Ontario Securities Commission Bulletin

Issue 43/44 - October 29, 2020

Ont. Sec. Bull. Issue 43/44

Table of Contents

Chapter 1 - Notices

Notices

• CSA Multilateral Staff Notice 51-361 Continuous Disclosure Review Program Activities for the fiscal years ended March 31, 2020 and March 31, 2019

Notices from the Office of the Secretary

• Majd Kitmitto et al.

• First Global Data Ltd. et al.

• Derek F.C. Elliott

Chapter 2 - Decisions, Orders and Rulings

Decisions

• Baillie Gifford International LLC and Baillie Gifford Overseas Limited

• Next Edge Capital Corp. and Next Edge Bio-Tech Plus Fund

• Value Partners Investments Inc. and VPI Global Equity Pool

Orders

• Derek F.C. Elliott -- 127(1), 127(10)

Chapter 3 - Reasons: Decisions, Orders and Rulings

OSC Decisions

• Derek F.C. Elliott -- 127(1), 127(10)

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 11 - IPOs, New Issues and Secondary Financings

Chapter 12 - Registrations

• Registrants

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

Marketplaces

• Liquidnet Canada Inc. -- Proposed Changes to Broker Blocks Functionality -- Notice of Withdrawal

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Chapter 1 -- Notices

CSA Multilateral Staff Notice 51-361 Continuous Disclosure Review Program Activities for the fiscal years ended March 31, 2020 and March 31, 2019

CSA Multilateral Staff Notice 51-361 Continuous Disclosure Review Program Activities for the fiscal years ended March 31, 2020 and March 31, 2019

October 29, 2020

Introduction

The Canadian Securities Administrators{1} (CSA) have prepared this Staff Notice (Notice) to report on the results of the reviews conducted by the CSA within the scope of its Continuous Disclosure Review Program (CD Review Program). The goal of the program is to improve the completeness, quality and timeliness of continuous disclosure (CD) provided by reporting issuers{2} (issuers) in Canada. This program was established to assess the compliance of CD documents with securities laws, including CD rules, and to help issuers understand and comply with their obligations under the CD rules so that investors receive high quality disclosure to assist them in making informed investment decisions.

In this Notice, we summarize the key findings and outcomes of the CD Review Program for the fiscal year ended March 31, 2020 (fiscal 2020) and the fiscal year ended March 31, 2019 (fiscal 2019). Appendix A -- Financial Statement, MD&A and Other Regulatory Deficiencies (Appendix A) describes common deficiencies and includes some disclosure examples to help issuers address these deficiencies and to illustrate our expectations.

Given the impact of the COVID-19 pandemic (COVID-19) on the Canadian and global economy and potential impact on issuers' operating performance, financial position, liquidity and future prospects, Appendix A includes guidance on reporting the impact of COVID-19.

For further details on the CD Review Program, see CSA Staff Notice 51-312 (revised) Harmonized Continuous Disclosure Review Program.

Results for Fiscal 2020 and Fiscal 2019

Issuers selected for a CD review (full or issue-oriented review (IOR)) are identified using a risk-based and outcomes-focused approach using both qualitative and quantitative criteria. IORs are focused on a specific accounting, legal or regulatory issue, an emerging issue or industry, implementation of recent rules or areas where we believe there may be a heightened risk of potential investor harm. A review may also stem from general monitoring of our issuers through news releases, media articles, complaints and other sources.

During fiscal 2020, a total of 583 CD reviews (fiscal 2019 -- 514 CD reviews) were conducted with IORs consisting of 73% of the total (fiscal 2019 -- 70%). The nature of an IOR will impact the time spent and outcome obtained from the review. The following charts outline the focus areas of the IORs conducted:

Figure #1

The "Other" category includes, but is not limited to, reviews of:

• Emerging industries (including cryptocurrencies and cannabis)

• Change of auditor notice

Figure #2

The "Other" category includes, but is not limited to, reviews of:

• Corporate governance

• Review of quarterly highlights

• Change of auditor notice

CD Outcomes for Fiscal 2020 and Fiscal 2019

In fiscal 2020, 55% (fiscal 2019 -- 67%) of our review outcomes required issuers to improve and/or amend their disclosure, refile certain documents, or to file unfiled documents. Some of our reviews resulted in the issuer being referred to enforcement, cease-traded or placed on the default list. The chart below summarizes the key outcomes.

Figure #3

We classify the outcomes of the full reviews and IORs into five categories as described in Appendix B -- Categories of Outcomes. Some CD reviews may generate more than one category of outcome. For example, an issuer may have been required to refile certain documents and also make certain changes on a prospective basis.

Given our risk-based approach noted above, the outcomes on a year to year basis may vary and cannot be interpreted as an emerging trend as the issues as well as the issuers reviewed each year are different. In fiscal 2020 and fiscal 2019, we continued to see substantive outcomes being obtained as a result of our reviews.

Common Deficiencies

We have highlighted below some of the deficiencies that were encountered during our CD reviews in fiscal 2020 and fiscal 2019. We have discussed these deficiencies in further detail in Appendix A to this Notice.

• Financial Statements: compliance with recognition, measurement and disclosure requirements in International Financial Reporting Standards (IFRS) including impairment of non-financial assets, recognition and measurement of intangible assets, and disclosure of operating segments.

• Management's Discussion and Analysis (MD&A): compliance with Form 51-102F1 including forward-looking information, liquidity and capital resources, transactions between related parties, discussion of operations, and non-GAAP financial measures.

• Other Regulatory Requirements: compliance with other regulatory matters including overly promotional disclosure, insider reporting, early warning reporting, material change reporting, and mineral project disclosure.

In addition, Appendix A discusses disclosure considerations flowing from the impact of COVID-19.

Results by Jurisdiction

All CSA jurisdictions participate in the CD review program and some local jurisdictions may publish staff notices and reports communicating results and findings of the CD reviews conducted in their jurisdictions. Refer to the individual regulator's website for copies of these notices and reports.

{1} This Notice is being published in all jurisdictions except British Columbia. It includes the results of the reviews conducted by the British Columbia Securities Commission (BCSC) as a result of its participation in the CD Review Program. The BCSC will advise of their approach after the final provincial interregnum period is over in mid-November.

{2} In this Notice "issuers" means those reporting issuers contemplated in National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102).

APPENDIX A -- FINANCIAL STATEMENT, MD&A AND OTHER REGULATORY DEFICIENCIES

Our CD reviews identified a number of financial statement, MD&A and other regulatory disclosure deficiencies that resulted in issuers enhancing their disclosure and/or refiling their CD documents. To help issuers better understand and comply with their CD obligations, we present the key observations from our reviews. The Hot Buttons sections below include observations along with considerations for issuers including the relevant authoritative guidance. We have also included some examples of deficient disclosure contrasted against improved examples of entity-specific disclosure or a more in-depth explanation of the matters we observed.

Issuers must ensure that their CD record complies with all relevant securities laws. The quantity of disclosure filed does not necessarily equate to quality or level of compliance.

The following observations are provided for illustrative purposes only. This is not an exhaustive list and does not represent all the requirements that could apply to a particular issuer's situation.

Impact of COVID-19

COVID-19 is impacting the economy and posing business challenges for some issuers, including reporting on and disclosing the effects of COVID-19. To support investors in making informed investment decisions, issuers should provide transparent and entity-specific disclosures, including information about the impact of COVID-19 on their operating performance, financial position, liquidity, and future prospects. Relevant regulatory guidance can be accessed at the CSA COVID-19 Information Hub at https://www.securities-administrators.ca/aboutcsa.aspx?id=1885.

The Hot Buttons and examples of deficient disclosure describe additional potential disclosure considerations in the context of the current environment; however, the observations below do not represent an exhaustive list. Issuers should consider their business and operations to provide clear and transparent disclosure of the impact of COVID-19.

1. FINANCIAL STATEMENT DEFICIENCIES

HOT BUTTONS

2. MD&A DEFICIENCIES

HOT BUTTONS

MD&A DISCLOSURE EXAMPLES

a. DISCUSSION OF OPERATIONS AND THE IMPACT OF COVID-19

The MD&A is a narrative explanation, through the eyes of management, of how an issuer performed during the period covered by the financial statements, and of an issuer's financial condition and future prospects. In discussing an issuer's operations for the reporting period, an issuer should avoid boilerplate disclosure, such as simply repeating information that is readily available in the financial statements. COVID-19 is likely to have had a significant impact on an issuer's operations and financial position. Disclosure of such should not only be entity-specific and transparent, providing a detailed explanation and breakdown of the impact of COVID-19, but also of any other factors contributing to period over period variances. For example, an issuer should not incorrectly attribute or generally list COVID-19 as the sole reason for any period over period variances or other negative news.

The impact of COVID-19 may vary significantly from industry to industry or issuer to issuer; therefore, an issuer should discuss the specific impact on their operations that COVID-19 has had, as well as provide detailed disclosures regarding the methodology used to determine the impact. For example, retailers that have been forced to shut their doors during emergency orders will have decreased sales from their brick and mortar locations, whereas a manufacturer may be impacted by issues in the supply chain or operating with reduced staffing in order to practice safe social distancing. Providing entity-specific disclosure will help investors understand the effect COVID-19 has had on operations and the mitigation measures that have been put in place.

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Example of Deficient Disclosure -- Information on Impact of COVID-19 on Financial Performance

• Results from the last quarter were impacted by COVID-19.

• Revenues of $4.8 million, down by 20% and up by 5% when excluding the impact of COVID-19 pandemic.

• Net earnings of $1.2 million, down by 25%.

• Impact of COVID-19 represents a decrease in net earnings per share of approximately $0.05.

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In the above example, the issuer discloses precise quantitative information on the impact of COVID-19 on its financial performance. However, the MD&A does not provide disclosure on the methodology used by the issuer to determine the impact of COVID-19 on revenues, net earnings and earnings per share. Further, the issuer has not described the other factors that have contributed to the period over period variances.

It may be difficult for an issuer to determine with accuracy the quantitative impact of COVID-19 on its financial performance. Therefore, in order to avoid misleading investors, the issuer should explain the methodology used in its calculation and should provide information about the judgements and estimations made by management in determining those impacts.

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Example of Improved Disclosure -- Information on Impact of COVID-19 on Financial Performance

As described above, we shut down 25 locations country-wide in mid-March, and these locations remain closed as at the date of this MD&A. 14 locations remained open for take-out only. In order to mitigate the impacts of store closures and reduced revenues, we have temporarily laid off certain staff. Our mitigating efforts are described in further detail in the Recent Developments section.

• Results from the last quarter were impacted by COVID-19, specifically, as mentioned above, with the closure of 25 locations country-wide and 14 locations operating with limited capacity as take-out only.

• Revenue decreased by $1.2 million, or 20% from the same period in the prior year. The closures noted above were in effect for 2 weeks during the reporting period. Based on our forecasts for each location, we estimate that the loss in revenues due to store closures was approximately $1 million for the period ended March 31, 2020 (based on a 2-week average sales at those stores in prior periods). A further reduction of revenue of $200 thousand is estimated from locations that remained open as take-out only due to a reduction in revenue/hour from the loss of customers dining in and shorter operating times.

• Cost of goods sold decreased by $800 thousand, or 15% from the same period in the prior year. The decrease in cost of goods sold did not track the decrease in revenue exactly due to retaining staff members in open locations with reduced traffic due to operating as take-out only.

• Net earnings decreased by $400 thousand, or 25% from the same period in the prior year. The decrease in net earnings is a result of the above decreases in revenue and cost of goods sold as certain fixed costs, such as leases, head office salaries and depreciation remained consistent from the prior period despite large decreases in revenue.

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The above example provides a clear and detailed analysis of the impact of COVID-19, by providing entity-specific disclosure while also discussing other factors that may have contributed to period over period variances.

In uncertain times, clear and transparent disclosure is essential for investors to fully understand the impact of macro-economic factors, and also to ascertain information about the issuer's future prospects.

b. NON-GAAP FINANCIAL MEASURES (NGMs) -- PROMINENCE AND LABELLING (including appropriate use of adjustments as a result of COVID-19)

For a number of years, we have noted the proliferation of NGMs. Many of these measures are derived from profit or loss determined under an issuer's GAAP and, by omission or inclusion of selected items, generally present a more positive picture of financial performance. While NGMs can supplement and explain financial performance, cash flows or financial conditions, we remind issuers to accompany them with appropriate explanatory disclosures, as contemplated in CSA Staff Notice 52-306 (Revised) Non-GAAP Financial Measures (CSA SN 52-306).

We continue to see NGMs presented with greater prominence than the most directly comparable measure presented in an issuer's financial statements, or NGMs not properly labeled. Consistent with CSA SN 52-306, in order to ensure that an NGM does not mislead investors, an issuer should present, with equal or greater prominence to that of the NGM, the most directly comparable measure specified, defined or determined under the issuer's GAAP.

In addition, issuers are cautioned about adjustments or alternative profit measures defined as COVID-19 related. Not all COVID-19 effects are non-recurring and there may be a limited basis for management to conclude that a loss or expense is non-recurring, infrequent or unusual. This includes where the impact of COVID-19 crosses over multiple reporting periods. It could be misleading to describe an adjustment as COVID-19 related if management does not explain how the adjusted amount was specifically associated with COVID-19.

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Example of Deficient Disclosure -- NGMs in a News Release

COMPANY ABC REPORTS FINANCIAL RESULTS FOR Q2 2020 OF $10 MILLION

Highlights

• Revenue decreased 2% from the same period in the prior year to $52 million.

• Adjusted EBITDA{*} increased by 1% from the same period in the prior year to $10 million.

• Net Earnings decreased 25% from the same period in the prior year to $4 million.

{1z} The increased costs are non-recurring and are due to the COVID-19 pandemic.

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In the above example, the issuer presented in the news release title "Financial Results of $10 million". In this title, Financial Results are neither identified as being Adjusted EBITDA, an NGM, nor accompanied by Net Earnings determined under the issuer's GAAP. Investors may be confused and misinterpret the "Financial Results" as being a GAAP measure.

When presenting an NGM it may be misleading to present it without labeling the NGM properly and without identifying it as being an NGM. In this example, it is misleading to not present Net Earnings calculated in accordance with the issuer's GAAP with equal or greater prominence than the NGM.

In addition, the NGM, Adjusted EBITDA, includes an adjustment which is described as being non-recurring as a result of COVID-19. However, the disclosure does not explain how management determined the increased costs are related to COVID-19, the nature of the increased costs, why the measure provides useful information for investors and the additional purposes, if any, for which management uses the NGM. Further, describing the adjustment as 'non-recurring' may be misleading if there is little basis for management to conclude that similar costs are unreasonably likely to occur within the next two years.

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Example of Improved Disclosure -- NGMs in a News Release

COMPANY ABC REPORTS NET EARNINGS OF $4 MILLION AND ADJUSTED EBITDA OF $10 MILLION

Highlights

• Revenue decreased 2% from the same period in the prior year to $52 million.

• Net Earnings decreased 25% from the same period in the prior year to $4 million.

• Adjusted EBITDA{*y} increased by 1% from the same period in the prior year to $10 million.

{1x} As a result of the COVID-19 pandemic, management expects decreased demand for our products for the remainder of 2020 and 2021. As a result, management has reorganized its operations to streamline production and reduce head office staff. These restructuring costs include the cost of laying off 10 employees and the cost of shifting the majority of the production to manufacturing plant A. Additional restructuring costs are expected in the subsequent interim period, although the majority of the restructuring costs have already been incurred. Please refer to the COVID-19 impact section of the company's MD&A and the restructuring costs note in the financial statements, filed concurrently with this news release, for additional details on the impact of COVID-19 on the company's operations.

{2x} As a result of public health directives, the company implemented safety measures at manufacturing plant A to ensure the safety of our employees. These costs include the cost of reconfiguring certain equipment to ensure physical distancing guidelines could be observed, the installation of physical barriers to production areas where safe physical distancing cannot be observed, and increased overhead costs of running three production shifts (previously two) to reduce the number of workers per shift. The costs relating to plant reconfiguration and installation of barriers are one-time costs, but the increased overhead costs ($0.1M) are expected to recur until physical distancing measures are no longer recommended.

These two adjustments to EBITDA provide useful information to investors as the resulting "Adjusted EBITDA" measure is comparable to the prior year measure and provides investors with management's calculation of earnings resulting from the company's ongoing business operations.

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The above discussion focused on a few aspects of NGMs' disclosure expectations. Issuers should ensure that they refer to all of the guidance set forth in CSA SN 52-306 in preparing disclosure documents.

3. OTHER REGULATORY DISCLOSURE DEFICIENCIES

HOT BUTTONS

{3} Note that the reporting requirements differ for eligible institutional investors that choose to report under the alternative monthly reporting system. Refer to Part 4 of National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues for additional information.

{4} Note that in the case of a decrease to less than 10% ownership, security holders are not required to report any further change in ownership unless they regain at least 10% ownership.

4. MINERAL PROJECT DISCLOSURE

National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) governs public disclosure of scientific and technical information about an issuer's mining and mineral exploration projects including written documents, websites, and oral statements. Issuers must base their scientific and technical disclosure on information provided by a "qualified person" (QP), as defined in section 1.1 of NI 43-101. NI 43-101 also requires issuers to file a "technical report", in a prescribed format, Form 43-101F1 Technical Report (Technical Report), for significant corporate or mineral project milestones. The purpose of the Technical Report is to support disclosure of the issuer's exploration, development, and production activities with additional information to assist current and prospective investors in making investment decisions. In some circumstances, QPs authoring the Technical Report must be independent of the issuer and the mineral property.

A major component of CSA mineral-industry reviews in 2018 and 2019 was a review of technical reports supporting the disclosure of mineral resource estimates. CSA Staff Notice 43-311 Review of Mineral Resource Estimates in Technical Reports provides detailed commentary on the results of the review and guidance on regulatory requirements and expectations. The main results of the review are included in the Hot Buttons below. Please note that this is not an exhaustive list.

HOT BUTTONS

{*} Adjusted EBITDA is adjusted earnings before interest, taxes, depreciation, amortization and COVID-19 effects, as reflected below:

{*y} Adjusted EBITDA is a Non-GAAP Financial Measure. For more information, refer to the section on Non-GAAP Financial Measures at the end of this news release, and below for a full reconciliation of adjusted EBITDA to the most comparable GAAP measure.

APPENDIX B

CATEGORIES OF OUTCOMES

1. Referred to Enforcement/Cease-Traded/Default List

If the issuer has substantive CD deficiencies, we may add the issuer to our default list, issue a cease-trade order and/or refer the issuer to enforcement.

2. Refiling

The issuer must amend and refile certain CD documents or must file a previously unfiled document.

3. Prospective Changes

The issuer is informed that certain changes or enhancements are required in its next filing as a result of deficiencies identified.

4. Education and Awareness

The issuer receives a proactive letter alerting it to certain disclosure enhancements that should be considered in its next filing or when staff of local jurisdictions publish staff notices and reports on a variety of continuous disclosure subject matters reflecting best practices and expectations.

5. No Action Required

The issuer does not need to make any changes or additional filings. The issuer could have been selected in order to monitor overall quality disclosure of a specific topic, observe trends and conduct research.

Questions -- Please refer your questions to any of the following:

Raymond Ho	Rebecca Moen
Senior Accountant, Corporate Finance	Securities Analyst
Ontario Securities Commission	Alberta Securities Commission
416-593-8106	403-297-4846
rho@osc.gov.on.ca	rebecca.moen@asc.ca
Heather Kuchuran	Patrick Weeks
Director, Corporate Finance	Analyst, Corporate Finance
Financial and Consumer Affairs Authority of Saskatchewan	Manitoba Securities Commission
306-787-1009	204-945-3326
heather.kuchuran@gov.sk.ca	patrick.weeks@gov.mb.ca
Nadine Gamelin	Joe Adair
Senior Analyst, Continuous Disclosure	Senior Securities Analyst
Autorité des marchés financiers	Financial and Consumer Services Commission (New Brunswick)
514-395-0337, ext. 4417	506-643-7435
nadine.gamelin@lautorite.qc.ca	joe.adair@fcnb.ca
Junjie (Jack) Jiang
Securities Analyst, Corporate Finance
Nova Scotia Securities Commission
902-424-7059
jack.jiang@novascotia.ca

Majd Kitmitto et al.

FOR IMMEDIATE RELEASE

October 23, 2020

MAJD KITMITTO, STEVEN VANNATTA, CHRISTOPHER CANDUSSO, CLAUDIO CANDUSSO, DONALD ALEXANDER (SANDY) GOSS, JOHN FIELDING, and FRANK FAKHRY, File No. 2018-70

TORONTO -- Take notice of the following merits hearing date changes in the above named matter:

(1) the hearing scheduled to be heard on November 2 and 5, 2020 at 10:00 a.m. will proceed on November 2 and 5, 2020 at 9:30 a.m.;

(2) the hearing on November 20, 2020 will not proceed as scheduled; and

(3) additional hearing dates are scheduled for December 4 and December 7, 2020 at 10:00 a.m.

For Media Inquiries:

For General Inquiries:

First Global Data Ltd. et al.

FOR IMMEDIATE RELEASE

October 26, 2020

FIRST GLOBAL DATA LTD., GLOBAL BIOENERGY RESOURCES INC., NAYEEM ALLI, MAURICE AZIZ, HARISH BAJAJ, AND ANDRE ITWARU, File No. 2019-22

TORONTO -- Take notice that the hearing in the above named matter scheduled to be heard on October 27, 2020 at 10:00 a.m. will be heard on October 27, 2020 at 9:00 a.m.

For Media Inquiries:

For General Inquiries:

Derek F.C. Elliott

FOR IMMEDIATE RELEASE

October 28, 2020

DEREK F.C. ELLIOTT, File No. 2020-31

TORONTO -- The Commission issued its Reasons and Decision and an Order pursuant to Subsections 127(1) and 127(10) of the Securities Act in the above named matter.

A copy of the Reasons and Decision and the Order dated October 27, 2020 are available at www.osc.gov.on.ca.

For Media Inquiries:

For General Inquiries:

Chapter 2 -- Decisions, Orders and Rulings

Baillie Gifford International LLC and Baillie Gifford Overseas Limited

Headnote

Under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations a registered firm must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual is registered as a dealing, advising or associate advising representative of another registered firm. The Filers are affiliated entities and have valid business reasons for the individuals to be registered with both firms. The Filers have agreed that up to a maximum of ten individuals will be dually registered under the exemption at any point in time. The Filers have policies in place to handle potential conflicts of interest. The Filers are exempted from the prohibition.

Applicable Legislative Provisions

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1 and 15.1.

October 20, 2020

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 BAILLIE GIFFORD INTERNATIONAL LLC (BGI) AND BAILLIE GIFFORD OVERSEAS LIMITED (BGO, and together with BGI, the Filers)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for relief from the restriction under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) (such restriction, the Dual-Registration Restriction), pursuant to section 15.1 of NI 31-103, to permit Mr. Anthony Spagnolo -- and future individuals (such individuals, the Future Representatives and together with Mr. Spagnolo, theRepresentatives) -- to be registered as an advising representative, associate advising representative, and/or dealing representative of BGO, as the case may be, and as a dealing representative of BGI (the Relief Sought). For clarity, the Relief Sought will apply to up to ten representatives at any one time, including Mr. Spagnolo and any Future Representatives.

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

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

b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Quebec, Saskatchewan and Yukon (collectively with Ontario, the 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 Filers:

1. BGI is registered as an exempt market dealer in each of Ontario, Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland, Nova Scotia, Northwest Territories, Nunavut, Prince Edward Island, Québec, Saskatchewan and Yukon and has an office in Ontario. The head office of BGI is in New York, New York, USA. BGI is registered as an investment adviser with the U.S. Securities and Exchange Commission (the SEC).

2. BGO is registered as an exempt market dealer and portfolio manager in each of Ontario, Alberta, Manitoba, Newfoundland, Québec and Saskatchewan and as an exempt market dealer in each of British Columbia, New Brunswick, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island and Yukon. The head office of BGO is in Edinburgh, Scotland. BGO is registered as an investment adviser with the SEC and is also authorized in the United Kingdom by the Financial Conduct Authority (the FCA) to, among other things, advise on investments, arrange deals in investments, arrange safeguarding and administration of assets, deal in investments as agent, make arrangements with a view to transactions in investments and manage investments.

3. BGI and BGO are wholly-owned subsidiaries of the same ultimate parent entity, Baillie Gifford & Co, a Scottish partnership, and are therefore affiliates.

4. Baillie Gifford & Co. Ltd (BG&Co Ltd) is another affiliate of BGI and BGO and is also a wholly-owned subsidiary of Baillie Gifford & Co. BG&Co Ltd is registered as a portfolio manager in Ontario and relies on the exemption from the investment fund manager registration requirement set out in section 4 of Multilateral Instrument 32-102 Registration Exemptions for Non-Resident Investment Fund Managers (MI 32-102) in Ontario, Newfoundland and Québec. In the United Kingdom, BG&Co Ltd is authorized by the FCA to, among other things, manage alternative investments funds.

5. BG&Co Ltd currently acts as the investment fund manager for certain Baillie Gifford funds. Pursuant to an intra-group agreement dated September 14, 2014, as amended from time to time, BG&Co Ltd has appointed BGO as investment manager to provide advisory and other services in respect of a number of segregated and pooled funds under the Baillie Gifford name domiciled outside of the United Kingdom, including Baillie Gifford investment funds based in Ontario (BG Funds Canada). BG Funds Canada consist of international portfolios of equities and fixed income securities, the units of which are sold to institutional investors.

6. BGO also manages segregated international portfolios for institutional investors and may act as a sub-advisor for investment funds managed by third parties. In addition to these adviser activities, BGO acts as an exempt market dealer primarily to distribute BG Funds Canada to institutional investors and other high net worth clients that qualify as "permitted clients" as defined in MI 32-102.

7. BGI acts as agent for BG&Co Ltd for the provision of client service and marketing support in Canada for the investment funds managed by BG&Co Ltd. BGI does not act as dealer of record for any clients in Canada, but rather, acts in a marketing and business development role to build the Baillie Gifford brand at a strategy level. All clients, including any investors in the BG Funds Canada, are clients of BGO, which acts as dealer of record. BGI has no clients and is solely the marketing entity. All clients are contracted with BGO. This arrangement is consistent with Baillie Gifford's organizational structure outside of Canada. BGI also acts as agent for BGO, in its capacity as sub-advisor for investment funds managed by third parties, for the provision of certain marketing services in Canada.

8. BGI dealing representatives are permitted to trade in securities of BG Funds Canada on an exempt basis, subject to BGI procedures for permitted products.

9. Mr. Spagnolo is currently the Business Development Director with BGI and is registered as an advising representative with BGO.

10. As an advising representative of BGO, Mr. Spagnolo principally carries out advisory client relationship management services with institutional clients of BGO by managing previously established client relationships as well as creating and fostering new business relationships. Once Mr. Spagnolo becomes registered as a dealing representative of BGI, he will also provide marketing services in respect of BG Funds Canada to institutional clients resident in various provinces of Canada.

11. It is anticipated that any Future Representatives would have similar duties at BGO and BGI to those described above for Mr. Spagnolo.

12. Because each of BGO and BGI are affiliates, and because the Representatives will be advising, associate advising and/or dealing representatives of BGO and dealing representatives of BGI, the Representatives will be intimately familiar with all of the investment products offered by BGO and will be in the best position to act in the proposed dual roles with BGO and BGI.

13. The dual registration of the Representatives will help optimize the Filers' resources and increase their operational efficiency. In addition, the dual registration approach is consistent with the global organizational structure of the Baillie Gifford group of companies.

14. The terms and conditions, if any, on a Representative's advising, associate advising and/or dealing representative registration with BGO, as the case may be, would be the same as under his or her dealing representative registration with BGI.

15. Each Representative will be subject to supervision by each of the Filers and come under the applicable compliance requirements of both Filers.

16. The Filers each have compliance and supervisory policies and procedures in place to monitor the conduct of the Representatives and to ensure that they can deal appropriately with any conflict of interest that may arise as a result of the dual registration and each Representative will be subject to these policies and procedures.

17. BGI and BGO are affiliates and accordingly the dual registration of a Representative will not give rise to the conflicts of interest present in a similar arrangement involving unrelated, arm's-length firms.

18. BGO has been appointed as the investment manager of BG Funds Canada, and BGI acts as agent for BGO, in its capacity as sub-advisor for various investment funds managed by third parties for the provision of certain marketing services in Canada. The interests of the Filers are aligned, and because the role of a Representative is to support the business activities and interests of the Baillie Gifford group of companies (including BGI and BGO), the potential for conflicts of interest is remote.

19. There is adequate supervision of any identified conflicts of interest to ensure that each Representative, and each of the Filers, can deal appropriately with any conflict of interest that may arise. Each Representative will be under the supervision of both Filers.

20. Neither BGI nor BGO is in default of any requirement of securities legislation in any of the Jurisdictions.

21. The Filers are confident that each Representative will have sufficient time to adequately serve both firms.

22. Each of the Filers' respective Ultimate Designated Persons will ensure that a Representative has sufficient time and resources to adequately serve each Filer. Each of the Filers' respective Chief Compliance Officers will monitor and assess whether a Representative has sufficient time and resources to adequately serve each Filer and its clients.

23. Disclosure regarding the dual employment of a Representative will be disclosed in writing to clients of both BGO and BGI, as applicable, including in applicable client account opening documentation of BGO and marketing materials (such as information factsheets and client pitch presentations) provided by BGI.

24. Each Representative will act in the best interest of all clients of each Filer and will deal fairly, honestly and in good faith with these clients.

25. In the absence of the Relief Sought, the Filers would be prohibited by the Dual-Registration Restriction from permitting a Representative to be registered as an advising representative, associate advising representative, and/or dealing representative, as the case may be, of each Filer, even though the Filers are affiliates and have controls and compliance procedures in place to deal with such advising, associate advising and/or dealing activities.

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 Relief Sought is granted on the following conditions:

i. That at any point in time, no more than ten (10) representatives are dually registered with both Filers;

ii. The Representatives are subject to supervision by, and the applicable compliance requirements of, both Filers;

iii. The Chief Compliance Officer and Ultimate Designated Person of each Filer ensures that the Representatives have sufficient time and resources to adequately serve each Filer and its respective clients;

iv. The Filers each have adequate policies and procedures in place to address any potential conflicts of interest that may arise as a result of the dual registration of the Representatives and deal appropriately with any such conflicts; and

v. The relationship between the Filers and the fact that the Representatives are dually registered with both of them, is fully disclosed in writing to clients of each of them that deal with such person.

Next Edge Capital Corp. and Next Edge Bio-Tech Plus Fund

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted under subsection 62(5) of the Securities Act to permit extension of fund's prospectus lapse date by 66 days to accommodate timing of a proposed fund merger -- no conditions.

Applicable Legislative Provisions

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

October 20, 2020

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 NEXT EDGE CAPITAL CORP. (the Filer) AND NEXT EDGE BIO-TECH PLUS FUND (the Fund)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Fund for a decision under the securities legislation of the Jurisdiction (the Legislation) that the time limits for the renewal of the simplified prospectus of the Fund dated October 25, 2020 (the Current Prospectus) be extended to the time limits that would apply if the lapse date of the Current Prospectus was December 31, 2020 (the Exemption Sought).

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

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

(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 British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Quebec and Prince Edward Island (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 incorporated under the laws of Canada with a head office in Toronto.

2. The Filer is registered as: (i) an Investment Fund Manager in Ontario, Québec and Newfoundland and Labrador; (ii) a Portfolio Manager in Alberta and Ontario; and (iii) as an Exempt Market Dealer in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan.

3. The Filer is the investment fund manager of the Fund.

4. The Fund is an open-ended mutual fund trust established under the laws of each of the Canadian Jurisdictions. The Fund is a reporting issuer as defined in the securities legislation of each of the Canadian Jurisdictions.

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

6. The Fund currently distributes securities in the Canadian Jurisdictions under the Current Prospectus.

7. Pursuant to subsection 62(1) of the Act, the lapse date of the Current Prospectus is October 25, 2020 (the Lapse Date). Accordingly, under subsection 62(2) of the Act, the distribution of securities of the Fund would have to cease on the Lapse Date unless: (i) the Fund files a pro forma simplified prospectus at least 30 days prior to the Lapse Date; (ii) the final simplified prospectus is filed no later than 10 days after the Lapse Date; and (iii) a receipt for the final simplified prospectus is obtained within 20 days of the Lapse Date.

8. The pro forma prospectus of the Fund was required to have been filed by September 25, 2020 in order for securities of the Fund to continue to be distributed after the Lapse Date.

9. The Filer is considering merging the Fund into Next Edge Biotech and Life Sciences Opportunities Fund (the Continuing Fund), a related mutual fund (the Proposed Merger).

10. The Continuing Fund will be an open-ended mutual fund trust, established under the laws of Ontario by the Declaration of Trust and will be governed by the provisions of National Instrument 81-102 -- Investment Funds (NI 81-102). The Continuing Fund will also be an "alternative mutual fund" under NI 81-102

11. Securities of the Continuing Fund are expected to be qualified for sale in each of the provinces of Canada pursuant to a simplified prospectus, annual information form and related Fund Facts. To this end, a preliminary simplified prospectus, preliminary annual information form and preliminary Fund Facts each dated October 15, 2020 were filed on behalf of the Continuing Fund with the applicable securities regulatory authorities in each province of Canada. A final simplified prospectus, final annual information form and final Fund Facts for the Continuing Fund will be filed, and a final receipt will be issued in respect thereof, prior to the Effective Date (as defined below).

12. It is anticipated that the effective date of the Proposed Merger would be no later than December 31, 2020 so as to coincide with the Fund's year-end (the Effective Date).

13. A press release in respect of the Proposed Merger was disseminated on October 15, 2020, along with a related material change report.

14. In addition, if the Proposed Merger is implemented, the Fund will be wound up as soon as possible after the Effective Date.

15. If the Filer proceeds with the Proposed Merger, in the opinion of the Filer, it would be unduly costly to file pro forma renewal documents for the approximately two-month period prior to the Effective Date.

16. If the Exemption Sought is not granted by October 25, 2020, securities of the Fund will no longer be permitted to be distributed.

17. Given the disclosure obligations of the Fund, should a material change in the affairs of the Fund occur, the Current Prospectus and current fund fact documents of the Fund will be amended as required under applicable legislation. Consequently, as a result of the announcement of the Proposed Merger, the Filer will comply with all applicable securities law requirements, including, without limitation, filing appropriate amendments to the Current Prospectus (within the time frames required by applicable securities requirements) and seeking unitholder and regulatory approval where necessary.

18. New investors in the Fund will receive delivery of the most recently filed fund facts of the Fund. The Current Prospectus will still be available upon request.

19. The Exemption Sought will not affect the accuracy of the information contained in the Current Prospectus or the respectively filed fund facts of the Fund, 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.

Value Partners Investments Inc. and VPI Global Equity Pool

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- approval of mutual fund mergers -- approval required because mergers do not meet the criteria for pre-approval -- securityholders of terminating funds provided with timely and adequate disclosure regarding the mergers.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 5.5(1)(b), 5.6(1)(a), 5.6(1)(b), 5.7(1)(b) and 19.1

October 20, 2020

IN THE MATTER OF THE SECURITIES LEGISLATION OF MANITOBA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF VALUE PARTNERS INVESTMENTS INC. (the Filer) AND VPI GLOBAL EQUITY POOL (the Terminating Fund)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Makers) has received an application from the Filer on behalf of the Terminating Fund for a decision under the securities legislation of the Jurisdictions (the Legislation) for approval of the proposed merger (the Merger) of the Terminating Fund into VPI Foreign Equity Pool (the Continuing Fund, and together with the Terminating Fund, theFunds) under paragraph 5.5(1)(b) of National Instrument 81-102 Investment Funds (NI 81-102) (the Exemption Sought).

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

(a) the Manitoba 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, Alberta, Saskatchewan, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon Territory and Nunavut (the Other Jurisdictions); 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 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:

The Filer

1. The Filer is a corporation organized under the laws of Canada with its head office in Winnipeg, Manitoba.

2. The Filer is registered under the securities legislation: (i) in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island and Saskatchewan, as an adviser in the category of portfolio manager; (ii) in Manitoba, Ontario and Newfoundland and Labrador as an investment fund manager; and (iii) in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island and Saskatchewan, as a dealer in the category of exempt market dealer.

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

4. The Filer is not in default of any requirement of securities legislation in any of the Jurisdictions, nor the Other Jurisdictions.

The Funds

5. The Funds are open ended mutual fund trusts established under the laws of Ontario.

6. Units of the Funds are currently qualified for sale under a simplified prospectus, annual information form and fund facts dated June 29, 2020 (collectively, theOffering Documents).

7. Each Fund is a reporting issuer under the applicable securities legislation of the Jurisdictions and the Other Jurisdictions.

8. The Funds are not in default of any requirement of securities legislation in any of the Jurisdictions, nor the Other Jurisdictions.

9. Each Fund follows the standard investment restrictions and practices established under NI 81-102. The Terminating Fund has done so, since inception (even though it was established before becoming a reporting issuer).

10. The net asset value for each series of the Funds is calculated on a daily basis in accordance with the Funds' valuation policy and as described in the Offering Documents.

Reason for Exemption Sought

11. The Exemption Sought is required because the Merger does not satisfy all of the criteria for pre-approved reorganizations and transfers set out in section 5.6 of NI 81-102, given that the Merger will not be completed as a "qualifying exchange" under the Income Tax Act (Canada) (the Tax Act).

12. The Merger will be effected on a taxable basis because the Continuing Fund has significant loss carry-forwards that would be lost if the Merger were completed on a tax-deferred basis under the Tax Act.

13. Except as described in this decision, the proposed Merger complies with all of the other criteria for pre-approved reorganizations and transfers set out in section 5.6 of NI 81-102, as the Continuing Fund has substantially similar investment objectives, fee structures and valuation procedures as the Terminating Fund.

The Proposed Merger

14. The Filer intends to reorganize by merging the Terminating Fund into the Continuing Fund such that unitholders of the Terminating Fund will become unitholders of the Continuing Fund.

15. Unitholders of the Terminating Fund will continue to have the right to redeem units of the Terminating Fund at any time up to the close of business on the business day immediately before the effective date of the Merger.

16. No sales charges will be payable by unitholders of the Terminating Fund in connection with the Merger.

17. Units of the Terminating Fund and the Continuing Fund are, and are expected to continue to be at all material times, "qualified investments" under the Tax Act for registered retirement savings plans, registered retirement income funds, deferred profit sharing plans, registered education savings plans, registered disability savings plans and tax free savings accounts.

18. As required by National Instrument 81-107 Independent Review Committee for Investment Funds, an Independent Review Committee (the IRC) has been appointed for the Funds. The Filer presented the potential conflict of interest matters related to the Merger to the IRC for its recommendation. The IRC reviewed the potential conflict of interest matters related to the Merger and on August 21, 2020, provided its positive recommendation for the Manager to proceed with the Merger after determining that the Merger, if implemented, would achieve a fair and reasonable result for each Fund.

19. In accordance with National Instrument 81-106 Investment Fund Continuous Disclosure, a press release announcing the proposed Merger was issued and filed by the Terminating Fund via SEDAR on August 28, 2020. A material change report with respect to the proposed Merger was filed via SEDAR on August 28, 2020.

20. The Filer has concluded that the Merger will not be a "material change" for the Continuing Fund.

21. A notice of meeting, a management information circular, a proxy and fund facts documents for the Continuing Fund in connection with a special meeting of unitholders will be mailed to unitholders of the Terminating Fund on or about October 27, 2020 and concurrently filed via SEDAR.

22. Unitholders of the Terminating Fund will be asked to approve the Merger at a special meeting to be held on or about November 19, 2020.

23. The Filer will pay for the costs of the Merger. These costs consist mainly of brokerage charges associated with the merger-related trades that occur both before and after the effective date of the Merger, and legal, proxy solicitation, printing, mailing and regulatory fees.

24. The Merger has been approved by the board of directors of the Filer.

25. If all required approvals for the Merger are obtained, it is intended that the Merger will occur at the close of business on or about November 20, 2020 (the Effective Date). The Filer therefore anticipates that each unitholder of the Terminating Fund will become a unitholder of the Continuing Fund after the close of business on the Effective Date.

26. The tax implications of the Merger, similarities between the investment objectives and fee structures of the Terminating Fund and the Continuing Fund and the IRC's recommendation of the Merger will be described in the management information circular so that the unitholders of the Terminating Fund can consider this information before voting on the Merger. The meeting materials will also describe the various ways in which investors can obtain a copy of the simplified prospectus, annual information form and fund facts document(s) for the Continuing Fund and its most recent interim and annual financial statements and management reports of fund performance.

27. In light of the disclosure in the management information circular, unitholders of the Terminating Fund will have all the information necessary to determine whether the proposed Merger is appropriate for them.

Merger Steps

28. The proposed merger of the Terminating Fund into the Continuing Fund will be structured as follows:

(a) The value of the Terminating Fund's portfolio and other assets will be determined at the close of business on the effective date of the Merger in accordance with the constating documents of the Terminating Fund.

(b) The Continuing Fund will acquire the investment portfolio and other assets of the Terminating Fund in exchange for units of the Continuing Fund.

(c) The Continuing Fund will not assume any liabilities of the Terminating Fund and the Terminating Fund will retain sufficient assets to satisfy its estimated liabilities, if any, as of the effective date of the Merger.

(d) The Terminating Fund will distribute a sufficient amount of its net income and net realized capital gains, if any, to unitholders to ensure that they will not be subject to tax for their current tax year.

(e) The units of the Continuing Fund received by the Terminating Fund will have an aggregate net asset value equal to the value of the portfolio assets and other assets that the Continuing Fund is acquiring from the Terminating Fund, and the units of the Continuing Fund will be issued at the applicable series net asset value per unit as of the close of business on the effective date of the Merger.

(f) Immediately thereafter, units of the Continuing Fund received by the Terminating Fund will be distributed to unitholders of the Terminating Fund in exchange for their units in the Terminating Fund on a dollar-for-dollar basis, as applicable.

(g) As soon as reasonably possible following the Merger, and in any case within 60 days following the effective date of the Merger, the Terminating Fund will be wound up.

Benefits of the Merger

29. The Filer believes that the Merger is beneficial to unitholders of each Fund for the following reasons:

(a) the Merger will result in a more streamlined and simplified product line-up that is easier for investors to understand;

(b) there is significant overlap between the portfolio holdings of the Terminating Fund and the portfolio holdings of the Continuing Fund, and thus the Merger will contribute towards reducing duplication and redundancy across the fund line-up;

(c) unitholders of the Terminating Fund will have options to (a) switch to another investment, (b) redeem their investment, or (c) maintain an investment with the Filer in the Continuing Fund, which provides the unitholders of the Terminating Fund with flexibility, convenience and potential cost savings;

(d) the Merger will eliminate the administrative and regulatory costs of operating each of the Terminating Fund and Continuing Fund as separate funds;

(e) following the Merger, the Continuing Fund will have a portfolio of greater value, which may allow for increased portfolio diversification opportunities if desired; and

(f) following the Merger, the Continuing Fund, as a result of its greater size, may benefit from its larger profile in the marketplace.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation of the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted, provided that the Filer obtains the prior approval of the unitholders of the Terminating Fund for the Merger at a special meeting held for that purpose.

Derek F.C. Elliott -- 127(1), 127(10)

File No. 2020-31

IN THE MATTER OF DEREK F.C. ELLIOTT

October 27, 2020

ORDER (Subsections 127(1) and 127(10) of the Securities Act, RSO 1990, c S.5)

WHEREAS the Ontario Securities Commission (the Commission) held a hearing in writing to consider a request by Staff of the Commission (Staff) for an order imposing sanctions against Derek F.C. Elliott (Elliott) pursuant to subsections 127(1) and 127(10) of the Act;

ON READING the materials filed by Staff and Elliott, and on considering the consent of the parties to the making of this order;

IT IS ORDERED THAT:

1. pursuant to paragraph 2 of subsection 127(1) of the Securities Act, RSO 1990, c S.5 (the Act), trading in any securities or derivatives by Elliott shall cease permanently, except that this order does not preclude Elliott from trading in securities or derivatives in a registered retirement savings plan, registered education savings plan, any registered retirement income funds, and/or tax-free savings account (as defined in the Income Tax Act (Canada)) in which he has sole legal and beneficial ownership, provided that he carries out any permitted trading through a registered dealer (which dealer must be given a copy of this order) and through accounts opened in his name only;

2. pursuant to paragraph 2.1 of subsection 127(1) of the Act, acquisition of any securities by Elliott shall be prohibited permanently, except that this order does not preclude Elliott from purchasing securities in a registered retirement savings plan, registered education savings plan, any registered retirement income funds, and/or tax-free savings account (as defined in the Income Tax Act (Canada)) in which he has sole legal and beneficial ownership, provided that he carries out any permitted acquisitions through a registered dealer (which dealer must be given a copy of this order) and through accounts opened in his name only;

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

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

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

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

Chapter 3 -- Reasons: Decisions, Orders and Rulings

Derek F.C. Elliott -- 127(1), 127(10)

Citation: Elliott (Re), 2020 ONSEC 27

October 27, 2020

File No. 2020-31

IN THE MATTER OF DEREK F.C. ELLIOTT

REASONS AND DECISION (Subsections 127(1) and 127(10) of the Securities Act, RSO 1990, c S.5)

REASONS AND DECISION

I. OVERVIEW

[1] On August 27, 2014, Derek F.C. Elliott was convicted in the United States District Court for the Northern District of California (the "US Court") of one count of conspiracy to commit fraud in violation of Title 18 of the United States Code, Section 1349. In pleading guilty to the offence, Mr. Elliott admitted to engaging in a conspiracy to defraud investors.{1} Mr. Elliott was sentenced to 24 months imprisonment and was ordered to make full restitution to harmed investors in the amount of approximately US$38.7 million.

[2] Staff of the Ontario Securities Commission (Staff) applies for a protective order in the public interest pursuant to s. 127(10) of the Securities Act, RSO 1990 c.S.5 (the Act), which provides that an order may be made under s. 127(1) of the Act against a person who has been convicted of an offence arising from a transaction, business or course of conduct related to securities or derivatives. Staff submits that this precondition has been met and that it is in the public interest based on these circumstances to make an inter-jurisdictional enforcement order on the terms proposed.

[3] Mr. Elliott consents to the order requested by Staff, subject to the inclusion of carve-outs that allow Mr. Elliott to trade in personal accounts, as described more fully below. Staff consents to the requested carve-outs to the proposed order.

[4] For the reasons that follow, I find that Mr. Elliott's conviction arose from transactions and a course of conduct related to securities, and that it is in the public interest to issue the order requested by Staff, subject to certain limited carve-outs requested by Mr. Elliott.

II. RESPONDENT'S PARTICIPATION

[5] Mr. Elliott participated in this proceeding and was represented by counsel.

[6] Staff brought this inter-jurisdictional proceeding under the expedited procedure providing for a hearing in writing.{2} On September 17, 2020, Mr. Elliott requested an oral hearing in this matter.

[7] On October 8, 2020, Mr. Elliott advised the Commission that he would consent to the sanctions proposed by Staff with carve-outs to permit him to trade securities or derivatives in his personal registered retirement, registered education or tax-fee savings accounts held through a registered dealer. Staff consented to such carve-outs. Accordingly, on the consent of the parties, this matter was heard in writing.

III. FACTUAL BACKGROUND

A. Conduct at issue, Guilty Plea and Conviction

[8] Mr. Elliott is a resident of Ontario and has never been registered with the Commission in any capacity.

[9] Between August 2006 and July 2008 (the Material Time), Mr. Elliott was the President and Chief Executive Officer of a number of entities related to the hospitality business in the Dominican Republic, including a resort in the Dominican Republic called the Sun Village Juan Dolio Resort (Juan Dolio).

[10] During the Material Time, Mr. Elliott and a co-conspirator, either directly or through sales agents, raised approximately US$91.3 million from investors in two types of investment products related to the Juan Dolio, one investment product where investors were promised a guaranteed interest rate of 8% to 12% for a five year term (the Residence Investment) and the second where investors were told that they invested through a trust and received the option of using a room at the resort or collecting a share of room revenues, and could resell their investment at market rate (the Passport Investment).

[11] Mr. Elliott and his co-conspirator made misleading material statements to, and omitted material information from, investors.

[12] Instead of investing the funds into the Juan Dolio and completing renovations as represented to investors, substantial portions of the funds raised were diverted to pay sales commissions to agents, make interest payments to investors in the Residence Investment, and fund other real estate development projects not connected to Juan Dolio. Investors were not told that their money would be diverted in this fashion.

[13] Mr. Elliott and his co-conspirator made misrepresentations in promotional materials provided to investors regarding the status of the renovations and time frame for opening the Juan Dolio when, in fact, the renovations were never completed and the investor money was spent on, among other things, a different project.

[14] Mr. Elliott and his co-conspirator made misrepresentations to investors, directly or through sales agents, regarding guaranteed investment returns when they knew that such returns in the Residence Investment could not be reasonably expected.

[15] On August 27, 2014, Mr. Elliott plead guilty to conspiracy to commit fraud before the US Court.

B. Sentencing

[16] On November 20, 2019, Mr. Elliott was sentenced to 24 months imprisonment{3} and also ordered to make restitution to harmed investors in the amount of US$38,724,570.17.{4}

[17] The US Court considered Mr. Elliott's guilty plea, his cooperation with the prosecution and the prosecutor's recommendation of a three-year term of probation{5} but concluded that the seriousness of the conduct warranted a custodial sentence of two years.

IV. LEGAL FRAMEWORK

[18] Subsection 127(10) of the Act provides that an order may be made under s. 127(1) where a person has been convicted in any jurisdiction of an offence arising from a transaction, business or course of conduct related to securities or derivatives. If that precondition is met, the Commission must consider whether it should exercise its jurisdiction to make a protective order in the public interest.

[19] In determining whether such an order should be made in the public interest, the Commission may consider, among other factors, the seriousness of the misconduct, the harm suffered by investors, specific and general deterrence and any aggravating or mitigating factors. The purpose of such an order is "protective and preventative" and made to restrain potential conduct that could be detrimental to the integrity of the capital markets and therefore prejudicial to the public interest.{6}

V. ANALYSIS AND CONCLUSION

[20] I am satisfied that Mr. Elliott's conviction for conspiracy to commit fraud arises from transactions and a course of conduct related to securities.

[21] The Residence Investment and the Passport Investment both involved investments of funds with an expectation of profit, in a common enterprise, which was to be derived solely from the efforts of Mr. Elliott and others relating to the development of the Juan Dolio resort.{7} The investors in one investment product were promised high rates of return and in the other investment product were promised a share of the revenues and an ability to sell their investment at "market rates".

[22] These investment products sold to investors constitute securities for the purposes of the Act.

[23] Mr. Elliott's misconduct was extremely serious. Over a period of approximately two years, Mr. Elliott and his co-conspirator solicited investor funds of approximately US$91.3 million through fraudulent representations. Investors suffered significant losses, which caused significant financial and personal hardship for some investors.{8}

[24] Fraud is one of the most egregious securities regulatory violations. It causes direct and immediate harm to investors, and it significantly undermines confidence in the capital markets.

[25] Given these circumstances, it is important that this Commission impose sanctions that will protect Ontario investors by specifically deterring Mr. Elliott from engaging in similar or other misconduct in Ontario, and by acting as a general deterrent to other like-minded persons.

[26] Mr. Elliott does not contest the sanctions proposed by Staff, subject to his request for limited carve-outs for personal trading. Given the nature of the misconduct, it is not necessary to prohibit Mr. Elliott from trading in registered accounts for which he has beneficial ownership, subject to the conditions specified below.

[27] For the reasons set out above, I find that it is in the public interest to limit Mr. Elliott's future participation in Ontario's capital markets on the following terms. I therefore order that:

a. pursuant to paragraph 2 of subsection 127(1) of the Act, trading in any securities or derivatives by Mr. Elliott shall cease permanently, except that he shall not be precluded from trading in securities or derivatives in a registered retirement savings plan, registered education savings plan, any registered retirement income funds, and/or tax-free savings account (as defined in the Income Tax Act (Canada){9}) in which he has sole legal and beneficial ownership, provided that he carries out any permitted trading through a registered dealer (which dealer must be given a copy of the order that I will issue) and through accounts opened in his name only;

b. pursuant to paragraph 2.1 of subsection 127(1) of the Act, acquisition of any securities by Mr. Elliott shall be prohibited permanently, except that he shall not be precluded from purchasing securities in a registered retirement savings plan, registered education savings plan, any registered retirement income funds, and/or tax-free savings account (as defined in the Income Tax Act (Canada)) in which he has sole legal and beneficial ownership, provided that he carries out any permitted acquisitions through a registered dealer (which dealer must be given a copy of the order that I will issue) and through accounts opened in his name only;

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

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

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

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

Dated at Toronto this 27th day of October, 2020.

{1} Exhibit 1, Staff's Hearing Brief, Plea Agreement of Derek F.C. Elliott dated August 27, 2014, Tab 6

{2} Ontario Securities Commission Rules of Procedure and Forms, (2019) 42 OSCB 9714, r 11(3)

{3} Exhibit 1, Staff's Hearing Brief, Judgment in Criminal Case of the United States District Court for the Northern District of California dated November 20, 2019, Tab 7A

{4} Exhibit 1, Staff's Hearing Brief, Stipulation and Amended Order Regarding Restitution of the United States District Court for the Northern District of California, San Francisco Division, dated February 24, 2020, Tab 10

{5} Exhibit 1, Staff's Hearing Brief, United States District Court for the Northern District of California Sentencing Memorandum dated October 30, 2019, Tab 15 at 22

{6} Theroux (Re), 2019 ONSEC 20, (2019) 42 OSCB 5043 at paras 22 and 23.

{7} Furtak v Ontario (Securities Commission), 2018 ONSC 6616 at para 36 (Div Ct); Reeve (Re), 2018 ONSEC 55, (2018) 41 OSCB 9433 at paras 18-22.

{8} Exhibit 1, Staff's Hearing Brief, United States District Court for the Northern District of California Transcript of Proceedings dated November 6, 2019, Tab 14B at 42-45, 49-50, 53-56

{9} RSC, 1985, c 1 (5th Supp)

Chapter 4 -- Cease Trading Orders

Temporary, Permanent & Rescinding Issuer Cease Trading Orders

Failure to File Cease Trade Orders

Temporary, Permanent & Rescinding Management Cease Trading Orders

Outstanding Management & Insider Cease Trading Orders

Chapter 11 -- IPOs, New Issues and Secondary Financings

INVESTMENT FUNDS

Issuer Name:

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Offering Price and Description:

Underwriter(s) or Distributor(s):

Promoter(s):

Project #3125542

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Project #3111672

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Project #3114029

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Project #3100178

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Project #3069832

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Project #3074012

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Project #2973082

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Project #2993417

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NON-INVESTMENT FUNDS

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Promoter(s):

Project #3124685

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Promoter(s):

Project #2933242

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Project #3124365

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Project #3125033

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Project #3124247

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Project #3124646

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Project #3124788

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Project #3124362

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Project #3123532

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Project #3124157

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Project #3119650

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Project #3118197

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Project #3118800

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Project #3121220

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Project #3123162

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Project #3120927

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Project #3117064

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Promoter(s):

Project #3120996

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Promoter(s):

Project #3122255

Chapter 12 -- Registrations

Registrants

Chapter 13 -- SROs, Marketplaces, Clearing Agencies andTrade Repositories

Liquidnet Canada Inc. -- Proposed Changes to Broker Blocks Functionality -- Notice of Withdrawal

LIQUIDNET CANADA INC.

NOTICE OF WITHDRAWAL OF PROPOSED CHANGES TO BROKER BLOCKS FUNCTIONALITY

In accordance with the Process for the Review and Approval of the Information Contained in Form 21-101F2 and the Exhibits thereto (the "ATS Protocol"), Liquidnet Canada Inc. ("Liquidnet Canada") has withdrawn the Notice of Proposed Changes and Request for Comment published on November 21, 2019 relating to changes to existing "broker blocks" functionality. To the extent Liquidnet Canada decides to pursue the proposal again, it will be published for comment in accordance with the requirements of the ATS Protocol.