc. stock (TSX: AYA) is halted by IIROC

 

1:23 PM

SMS

Frank Soave

JD Rothstein

"Wholy [sic] Shit"

 

1:23 PM

SMS

Frank Soave

Jordan Zale

"Did u see AYA"

 

1:24 PM

SMS

Jordan Zale

Frank Soave

"No what happenned [sic]"

 

1:24 PM

SMS

Frank Soave

Jordan Zale

"Up $2"

 

1:25 PM

PIN

Frank Soave

Soave's Assistant (JW)

"How many AYA did I buy today"

 

1:28 PM

PIN

JW

Frank Soave

"5000"

 

1:29 PM

PIN

Frank Soave

JW

"Shit I wish I had bought more"

 

1:30 PM

PIN

JW

Frank Soave

"Smooth move Frank. Where did you get that tip?"

 

2:06 PM

PIN

Frank Soave

JW

"Did it reopen"

 

2:07 PM

PIN

JW

Frank Soave

"Yes bid and. Ask 14.04"

 

2:11 PM

SMS

Frank Soave

Jordan Zale

"What's going on with AYA"

 

2:34 PM

SMS

Jordan Zale

Frank Soave

"Halted"

 

2:36 PM

SMS

Frank Soave

Jordan Zale

"Still"

 

2:37 PM

SMS

Jordan Zale

Frank Soave

"Yes"

 

2:40 PM

PIN

Frank Soave

JW

"Are u sure it's trading"

 

2:41 PM

PIN

JW

Frank Soave

"No it actually not trading ... sorry"

 

3:26 PM

SMS

Frank Soave

Jordan Zale

"What are u hearing? Do u own any?"

 

3:27 PM

SMS

Jordan Zale

Frank Soave

"None"

 

3:30 PM

Flight

JD Rothstein flight from Sudbury to Toronto

 

4:38 PM

Arrival

JD Rothstein -- arrival in Toronto

 

6:01 PM

SMS

Jordan Zale

Frank Soave

"Call me when u have a minute. Tks"

 

9:24 PM

News

Amaya Press Release re: PokerStars transaction

Friday, June 13, 2014 -- Frank Soave Sells Amaya Shares

Time

Event

From

To

Description

 

8:24 AM

Email

Jordan Zale

Frank Soave

Re: you are rich "Pre market on aya is 19.05"

 

Before markets open

Trade

Frank Soave cancels the 5,000 buy trade in his spouse's CASH trading account and buys Amaya for a total of 5,000 shares in three trading accounts: 850 shares in his spouse's CASH account, 2,370 shares in her TFSA account and 1,780 shares in Frank Soave's TFSA account.

 

9:32 AM

Trade

Frank Soave sold all the 1,780 Amaya shares in his TFSA trading account [Limit order at $19.95, filled immediately at $20.00]

 

9:33 AM

Trade

Frank Soave sold all the 2,370 Amaya shares in his spouse's TFSA trading account [Limit order at 9:33:15 at $19.90, changed at 9:33:51 to $19.65, filled by 9:35:22 at average price of $19.73]

 

9:38 AM

SMS

Frank Soave

JD Rothstein

"Thank You"

 

9:42 AM

SMS

Frank Soave

BBT

"AYA" [{*}BBT is a colleague at another CIBC branch office]

 

9:45 AM

SMS

BBT

Frank Soave

"Wow! Clairvoyant or what?"

 

9:50 AM

Email

Frank Soave

KS

Re: Were u long AYA [{*}KS was a business associate of Soave]

 

10:04 AM

Email

Frank Soave

DM

Re: Tell me you are still long AYA!!!!!!!!!!!!! [{*}DM was a business associate of Soave]

 

10:31 AM

Call

JD Rothstein

Frank Soave

Call from Rothstein (office) (1 minute) to Soave (cell) (no record of call received)

 

10:54 AM

SMS

JD Rothstein

Frank Soave

"Unbelievable"

 

12:16 PM

Trade

Frank Soave sold all the 850 Amaya shares in his spouse's Cash trading account [Limit order at $19.77, filled immediately at $19.77]

 

12:18 PM

SMS

Frank Soave

JD Rothstein

"What fund won on the Trade"

 

12:21 PM

Email

JD Rothstein

AHAM gaming analyst (MK)

Re: Which funds got an allotment to Amaya?

 

12:33 PM

Email

MK

JD Rothstein

Re: Which funds got an allotment to Amaya "We are participating but have not been given out [sic] total fill yet"

 

3:54 PM

Trade

JD Rothstein sold all the 700 Amaya shares in the Rothstein [{*}trading] account [Market order filled at $19.77 for $13,829]

 

4:47 PM{*}

Email

Frank Soave

LG (client)

"How did you do with Amaya a gaming today?"

 

4:57 PM{*}

Email

LG

Frank Soave

"Most I ever made on one stock. I did not sell yet. What is your advise [sic]"

 

5:11 PM{*}

Email

Frank Soave

LG

"I had 5000 I sold did u get any of the issue at $20"

 

5:13 PM{*}

Email

Frank Soave

BM

Re: Did u own any Amaya

 

5:17 PM{*}

Email

BM

Frank Soave

Re: Did u own any Amaya: "Yes"

 

5:21 PM{*}

Email

Frank Soave

BM

Re: Did u own any Amaya: "Big"

 

5:22 PM{*}

Email

BM

Frank Soave

Re: Did u own any Amaya: "Not much"

 

5:22 PM{*}

Email

Frank Soave

BM

Re: Did u own any Amaya: "Pro or client I had 5000"

{*} Boldfaced words in the description column are boldfaced in Exhibit 57; the Panel's additions are identified by an asterisk.

 

Chapter 4 -- Cease Trading Orders

Temporary, Permanent & Rescinding Issuer Cease Trading Orders

Company Name

Date of Temporary Order

Date of Hearing

Date of Permanent Order

Date of Lapse/Revoke

 

Rosehearty Energy Inc.

12 May 2015

25 May 2015

25 May 2015

30 January 2019

Failure to File Cease Trade Orders

Company Name

Date of Order

Date of Revocation

 

Abattis Bioceuticals Corp.

01 February 2019

__________

 

Azema Sciences Inc.

04 February 2019

__________

 

Bexar Ventures Inc.

01 February 2019

__________

 

Biosenta Inc.

01 February 2019

__________

 

Braille Energy Systems Inc.

01 February 2019

__________

 

DMG Blockchain Solutions Inc.

01 February 2019

__________

 

Global Gardens Group Inc.

01 February 2019

__________

 

Grand Peak Capital Corp.

01 February 2019

__________

 

Greenshield Explorations Limited

01 February 2019

__________

 

Mag One Products Inc.

01 February 2019

__________

 

Pepcap Resources, Inc.

01 February 2019

__________

 

ProSmart Enterprises Inc.

01 February 2019

__________

 

Silk Road Energy Inc.

01 February 2019

__________

 

Temporary, Permanent & Rescinding Management Cease Trading Orders

Company Name

Date of Order

Date of Lapse

 

Leviathan Cannabis Group Inc.

07 January 2019

04 February 2019

 

LGC Capital Ltd.

30 January 2019

__________

 

Outstanding Management & Insider Cease Trading Orders

Company Name

Date of Order or Temporary Order

Date of Hearing

Date of Permanent Order

Date of Lapse/Expire

Date of Issuer Temporary Order

 

Performance Sports Group Ltd.

19 October 2016

31 October 2016

31 October 2016

__________

__________

Company Name

Date of Order

Date of Lapse

 

Blocplay Entertainment Inc.

04 December 2018

__________

 

LGC Capital Ltd.

30 January 2019

__________

 

Katanga Mining Limited

15 August 2017

__________

 

Leviathan Cannabis Group Inc.

07 January 2019

04 February 2019

 

Chapter 5 -- Rules and Policies

Arrangements Regarding the Access, Collection, Storage and Use of Derivatives Data

ARRANGEMENT REGARDING THE ACCESS, COLLECTION, STORAGE AND USE OF DERIVATIVES DATA

This Arrangement is made as of the 24th day of January 2019 (the "Effective Date").

BETWEEN:

Service NL, Government of Newfoundland and Labrador ("Partner Jurisdiction")

-- and --

Ontario Securities Commission ("OSC")

PURPOSE

The purpose of this Arrangement is to set out the understanding between the Partner Jurisdiction and the OSC with respect to

• the OSC's role in acting as agent for the Partner Jurisdiction for the purposes of accessing, collecting, storing, analysing and reporting on data reported to a recognized trade repository pursuant to Multilateral Instrument 96-101 Trade Repositories and Derivatives Data Reporting ("MI 96-101"), and

• the OSC's use of such data.

DEFINITIONS

For the purposes of this Arrangement:

1(1) "Partner Jurisdiction data" means data related to a local counterparty of the Partner Jurisdiction that is held at a recognized trade repository and is reportable pursuant to Part 3 of MI 96-101, and includes any documents, analysis and reports generated by the OSC for the Partner Jurisdiction exclusively using that data.

1(2) "OSC data" means data related to an Ontario local counterparty that is held at a recognized trade repository that is reportable pursuant to Part 3 of OSC 91-507, and includes any documents, analysis and reports generated by the OSC exclusively using that data and/or using that data commingled with Partner Jurisdiction data as permitted under section 5 of this Arrangement.

APPOINTMENT OF AGENT

2(1) The Partner Jurisdiction appoints the OSC to act as agent of the Partner Jurisdiction for the purpose of accessing, collecting, storing, analysing and reporting on Partner Jurisdiction data.

2(2) The Partner Jurisdiction and OSC will act in compliance with applicable laws in respect of matters under this Arrangement.

SCOPE OF ACTIVITIES UNDERTAKEN ON BEHALF OF THE PARTNER JURISDICTION

3(1) The OSC agrees to access and collect Partner Jurisdiction data from a recognized trade repository and to store the data on behalf of the Partner Jurisdiction.

3(2) The OSC agrees to provide the Partner Jurisdiction with regular market, participant and product reports on the Partner Jurisdiction data, the frequency, content and format of which will be mutually agreed upon from time to time by both parties.

3(3) In the event the Partner Jurisdiction or the OSC wants to make changes to the activities undertaken by the OSC on its behalf, the changes will be discussed and mutually agreed upon in writing by the parties.

3(4) The OSC will not charge fees for the activities undertaken under this Arrangement. In the event that the Partner Jurisdiction requests special or non-standard reports, the customized treatment of data or increased data capabilities, the OSC will determine the incremental costs of undertaking such activities and the parties will agree to a reasonable fee.

INTELLECTUAL PROPERTY

4(1) The Partner Jurisdiction owns and retains all right, title and interest (including intellectual property rights) in and to the Partner Jurisdiction data.

4(2) The OSC owns and retains all right, title and interest (including intellectual property rights) in and to OSC data.

4(3) The OSC may access and use Partner Jurisdiction data to undertake the activities on behalf of the Partner Jurisdiction and as otherwise permitted under Section 5. The OSC will own any data models and the format of any reports it generates for the Partner Jurisdiction under this Arrangement, but not the content.

OSC USE OF PARTNER JURISDICTION DATA AND OSC DATA

5(1) The Partner Jurisdiction agrees that the OSC may access, collect, store, perform quality analysis, commingle and use Partner Jurisdiction data in connection with the fulfillment of its regulatory mandate, including but not limited to market and product analysis, policy development, and systemic risk assessment.

5(2) The Partner Jurisdiction agrees that the OSC may also use and disclose the Partner Jurisdiction data collected hereunder for enforcement purposes where appropriate. In these circumstances, the OSC will provide a minimum of three (3) business days' notice to the Partner Jurisdiction prior to the commencement of any administrative proceedings under the Ontario Securities Act or the Commodity Futures Act, quasi-criminal proceedings or criminal proceedings.

5(3) For greater certainty, no restrictions apply and no reasonable notice is required to be given to the Partner Jurisdiction in respect of the OSC's use of OSC data.

CONFIDENTIALITY AND FREEDOM OF INFORMATION REQUESTS

6(1) Except as may be required or permitted by law, or as contemplated by subsections 5(1) and 5(2), or otherwise with the consent of the Partner Jurisdiction, and subject to what is already public information, the OSC agrees to keep Partner Jurisdiction Data in confidence, including for greater certainty individual transaction data or data that identifies individual counterparties or transactions, both during the period of this Arrangement and at any time after.

6(2) Subject to section 5 and subsection 6(1), the OSC agrees not to disclose Partner Jurisdiction data to any third party without the prior written consent of the Partner Jurisdiction, both during the period of this Arrangement and at any time after.

6(3) The Partner Jurisdiction acknowledges that freedom of information legislation in Ontario applies to and governs all records in the custody or under the control of the OSC. In the event that the OSC receives an information request that relates to Partner Jurisdiction data or enforcement files related to Partner Jurisdiction data, the OSC will notify the Partner Jurisdiction and will not disclose any information related to the request unless required to do so by law.

DATA SECURITY

7(1) The OSC agrees to hold and transmit Partner Jurisdiction data in a secure manner and in accordance with its own standards, policies and procedures.

7(2) The OSC agrees to restrict access to Partner Jurisdiction data to OSC personnel who require access to such data for the purpose of undertaking the activities on behalf of the Partner Jurisdiction in accordance with this Arrangement, or for another regulatory or enforcement purpose permitted under this Arrangement.

7(3) The OSC will advise the Partner Jurisdiction as soon as reasonably possible in the event there is a data security breach related to Partner Jurisdiction data.

TERMINATION

8(1) Any party may terminate its participation in this Arrangement upon giving ninety (90) business days' notice in writing to the other parties.

8(2) Upon termination of this Arrangement, the OSC must transfer and deliver to the Partner Jurisdiction all Partner Jurisdiction data.

8(3) Following termination of this Arrangement and upon the Partner Jurisdiction's written request, the OSC must destroy all Partner Jurisdiction data in its possession or under its control. For greater certainty, the OSC will retain OSC data in accordance with its own records retention requirements.

NOTICE

9(1) Any notice under this Arrangement must be in writing and be delivered personally to the party to whom it is given or sent by courier, by prepaid registered mail, or by electronic mail, addressed as follows:

To the Government of Newfoundland and Labrador:

Superintendent of Securities
Service NL
P.O. Box 8700, St. John's, NL A1B 4i6
Attention: Renee Dyer, Director, Financial Services Regulation Division
Tel: 709-729-4909
E-mail: reneedyer@gov.nl.ca

To the OSC:

Ontario Securities Commission
20 Queen Street W., 22nd Floor
Toronto, ON M5H 3S8
Attention: Kevin Fine, Director of Derivatives
Tel: 416-593-8109
E-mail: kfine@osc.gov.on.ca

EFFECTIVE DATE

10(1) Cooperation in accordance with this Arrangement will begin on the Effective Date provided that the OSC has obtained its endorsement by the applicable Ministry in accordance with the applicable legislation.

Government of Newfoundland and Labrador
Ontario Securities Commission
 
Per: << "Renee Dyer" >>
<< "Maureen Jensen" >>
 
Renee Dyer, Director
Maureen Jensen, Chair
 
Date: 4 Dec 2018
Date: 10 Dec 2018

 

ARRANGEMENT REGARDING THE ACCESS, COLLECTION, STORAGE AND USE OF DERIVATIVES DATA

This Arrangement is made as of the 24th day of January 2019 (the "Effective Date").

BETWEEN:

Prince Edward Island Office of the Superintendent of Securities ("Partner Jurisdiction")

-- and --

Ontario Securities Commission ("OSC")

PURPOSE

The purpose of this Arrangement is to set out the understanding between the Partner Jurisdiction and the OSC with respect to

• the OSC's role in acting as agent for the Partner Jurisdiction for the purposes of accessing, collecting, storing, analysing and reporting on data reported to a recognized trade repository pursuant to Multilateral Instrument 96-101 Trade Repositories and Derivatives Data Reporting ("MI 96-101"), and

• the OSC's use of such data.

DEFINITIONS

For the purposes of this Arrangement:

1(1) "Partner Jurisdiction data" means data related to a local counterparty of the Partner Jurisdiction that is held at a recognized trade repository and is reportable pursuant to Part 3 of MI 96-101, and includes any documents, analysis and reports generated by the OSC for the Partner Jurisdiction exclusively using that data.

1(2) "OSC data" means data related to an Ontario local counterparty that is held at a recognized trade repository that is reportable pursuant to Part 3 of OSC 91-507, and includes any documents, analysis and reports generated by the OSC exclusively using that data and/or using that data commingled with Partner Jurisdiction data as permitted under section 5 of this Arrangement.

APPOINTMENT OF AGENT

2(1) The Partner Jurisdiction appoints the OSC to act as agent of the Partner Jurisdiction for the purpose of accessing, collecting, storing, analysing and reporting on Partner Jurisdiction data.

2(2) The Partner Jurisdiction and OSC will act in compliance with applicable laws in respect of matters under this Arrangement.

SCOPE OF ACTIVITIES UNDERTAKEN ON BEHALF OF THE PARTNER JURISDICTION

3(1) The OSC agrees to access and collect Partner Jurisdiction data from a recognized trade repository and to store the data on behalf of the Partner Jurisdiction.

3(2) The OSC agrees to provide the Partner Jurisdiction with regular market, participant and product reports on the Partner Jurisdiction data, the frequency, content and format of which will be mutually agreed upon from time to time by both parties.

3(3) In the event the Partner Jurisdiction or the OSC wants to make changes to the activities undertaken by the OSC on its behalf, the changes will be discussed and mutually agreed upon in writing by the parties.

3(4) The OSC will not charge fees for the activities undertaken under this Arrangement. In the event that the Partner Jurisdiction requests special or non-standard reports, the customized treatment of data or increased data capabilities, the OSC will determine the incremental costs of undertaking such activities and the parties will agree to a reasonable fee.

INTELLECTUAL PROPERTY

4(1) The Partner Jurisdiction owns and retains all right, title and interest (including intellectual property rights) in and to the Partner Jurisdiction data.

4(2) The OSC owns and retains all right, title and interest (including intellectual property rights) in and to OSC data.

4(3) The OSC may access and use Partner Jurisdiction data to undertake the activities on behalf of the Partner Jurisdiction and as otherwise permitted under Section 5. The OSC will own any data models and the format of any reports it generates for the Partner Jurisdiction under this Arrangement, but not the content.

OSC USE OF PARTNER JURISDICTION DATA AND OSC DATA

5(1) The Partner Jurisdiction agrees that the OSC may access, collect, store, perform quality analysis, commingle and use Partner Jurisdiction data in connection with the fulfillment of its regulatory mandate, including but not limited to market and product analysis, policy development, and systemic risk assessment.

5(2) The Partner Jurisdiction agrees that the OSC may also use and disclose the Partner Jurisdiction data collected hereunder for enforcement purposes where appropriate. In these circumstances, the OSC will provide a minimum of three (3) business days' notice to the Partner Jurisdiction prior to the commencement of any administrative proceedings under the Ontario Securities Act or the Commodity Futures Act, quasi-criminal proceedings or criminal proceedings.

5(3) For greater certainty, no restrictions apply and no reasonable notice is required to be given to the Partner Jurisdiction in respect of the OSC's use of OSC data.

CONFIDENTIALITY AND FREEDOM OF INFORMATION REQUESTS

6(1) Except as may be required or permitted by law, or as contemplated by subsections 5(1) and 5(2), or otherwise with the consent of the Partner Jurisdiction, and subject to what is already public information, the OSC agrees to keep Partner Jurisdiction Data in confidence, including for greater certainty individual transaction data or data that identifies individual counterparties or transactions, both during the period of this Arrangement and at any time after.

6(2) Subject to section 5 and subsection 6(1), the OSC agrees not to disclose Partner Jurisdiction data to any third party without the prior written consent of the Partner Jurisdiction, both during the period of this Arrangement and at any time after.

6(3) The Partner Jurisdiction acknowledges that freedom of information legislation in Ontario applies to and governs all records in the custody or under the control of the OSC. In the event that the OSC receives an information request that relates to Partner Jurisdiction data or enforcement files related to Partner Jurisdiction data, the OSC will notify the Partner Jurisdiction and will not disclose any information related to the request unless required to do so by law.

DATA SECURITY

7(1) The OSC agrees to hold and transmit Partner Jurisdiction data in a secure manner and in accordance with its own standards, policies and procedures.

7(2) The OSC agrees to restrict access to Partner Jurisdiction data to OSC personnel who require access to such data for the purpose of undertaking the activities on behalf of the Partner Jurisdiction in accordance with this Arrangement, or for another regulatory or enforcement purpose permitted under this Arrangement.

7(3) The OSC will advise the Partner Jurisdiction as soon as reasonably possible in the event there is a data security breach related to Partner Jurisdiction data.

TERMINATION

8(1) Any party may terminate its participation in this Arrangement upon giving ninety (90) business days' notice in writing to the other parties.

8(2) Upon termination of this Arrangement, the OSC must transfer and deliver to the Partner Jurisdiction all Partner Jurisdiction data.

8(3) Following termination of this Arrangement and upon the Partner Jurisdiction's written request, the OSC must destroy all Partner Jurisdiction data in its possession or under its control. For greater certainty, the OSC will retain OSC data in accordance with its own records retention requirements.

NOTICE

9(1) Any notice under this Arrangement must be in writing and be delivered personally to the party to whom it is given or sent by courier, by prepaid registered mail, or by electronic mail, addressed as follows:

To the PEIOSS:

Prince Edward Island Office of the Superintendent of Securities
95 Rochford Street, PO Box 2000
Attention: Steve Dowling, Superintendent of Securities
Tel: 902-368-4551
E-mail: sddowling@gov.pe.ca

To the OSC:

Ontario Securities Commission
20 Queen Street W., 22nd Floor
Toronto, ON M5H 3S8
Attention: Kevin Fine, Director of Derivatives
Tel: 416-593-8109
E-mail: kfine@osc.gov.on.ca

EFFECTIVE DATE

10(1) Cooperation in accordance with this Arrangement will begin on the Effective Date provided that the OSC has obtained its endorsement by the applicable Ministry in accordance with the applicable legislation.

Financial and Consumer Services Commission
Ontario Securities Commission
 
Per: << "Steve Dowling" >>
<< "Maureen Jensen" >>
 
Steve Dowling, Superintendent of Securities
Maureen Jensen, Chair
 
Date: 12 Sept 2018
Date: 10 Dec 2018

 

ARRANGEMENT REGARDING THE ACCESS, COLLECTION, STORAGE AND USE OF DERIVATIVES DATA

This Arrangement is made as of the 24th day of January 2019 (the "Effective Date").

BETWEEN:

Office of the Superintendent of Securities, Northwest Territories ("Partner Jurisdiction")

-- and --

Ontario Securities Commission ("OSC")

PURPOSE

The purpose of this Arrangement is to set out the understanding between the Partner Jurisdiction and the OSC with respect to

• the OSC's role in acting as agent for the Partner Jurisdiction for the purposes of accessing, collecting, storing, analysing and reporting on data reported to a recognized trade repository pursuant to Multilateral Instrument 96-101 Trade Repositories and Derivatives Data Reporting ("MI 96-101"), and

• the OSC's use of such data.

DEFINITIONS

For the purposes of this Arrangement:

1(1) "Partner Jurisdiction data" means data related to a local counterparty of the Partner Jurisdiction that is held at a recognized trade repository and is reportable pursuant to Part 3 of MI 96-101, and includes any documents, analysis and reports generated by the OSC for the Partner Jurisdiction exclusively using that data.

1(2) "OSC data" means data related to an Ontario local counterparty that is held at a recognized trade repository that is reportable pursuant to Part 3 of OSC 91-507, and includes any documents, analysis and reports generated by the OSC exclusively using that data and/or using that data commingled with Partner Jurisdiction data as permitted under section 5 of this Arrangement.

APPOINTMENT OF AGENT

2(1) The Partner Jurisdiction appoints the OSC to act as agent of the Partner Jurisdiction for the purpose of accessing, collecting, storing, analysing and reporting on Partner Jurisdiction data.

2(2) The Partner Jurisdiction and OSC will act in compliance with applicable laws in respect of matters under this Arrangement.

SCOPE OF ACTIVITIES UNDERTAKEN ON BEHALF OF THE PARTNER JURISDICTION

3(1) The OSC agrees to access and collect Partner Jurisdiction data from a recognized trade repository and to store the data on behalf of the Partner Jurisdiction.

3(2) The OSC agrees to provide the Partner Jurisdiction with regular market, participant and product reports on the Partner Jurisdiction data, the frequency, content and format of which will be mutually agreed upon from time to time by both parties.

3(3) In the event the Partner Jurisdiction or the OSC wants to make changes to the activities undertaken by the OSC on its behalf, the changes will be discussed and mutually agreed upon in writing by the parties.

3(4) The OSC will not charge fees for the activities undertaken under this Arrangement. In the event that the Partner Jurisdiction requests special or non-standard reports, the customized treatment of data or increased data capabilities, the OSC will determine the incremental costs of undertaking such activities and the parties will agree to a reasonable fee.

INTELLECTUAL PROPERTY

4(1) The Partner Jurisdiction owns and retains all right, title and interest (including intellectual property rights) in and to the Partner Jurisdiction data.

4(2) The OSC owns and retains all right, title and interest (including intellectual property rights) in and to OSC data.

4(3) The OSC may access and use Partner Jurisdiction data to undertake the activities on behalf of the Partner Jurisdiction and as otherwise permitted under Section 5. The OSC will own any data models and the format of any reports it generates for the Partner Jurisdiction under this Arrangement, but not the content.

OSC USE OF PARTNER JURISDICTION DATA AND OSC DATA

5(1) The Partner Jurisdiction agrees that the OSC may access, collect, store, perform quality analysis, commingle and use Partner Jurisdiction data in connection with the fulfillment of its regulatory mandate, including but not limited to market and product analysis, policy development, and systemic risk assessment.

5(2) The Partner Jurisdiction agrees that the OSC may also use and disclose the Partner Jurisdiction data collected hereunder for enforcement purposes where appropriate. In these circumstances, the OSC will provide a minimum of three (3) business days' notice to the Partner Jurisdiction prior to the commencement of any administrative proceedings under the Ontario Securities Act or the Commodity Futures Act, quasi-criminal proceedings or criminal proceedings.

5(3) For greater certainty, no restrictions apply and no reasonable notice is required to be given to the Partner Jurisdiction in respect of the OSC's use of OSC data.

CONFIDENTIALITY AND FREEDOM OF INFORMATION REQUESTS

6(1) Except as may be required or permitted by law, or as contemplated by subsections 5(1) and 5(2), or otherwise with the consent of the Partner Jurisdiction, and subject to what is already public information, the OSC agrees to keep Partner Jurisdiction Data in confidence, including for greater certainty individual transaction data or data that identifies individual counterparties or transactions, both during the period of this Arrangement and at any time after.

6(2) Subject to section 5 and subsection 6(1), the OSC agrees not to disclose Partner Jurisdiction data to any third party without the prior written consent of the Partner Jurisdiction, both during the period of this Arrangement and at any time after.

6(3) The Partner Jurisdiction acknowledges that freedom of information legislation in Ontario applies to and governs all records in the custody or under the control of the OSC. In the event that the OSC receives an information request that relates to Partner Jurisdiction data or enforcement files related to Partner Jurisdiction data, the OSC will notify the Partner Jurisdiction and will not disclose any information related to the request unless required to do so by law.

DATA SECURITY

7(1) The OSC agrees to hold and transmit Partner Jurisdiction data in a secure manner and in accordance with its own standards, policies and procedures.

7(2) The OSC agrees to restrict access to Partner Jurisdiction data to OSC personnel who require access to such data for the purpose of undertaking the activities on behalf of the Partner Jurisdiction in accordance with this Arrangement, or for another regulatory or enforcement purpose permitted under this Arrangement.

7(3) The OSC will advise the Partner Jurisdiction as soon as reasonably possible in the event there is a data security breach related to Partner Jurisdiction data.

TERMINATION

8(1) Any party may terminate its participation in this Arrangement upon giving ninety (90) business days' notice in writing to the other parties.

8(2) Upon termination of this Arrangement, the OSC must transfer and deliver to the Partner Jurisdiction all Partner Jurisdiction data.

8(3) Following termination of this Arrangement and upon the Partner Jurisdiction's written request, the OSC must destroy all Partner Jurisdiction data in its possession or under its control. For greater certainty, the OSC will retain OSC data in accordance with its own records retention requirements.

NOTICE

9(1) Any notice under this Arrangement must be in writing and be delivered personally to the party to whom it is given or sent by courier, by prepaid registered mail, or by electronic mail, addressed as follows:

To the Office of the Superintendent of Securities, Northwest Territories:

Office of the Superintendent of Securities, Northwest Territories
GNWT Department of Justice, Legal Registries Division
PO Box 1320
Yellowknife, NT
X1A 2L9
Attention: Thomas W. Hall, Superintendent of Securities
Tel: 867-767-9305
E-mail: Tom_Hall@gov.nt.ca

To the OSC:

Ontario Securities Commission
20 Queen Street W., 22nd Floor
Toronto, ON M5H 3S8
Attention: Kevin Fine, Director of Derivatives
Tel: 416-593-8109
E-mail: kfine@osc.gov.on.ca

EFFECTIVE DATE

10(1) Cooperation in accordance with this Arrangement will begin on the Effective Date provided that the OSC has obtained its endorsement by the applicable Ministry in accordance with the applicable legislation.

Office of the Superintendent of Securities, Northwest Territories
Ontario Securities Commission
 
Per: << "Thomas W. Hall" >>
<< "Maureen Jensen" >>
 
Thomas W. Hall, Superintendent of Securities
Maureen Jensen, Chair
 
Date: 31 Aug 2018
Date: 10 Dec 2018

 

ARRANGEMENT REGARDING THE ACCESS, COLLECTION, STORAGE AND USE OF DERIVATIVES DATA

This Arrangement is made as of the 24th day of January 2019 (the "Effective Date").

BETWEEN:

Office of the Superintendent of Securities, Nunavut ("Partner Jurisdiction")

-- and --

Ontario Securities Commission ("OSC")

PURPOSE

The purpose of this Arrangement is to set out the understanding between the Partner Jurisdiction and the OSC with respect to

• the OSC's role in acting as agent for the Partner Jurisdiction for the purposes of accessing, collecting, storing, analysing and reporting on data reported to a recognized trade repository pursuant to Multilateral Instrument 96-101 Trade Repositories and Derivatives Data Reporting ("MI 96-101"), and

• the OSC's use of such data.

DEFINITIONS

For the purposes of this Arrangement:

1(1) "Partner Jurisdiction data" means data related to a local counterparty of the Partner Jurisdiction that is held at a recognized trade repository and is reportable pursuant to Part 3 of MI 96-101, and includes any documents, analysis and reports generated by the OSC for the Partner Jurisdiction exclusively using that data.

1(2) "OSC data" means data related to an Ontario local counterparty that is held at a recognized trade repository that is reportable pursuant to Part 3 of OSC 91-507, and includes any documents, analysis and reports generated by the OSC exclusively using that data and/or using that data commingled with Partner Jurisdiction data as permitted under section 5 of this Arrangement.

APPOINTMENT OF AGENT

2(1) The Partner Jurisdiction appoints the OSC to act as agent of the Partner Jurisdiction for the purpose of accessing, collecting, storing, analysing and reporting on Partner Jurisdiction data.

2(2) The Partner Jurisdiction and OSC will act in compliance with applicable laws in respect of matters under this Arrangement.

SCOPE OF ACTIVITIES UNDERTAKEN ON BEHALF OF THE PARTNER JURISDICTION

3(1) The OSC agrees to access and collect Partner Jurisdiction data from a recognized trade repository and to store the data on behalf of the Partner Jurisdiction.

3(2) The OSC agrees to provide the Partner Jurisdiction with regular market, participant and product reports on the Partner Jurisdiction data, the frequency, content and format of which will be mutually agreed upon from time to time by both parties.

3(3) In the event the Partner Jurisdiction or the OSC wants to make changes to the activities undertaken by the OSC on its behalf, the changes will be discussed and mutually agreed upon in writing by the parties.

3(4) The OSC will not charge fees for the activities undertaken under this Arrangement. In the event that the Partner Jurisdiction requests special or non-standard reports, the customized treatment of data or increased data capabilities, the OSC will determine the incremental costs of undertaking such activities and the parties will agree to a reasonable fee.

INTELLECTUAL PROPERTY

4(1) The Partner Jurisdiction owns and retains all right, title and interest (including intellectual property rights) in and to the Partner Jurisdiction data.

4(2) The OSC owns and retains all right, title and interest (including intellectual property rights) in and to OSC data.

4(3) The OSC may access and use Partner Jurisdiction data to undertake the activities on behalf of the Partner Jurisdiction and as otherwise permitted under Section 5. The OSC will own any data models and the format of any reports it generates for the Partner Jurisdiction under this Arrangement, but not the content.

OSC USE OF PARTNER JURISDICTION DATA AND OSC DATA

5(1) The Partner Jurisdiction agrees that the OSC may access, collect, store, perform quality analysis, commingle and use Partner Jurisdiction data in connection with the fulfillment of its regulatory mandate, including but not limited to market and product analysis, policy development, and systemic risk assessment.

5(2) The Partner Jurisdiction agrees that the OSC may also use and disclose the Partner Jurisdiction data collected hereunder for enforcement purposes where appropriate. In these circumstances, the OSC will provide a minimum of three (3) business days' notice to the Partner Jurisdiction prior to the commencement of any administrative proceedings under the Ontario Securities Act or the Commodity Futures Act, quasi-criminal proceedings or criminal proceedings.

5(3) For greater certainty, no restrictions apply and no reasonable notice is required to be given to the Partner Jurisdiction in respect of the OSC's use of OSC data.

CONFIDENTIALITY AND FREEDOM OF INFORMATION REQUESTS

6(1) Except as may be required or permitted by law, or as contemplated by subsections 5(1) and 5(2), or otherwise with the consent of the Partner Jurisdiction, and subject to what is already public information, the OSC agrees to keep Partner Jurisdiction Data in confidence, including for greater certainty individual transaction data or data that identifies individual counterparties or transactions, both during the period of this Arrangement and at any time after.

6(2) Subject to section 5 and subsection 6(1), the OSC agrees not to disclose Partner Jurisdiction data to any third party without the prior written consent of the Partner Jurisdiction, both during the period of this Arrangement and at any time after.

6(3) The Partner Jurisdiction acknowledges that freedom of information legislation in Ontario applies to and governs all records in the custody or under the control of the OSC. In the event that the OSC receives an information request that relates to Partner Jurisdiction data or enforcement files related to Partner Jurisdiction data, the OSC will notify the Partner Jurisdiction and will not disclose any information related to the request unless required to do so by law.

DATA SECURITY

7(1) The OSC agrees to hold and transmit Partner Jurisdiction data in a secure manner and in accordance with its own standards, policies and procedures.

7(2) The OSC agrees to restrict access to Partner Jurisdiction data to OSC personnel who require access to such data for the purpose of undertaking the activities on behalf of the Partner Jurisdiction in accordance with this Arrangement, or for another regulatory or enforcement purpose permitted under this Arrangement.

7(3) The OSC will advise the Partner Jurisdiction as soon as reasonably possible in the event there is a data security breach related to Partner Jurisdiction data.

TERMINATION

8(1) Any party may terminate its participation in this Arrangement upon giving ninety (90) business days' notice in writing to the other parties.

8(2) Upon termination of this Arrangement, the OSC must transfer and deliver to the Partner Jurisdiction all Partner Jurisdiction data.

8(3) Following termination of this Arrangement and upon the Partner Jurisdiction's written request, the OSC must destroy all Partner Jurisdiction data in its possession or under its control. For greater certainty, the OSC will retain OSC data in accordance with its own records retention requirements.

NOTICE

9(1) Any notice under this Arrangement must be in writing and be delivered personally to the party to whom it is given or sent by courier, by prepaid registered mail, or by electronic mail, addressed as follows:

To the OSSN:

Office of the Superintendent of Securities, Nunavut
P.O. Box 1000, Station 570
Iqaluit, Nunavut, X0A0H0
Attention: Jeff Mason, Director, Legal Registries
Tel: 867-975-6591
E-mail: jmason@gov.nu.ca

To the OSC:

Ontario Securities Commission
20 Queen Street W., 22nd Floor
Toronto, ON M5H 3S8
Attention: Kevin Fine, Director of Derivatives
Tel: 416-593-8109
E-mail: kfine@osc.gov.on.ca

EFFECTIVE DATE

10(1) Cooperation in accordance with this Arrangement will begin on the Effective Date provided that the OSC has obtained its endorsement by the applicable Ministry in accordance with the applicable legislation.

Office of the Superintendent of Securities, Nunavut
Ontario Securities Commission
 
Per: << "Jeff Mason" >>
<< "Maureen Jensen" >>
 
Jeff Mason, Chair
Maureen Jensen, Chair
 
Date: 7 Sept 2018
Date: 10 Dec 2018

 

ARRANGEMENT REGARDING THE ACCESS, COLLECTION, STORAGE AND USE OF DERIVATIVES DATA

This Arrangement is made as of the 24th day of January 2019 (the "Effective Date").

BETWEEN:

Superintendent of Securities, Yukon ("Partner Jurisdiction")

-- and --

Ontario Securities Commission ("OSC")

PURPOSE

The purpose of this Arrangement is to set out the understanding between the Partner Jurisdiction and the OSC with respect to

• the OSC's role in acting as agent for the Partner Jurisdiction for the purposes of accessing, collecting, storing, analysing and reporting on data reported to a recognized trade repository pursuant to Multilateral Instrument 96-101 Trade Repositories and Derivatives Data Reporting ("MI 96-101"), and

• the OSC's use of such data.

DEFINITIONS

For the purposes of this Arrangement:

1(1) "Partner Jurisdiction data" means data related to a local counterparty of the Partner Jurisdiction that is held at a recognized trade repository and is reportable pursuant to Part 3 of MI 96-101, and includes any documents, analysis and reports generated by the OSC for the Partner Jurisdiction exclusively using that data.

1(2) "OSC data" means data related to an Ontario local counterparty that is held at a recognized trade repository that is reportable pursuant to Part 3 of OSC 91-507, and includes any documents, analysis and reports generated by the OSC exclusively using that data and/or using that data commingled with Partner Jurisdiction data as permitted under section 5 of this Arrangement.

APPOINTMENT OF AGENT

2(1) The Partner Jurisdiction appoints the OSC to act as agent of the Partner Jurisdiction for the purpose of accessing, collecting, storing, analysing and reporting on Partner Jurisdiction data.

2(2) The Partner Jurisdiction and OSC will act in compliance with applicable laws in respect of matters under this Arrangement.

SCOPE OF ACTIVITIES UNDERTAKEN ON BEHALF OF THE PARTNER JURISDICTION

3(1) The OSC agrees to access and collect Partner Jurisdiction data from a recognized trade repository and to store the data on behalf of the Partner Jurisdiction.

3(2) The OSC agrees to provide the Partner Jurisdiction with regular market, participant and product reports on the Partner Jurisdiction data, the frequency, content and format of which will be mutually agreed upon from time to time by both parties.

3(3) In the event the Partner Jurisdiction or the OSC wants to make changes to the activities undertaken by the OSC on its behalf, the changes will be discussed and mutually agreed upon in writing by the parties.

3(4) The OSC will not charge fees for the activities undertaken under this Arrangement. In the event that the Partner Jurisdiction requests special or non-standard reports, the customized treatment of data or increased data capabilities, the OSC will determine the incremental costs of undertaking such activities and the parties will agree to a reasonable fee.

INTELLECTUAL PROPERTY

4(1) The Partner Jurisdiction owns and retains all right, title and interest (including intellectual property rights) in and to the Partner Jurisdiction data.

4(2) The OSC owns and retains all right, title and interest (including intellectual property rights) in and to OSC data.

4(3) The OSC may access and use Partner Jurisdiction data to undertake the activities on behalf of the Partner Jurisdiction and as otherwise permitted under Section 5. The OSC will own any data models and the format of any reports it generates for the Partner Jurisdiction under this Arrangement, but not the content.

OSC USE OF PARTNER JURISDICTION DATA AND OSC DATA

5(1) The Partner Jurisdiction agrees that the OSC may access, collect, store, perform quality analysis, commingle and use Partner Jurisdiction data in connection with the fulfillment of its regulatory mandate, including but not limited to market and product analysis, policy development, and systemic risk assessment.

5(2) The Partner Jurisdiction agrees that the OSC may also use and disclose the Partner Jurisdiction data collected hereunder for enforcement purposes where appropriate. In these circumstances, the OSC will provide a minimum of three (3) business days' notice to the Partner Jurisdiction prior to the commencement of any administrative proceedings under the Ontario Securities Act or the Commodity Futures Act, quasi-criminal proceedings or criminal proceedings.

5(3) For greater certainty, no restrictions apply and no reasonable notice is required to be given to the Partner Jurisdiction in respect of the OSC's use of OSC data.

CONFIDENTIALITY AND FREEDOM OF INFORMATION REQUESTS

6(1) Except as may be required or permitted by law, or as contemplated by subsections 5(1) and 5(2), or otherwise with the consent of the Partner Jurisdiction, and subject to what is already public information, the OSC agrees to keep Partner Jurisdiction Data in confidence, including for greater certainty individual transaction data or data that identifies individual counterparties or transactions, both during the period of this Arrangement and at any time after.

6(2) Subject to section 5 and subsection 6(1), the OSC agrees not to disclose Partner Jurisdiction data to any third party without the prior written consent of the Partner Jurisdiction, both during the period of this Arrangement and at any time after.

6(3) The Partner Jurisdiction acknowledges that freedom of information legislation in Ontario applies to and governs all records in the custody or under the control of the OSC. In the event that the OSC receives an information request that relates to Partner Jurisdiction data or enforcement files related to Partner Jurisdiction data, the OSC will notify the Partner Jurisdiction and will not disclose any information related to the request unless required to do so by law.

DATA SECURITY

7(1) The OSC agrees to hold and transmit Partner Jurisdiction data in a secure manner and in accordance with its own standards, policies and procedures.

7(2) The OSC agrees to restrict access to Partner Jurisdiction data to OSC personnel who require access to such data for the purpose of undertaking the activities on behalf of the Partner Jurisdiction in accordance with this Arrangement, or for another regulatory or enforcement purpose permitted under this Arrangement.

7(3) The OSC will advise the Partner Jurisdiction as soon as reasonably possible in the event there is a data security breach related to Partner Jurisdiction data.

TERMINATION

8(1) Any party may terminate its participation in this Arrangement upon giving ninety (90) business days' notice in writing to the other parties.

8(2) Upon termination of this Arrangement, the OSC must transfer and deliver to the Partner Jurisdiction all Partner Jurisdiction data.

8(3) Following termination of this Arrangement and upon the Partner Jurisdiction's written request, the OSC must destroy all Partner Jurisdiction data in its possession or under its control. For greater certainty, the OSC will retain OSC data in accordance with its own records retention requirements.

NOTICE

9(1) Any notice under this Arrangement must be in writing and be delivered personally to the party to whom it is given or sent by courier, by prepaid registered mail, or by electronic mail, addressed as follows:

To the Superintendent of Securities, Yukon:

The Office of the Yukon Superintendent of Securities
307 Black Street
Whitehorse, Yukon, Y1A 2N1
Attention: Rhonda Horte, Deputy Superintendent of Securities
Tel: (867) 667-5466
E-mail: Rhonda.Horte@gov.yk.ca

To the OSC:

Ontario Securities Commission
20 Queen Street W., 22nd Floor
Toronto, ON M5H 3S8
Attention: Kevin Fine, Director of Derivatives
Tel: 416-593-8109
E-mail: kfine@osc.gov.on.ca

EFFECTIVE DATE

10(1) Cooperation in accordance with this Arrangement will begin on the Effective Date provided that the OSC has obtained its endorsement by the applicable Ministry in accordance with the applicable legislation.

Superintendent of Securities, Yukon
Ontario Securities Commission
 
Per: << "Fred Pretorius" >>
<< "Maureen Jensen" >>
 
Fred Pretorius, Superintendent of Securities
Maureen Jensen, Chair
 
Date: 24 Aug 2018
Date: 10 Dec 2018

 

Chapter 11 -- IPOs, New Issues and Secondary Financings

INVESTMENT FUNDS

Issuer Name:

RBC Private Canadian Growth and Income Equity Pool
Principal Regulator -- Ontario

Type and Date:

Amendment #4 to Final Simplified Prospectus dated January 31, 2019
Received on January 31, 2019

Offering Price and Description:

Series F and Series O units

Underwriter(s) or Distributor(s):

RBC Global Asset Management Inc. (other than Series A)
Royal Mutual Funds Inc. (Series A)
Royal Mutual Funds Inc./RBC Direct Investing Inc.
The Royal Trust Company
RBC Dominion Securities Inc.
Phillips, Hager & North Investment Funds Ltd.

Promoter(s):

RBC Global Asset Management Inc. (other than Series A)

Project #2774740

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

BMO Balanced Yield Plus ETF Portfolio
BMO Fixed Income Yield Plus ETF Portfolio
BMO Laddered Corporate Bond Fund
Principal Regulator -- Ontario

Type and Date:

Amendment #3 to Final Simplified Prospectus dated January 28, 2019
Received on January 29, 2019

Offering Price and Description:

-

Underwriter(s) or Distributor(s):

BMO Investments Inc.

Promoter(s):

BMO Investments Inc.

Project #2744768

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Brompton Split Banc Corp.
Principal Regulator -- Ontario

Type and Date:

Preliminary Shelf Prospectus (NI 44-102) dated January 29, 2019
NP 11-202 Preliminary Receipt dated January 30, 2019

Offering Price and Description:

Maximum: $300,000,000
Preferred Shares: $10.00 and Class A Shares: $13.12.

Underwriter(s) or Distributor(s):

N/A

Promoter(s):

N/A

Project #2868784

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Canopy Rivers Inc.
Principal Regulator -- Ontario

Type and Date:

Preliminary Short Form Prospectus (NI 44-101) dated
Received on February 4, 2019

Offering Price and Description:

-

Underwriter(s) or Distributor(s):

-

Promoter(s):

-

Project #2871197

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Evolve Blockchain ETF
Principal Regulator -- Ontario

Type and Date:

Amendment #1 to Final Long Form Prospectus dated January 30, 2019
Received on February 1, 2019

Offering Price and Description:

-

Underwriter(s) or Distributor(s):

N/A

Promoter(s):

Evolve Funds Group Inc.

Project #2725272

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Exemplar Tactical Corporate Bond Fund
Principal Regulator -- Ontario

Type and Date:

Amendment #2 to Final Simplified Prospectus dated January 31, 2019
Received on February 4, 2019

Offering Price and Description:

-

Underwriter(s) or Distributor(s):

N/A

Promoter(s):

Arrow Capital Management Inc.

Project #2780252

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Franklin Bissett Canadian Equity Fund
Franklin Bissett Microcap Fund
Principal Regulator -- Ontario

Type and Date:

Amendment #4 to the Annual Information Form dated February 4, 2019
Received on February 4, 2019

Offering Price and Description:

-

Underwriter(s) or Distributor(s):

Franklin Templeton Investments Corp.
Bissett Investment Management, a division of Franklin Templeton Investments Corp.

Promoter(s):

N/A

Project #2758148

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Lorica Canadian Fixed Income Fund (formerly Marquest Canadian Fixed Income Fund)
Principal Regulator -- Ontario

Type and Date:

Amended and Restated to Final Simplified Prospectus dated January 28, 2019
Received on January 29, 2019

Offering Price and Description:

-

Underwriter(s) or Distributor(s):

N/A

Promoter(s):

N/A

Project #2864971

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Sphere FTSE Europe Sustainable Yield Index ETF
Sphere FTSE Canada Sustainable Yield Index ETF
Principal Regulator -- Ontario

Type and Date:

Amendment #1 to Final Long Form Prospectus dated January 30, 2019
Received on February 1, 2019

Offering Price and Description:

-

Underwriter(s) or Distributor(s):

N/A

Promoter(s):

N/A

Project #2736046

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Timbercreek Global Real Estate Income Fund
Principal Regulator -- Ontario

Type and Date:

Amended and Restated to Final Simplified Prospectus dated January 24, 2019
Received on January 30, 2019

Offering Price and Description:

-

Underwriter(s) or Distributor(s):

N/A

Promoter(s):

N/A

Project #2782123

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

AGFiQ Enhanced Core Canadian Equity ETF (previously, QuantShares Enhanced Core Canadian Equity ETF)
AGFiQ Enhanced Core Emerging Markets Equity ETF (previously, QuantShares Enhanced Core Emerging Markets Equity ETF)
AGFiQ Enhanced Core Global Multi-Sector Bond ETF
AGFiQ Enhanced Core International Equity ETF (previously, QuantShares Enhanced Core International Equity ETF)
AGFiQ Enhanced Core US Equity ETF (previously, QuantShares Enhanced Core US Equity ETF)
AGFiQ Enhanced Global ESG Factors ETF
AGFiQ Enhanced Global Infrastructure ETF
AGFiQ Global Equity Rotation ETF (previously, QuantShares Global Equity Rotation ETF)
AGFiQ MultiAsset Allocation ETF (previously, QuantShares MultiAsset Allocation ETF)
AGFiQ MultiAsset Income Allocation ETF (previously, QuantShares MultiAsset Income Allocation ETF)
Principal Regulator -- Ontario

Type and Date:

Final Long Form Prospectus dated January 31, 2019
NP 11-202 Receipt dated February 1, 2019

Offering Price and Description:

units @ net asset value

Underwriter(s) or Distributor(s):

N/A

Promoter(s):

N/A

Project #2857713

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Barometer Disciplined Leadership Balanced Fund
Barometer Disciplined Leadership Equity Fund
Barometer Disciplined Leadership Tactical Income Growth Fund
Principal Regulator -- Ontario

Type and Date:

Final Simplified Prospectus dated January 25, 2019
NP 11-202 Receipt dated January 31, 2019

Offering Price and Description:

Class A, F and I units @ net asset value

Underwriter(s) or Distributor(s):

N/A

Promoter(s):

N/A

Project #2858083

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

RBC Private Canadian Growth and Income Equity Pool
Principal Regulator -- Ontario

Type and Date:

Amendment #4 to Final Simplified Prospectus dated January 31, 2019
NP 11-202 Receipt dated February 4, 2019

Offering Price and Description:

Series F and Series O units

Underwriter(s) or Distributor(s):

RBC Global Asset Management Inc. (other than Series A)
Royal Mutual Funds Inc. (Series A)
Royal Mutual Funds Inc./RBC Direct Investing Inc.
The Royal Trust Company
RBC Dominion Securities Inc.
Phillips, Hager & North Investment Funds Ltd.

Promoter(s):

RBC Global Asset Management Inc. (other than Series A)

Project #2774740

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

BMO Balanced Yield Plus ETF Portfolio
BMO Fixed Income Yield Plus ETF Portfolio
BMO Laddered Corporate Bond Fund
Principal Regulator -- Ontario

Type and Date:

Amendment #3 to Final Simplified Prospectus dated January 28, 2019
NP 11-202 Receipt dated February 1, 2019

Offering Price and Description:

-

Underwriter(s) or Distributor(s):

BMO Investments Inc.

Promoter(s):

BMO Investments Inc.

Project #2744768

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

CMP 2019 Resource Limited Partnership
Principal Regulator -- Ontario

Type and Date:

Final Long Form Prospectus dated January 29, 2019
NP 11-202 Receipt dated January 31, 2019

Offering Price and Description:

Limited partnership units @ net asset value

Underwriter(s) or Distributor(s):

Scotia Capital Inc.
CIBC World Markets Inc.
National Bank Financial Inc.
RBC Dominion Securities Inc.
BMO Nesbitt Burns Inc.
TD Securities Inc.
Industrial Alliance Securities Inc.
Echelon Wealth Partners Inc.
Canaccord Genuity Corp.
Desjardins Securities Inc.
Raymond James Ltd.

Promoter(s):

Goodman & Company, Investment Counsel Inc.

Project #2857342

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

EHP Guardian Alternative Fund
EHP Advantage Alternative Fund
EHP Guardian International Alternative Fund
EHP Advantage International Alternative Fund
EHP Select Alternative Fund
EHP Global Arbitrage Alternative Fund
Principal Regulator -- Ontario

Type and Date:

Amended and Restated to Final Simplified Prospectus dated January 1, 2019
NP 11-202 Receipt dated February 1, 2019

Offering Price and Description:

-

Underwriter(s) or Distributor(s):

N/A

Promoter(s):

EdgeHill Partners

Project #2786290

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Empire Life Dividend Growth Mutual Fund
Empire Life Emblem Aggressive Growth Portfolio
Empire Life Emblem Balanced Portfolio
Empire Life Emblem Conservative Portfolio
Empire Life Emblem Diversified Income Portfolio
Empire Life Emblem Growth Portfolio
Empire Life Emblem Moderate Growth Portfolio
Empire Life Monthly Income Mutual Fund
Principal Regulator -- Ontario

Type and Date:

Final Simplified Prospectus dated January 29, 2019
NP 11-202 Receipt dated February 4, 2019

Offering Price and Description:

-

Underwriter(s) or Distributor(s):

N/A

Promoter(s):

N/A

Project #2857840

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Franklin FTSE Canada All Cap Index ETF
Franklin FTSE Europe ex U.K. Index ETF
Franklin FTSE Japan Index ETF
Franklin FTSE U.S. Index ETF
Principal Regulator -- Ontario

Type and Date:

Final Long Form Prospectus dated February 1, 2019
NP 11-202 Receipt dated February 4, 2019

Offering Price and Description:

Units @ net asset value

Underwriter(s) or Distributor(s):

N/A

Promoter(s):

Franklin Templeton Investments Corp

Project #2854744

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Mackenzie Credit Absolute Return Fund
Mackenzie Global Long/Short Equity Fund
Mackenzie Global Macro Fund
Principal Regulator -- Ontario

Type and Date:

Final Simplified Prospectus dated January 31, 2019
NP 11-202 Receipt dated February 1, 2019

Offering Price and Description:

Series A, F, FB, O, PW, PWFB and PWX units

Underwriter(s) or Distributor(s):

N/A

Promoter(s):

Mackenzie Financial Corporation

Project #2853423

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Ninepoint 2019 Flow-Through Limited Partnership
Principal Regulator -- Ontario

Type and Date:

Final Long Form Prospectus dated January 29, 2019
NP 11-202 Receipt dated January 30, 2019

Offering Price and Description:

Maximum: $50,000,000 -- 2,000,000 Limited Partnership Units
Minimum: $5,000,000 -- 200,000 -- Limited Partnership Units
Price per Unit: $25

Underwriter(s) or Distributor(s):

RBC Dominion Securities Inc.
CIBC World Markets Inc.
TD Securities Inc.
National Bank Financial Inc.
BMO Nesbitt Burns Inc.
Scotia Capital Inc.
GMP Securities L.P.
Industrial Alliance Securities Inc.
Manulife Securities Incorporated
Raymond James Ltd.
Canaccord Genuity Corp.
Desjardins Securities Inc.
Echelon Wealth Partners Inc.

Promoter(s):

Ninepoint 2019 Corporation

Project #2858073

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

 

NON-INVESTMENT FUNDS

Issuer Name:

Buckhaven Capital Corp.
Principal Regulator -- British Columbia

Type and Date:

Preliminary CPC Prospectus dated January 30, 2019
NP 11-202 Preliminary Receipt dated January 31, 2019

Offering Price and Description:

OFFERING: $322,500.00 (2,150,000 COMMON SHARES)
Price: $0.15 per Common Share

Underwriter(s) or Distributor(s):

Haywood Securities Inc.

Promoter(s):

Murray Sinclair & Robert Buchan

Project #2870019

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Chemistree Technology Inc. (Formerly Whattozee Networks Inc.)
Principal Regulator -- British Columbia

Type and Date:

Preliminary Short Form Prospectus dated February 1, 2019
Received on February 4, 2019

Offering Price and Description:

Up to $[*] 10% Unsecured Convertible Debenture Units
Price $1,000.00 per Convertible Debenture Unit

Underwriter(s) or Distributor(s):

-

Promoter(s):

-

Project #2871072

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Euro Sun Mining Inc. (formerly Carpathian Gold Inc.)
Principal Regulator -- Ontario

Type and Date:

Preliminary Short Form Prospectus dated January 29, 2019
NP 11-202 Preliminary Receipt dated January 29, 2019

Offering Price and Description:

Up To $10,000,000.00
Up To * Units
PRICE: $* PER UNIT

Underwriter(s) or Distributor(s):

BMO Nesbitt Burns Inc.
Canaccord Genuity Corp
GMP Securities L.P.
Haywood Securities Inc..

Promoter(s):

-

Project #2868578

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Euro Sun Mining Inc. (formerly Carpathian Gold Inc.)
Principal Regulator -- Ontario

Type and Date:

Amendment #1 dated January 29, 2019 to Preliminary Short Form Prospectus dated January 29, 2019
NP 11-202 Preliminary Receipt dated January 30, 2019

Offering Price and Description:

Up To $10,000,000.00
Up To 25,000,000 Units
PRICE: $0.40 PER UNIT

Underwriter(s) or Distributor(s):

BMO Nesbitt Burns Inc.
Canaccord Genuity Corp
GMP Securities L.P.
Haywood Securities Inc..

Promoter(s):

-

Project #2868578

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

The Alkaline Water Company Inc.
Principal Regulator -- British Columbia

Type and Date:

Preliminary Prospectus -- MJDS dated January 30, 2019
NP 11-202 Preliminary Receipt dated January 31, 2019

Offering Price and Description:

US$50,000,000.00
Common Stock
Preferred Stock
Debt Securities
Warrants
Subscription Receipts
Units

Underwriter(s) or Distributor(s):

-

Promoter(s):

-

Project #2870082

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Alphanco Venture Corp.
Principal Regulator -- British Columbia

Type and Date:

Final CPC Prospectus dated January 25, 2019
NP 11-202 Receipt dated January 30, 2019

Offering Price and Description:

Offering: $400,000.00 -- 4,000,000 Common Shares
Price: $0.10 per Common Share

Underwriter(s) or Distributor(s):

Canaccord Genuity Corp.

Promoter(s):

Joanne Yan

Project #2859020

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Bond Resources Inc.
Principal Regulator -- British Columbia

Type and Date:

Final Long Form Prospectus dated February 1, 2019
NP 11-202 Receipt dated February 1, 2019

Offering Price and Description:

Offering of $350,000.00
1,750,000 Shares at $0.20 per Share

Underwriter(s) or Distributor(s):

Mackie Research Capital Corporation

Promoter(s):

Robert Eadie
Gary Arca

Project #2839457

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Hampton Bay Capital Inc.
Principal Regulator -- Ontario

Type and Date:

Final CPC Prospectus dated January 29, 2019
NP 11-202 Receipt dated January 31, 2019

Offering Price and Description:

Minimum Offering: $300,000.00 (3,000,000 Common Shares)
Maximum Offering: $800,000.00 (8,000,000 Common Shares)
Price: $0.10 per Offered Share

Underwriter(s) or Distributor(s):

Echelon Wealth Partners Inc.

Promoter(s):

Jeremy Edelman

Project #2841297

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Issuer Name:

Heritage Cannabis Holdings Corp. (formerly Umbral Energy Corp.)
Principal Regulator -- British Columbia

Type and Date:

Final Short Form Prospectus dated January 30, 2019
NP 11-202 Receipt dated February 1, 2019

Offering Price and Description:

$7,500,000.00 -- 30,000,000 Units Issuable upon Exercise or Deemed Exercise
of 30,000,000 Special Warrants

Underwriter(s) or Distributor(s):

Cormack Securities Inc.
Canaccord Genuity Corp.

Promoter(s):

-

Project #2855242

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

 

Chapter 12 -- Registrations

Registrants

Type

Company

Category of Registration

Effective Date

 

New Registration

Durham Asset Management Inc.

Investment Fund Manager, Portfolio Manager and Exempt Market Dealer

January 29, 2019

 

New Registration

Clearpool Execution Services (Canada) Limited

Investment Dealer

February 1, 2019

 

Chapter 13 -- SROs, Marketplaces, Clearing Agencies and Trade Repositories

TSX Inc. -- Dark Trading Enhancements -- Notice of Approval

TSX INC.

NOTICE OF APPROVAL

DARK TRADING ENHANCEMENTS

In accordance with the Process for the Review and Approval of the Information Contained in Form 21-101F1 and the Exhibits Thereto, TSX Inc. (TSX) has adopted, and the Ontario Securities Commission has approved, amendments to the TSX Rule Book to reflect enhancements to the Market on Close facility operated by TSX (the Amendments).

Summary of the Amendments

Rule 1-101 of the TSX Rule Book will be amended to add a definition for the new "MOC Closing Offset Order" order type, and the definition of "MOC Order" will be amended to include the MOC Closing Offset Order.

Rule 4-902 will be amended to:

(i) provide when MOC Closing Offset Orders may be entered, cancelled and modified;

(ii) provide for the entering of the MOC Closing Offset Orders in the MOC Book on either side of the MOC Imbalance;

(iii) provide for the prioritization of limit orders and amended to include dark limit orders and MOC Closing Offset Orders; and

(iv) correct typographical errors.

The Amendments were published for comment on November 1, 2018 and no comments were received. A copy of the Amendments can be found at www.osc.gov.on.ca.

The Amendments will be effective in the second quarter of 2019, following a notice by TSX.

 

Chapter 25 -- Other Information

Husky Energy Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Revocation of order exempting issuer from requirements in NI 51-101 that qualified reserves evaluator or auditor be independent from the issuer, that an independent qualified reserves evaluator or auditor execute the required annual filing -- issuer intends to engage independent qualified oil and gas reserves evaluators or auditors and to require such independent qualified reserves evaluator or auditor to complete and execute Form 51-101F2 in accordance with NI 51-101.

Applicable Legislative Provisions

National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

Securities Act, R.S.O. 1990, c. S.5, as am., s.144.

Citation: Re Husky Energy Inc., 2019 ABASC 17

January 28, 2019

IN THE MATTER OF THE SECURITIES LEGISLATION OF ALBERTA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF HUSKY ENERGY INC. (the Filer)

REVOCATION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) revoking the decision of the Decision Makers dated December 17, 2010 (cited as Re Husky Energy Inc., 2010 ABASC 586) which exempted the Filer from the requirements contained in the Legislation:

(a) that the qualified reserves evaluators or auditors appointed under section 3.2 of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101) be independent of the Filer and that each of the qualified reserves evaluators or auditors who execute the report required under item 2 of section 2.1 of NI 51-101 (the Evaluator Report) be independent of the Filer (collectively, the Independent Evaluator Requirement); and

(b) that the Evaluator Report be in accordance with Form 51-101F2 Report on [Reserves Data][,][Contingent Resources Data][and][Prospective Resources Data] by Independent Qualified Reserves Evaluator or Auditor (Form 51-101F2) and that the report required under item 3 of section 2.1 of NI 51-101 (the Management Report) be in accordance with Form 51-101F3 Report of Management and Directors on Oil and Gas Disclosure (Form 51-101F3 and, together with Form 51-101F2, the Related Form Requirements), to the extent necessary for such reports to reflect changes which are consequential to the exemption from the Independent Evaluator Requirement

(the NI 51-101 Decision).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual passport application):

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, 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.

Interpretation

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meanings if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation existing under the Business Corporations Act (Alberta).

2. The Filer's head office is located in Calgary, Alberta.

3. The Filer is a reporting issuer in each of the provinces of Canada.

4. The Filer is not in default of securities legislation in any jurisdiction of Canada.

5. The authorized capital of the Filer consists of an unlimited number of common shares (the Husky Shares) and an unlimited number of preferred shares, issuable in series. As at November 30, 2018 there were 1,005,121,738 Husky Shares issued and outstanding.

6. The Husky Shares are listed for trading on the Toronto Stock Exchange (the TSX) under the symbol "HSE".

7. In connection with amendments to NI 51-101 that became effective on December 30, 2010, Husky applied for and received the NI 51-101 Decision.

8. Husky intends, commencing for the year ending December 31, 2018, to engage an independent qualified oil and gas reserves evaluator or auditor in respect of Husky's reserves reporting under NI 51-101 and to require such independent qualified reserves evaluator or auditor to complete and execute Form 51-101F2 in accordance with NI 51-101, and to complete and execute Form 51-101F3 in accordance with NI 51-101.

Decision

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 NI 51-101 Decision is revoked.

For the Commission:

"Tom Cotter"
Vice-Chair
 
"Kari Horn"
Vice-Chair