Connor, Clark & Lunn Financial Opportunities Fund and Connor, Clark & Lunn Capital Markets Inc.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Investment fund and its manager exempted from the dealer registration requirement for certain limited trading activities to be carried out by these parties in connection with a warrant offering by the investment fund -- The limited trading activities involve: i) the forwarding of a short form (final) prospectus, and the distribution of warrants to acquire securities of the fund to existing holders of fund securities, and ii) the subsequent distribution of securities to holders of the warrants, upon their exercise of the warrants, through an appropriately registered dealer.

Applicable Legislative Provisions

Securities Act, R.S.O., c. S.5, as am., ss. 25(1), 74(1).

Multilateral Instrument 11-102 Passport System, s. 4.7(1).

National Instrument 45-106 Prospectus and Registration Exemptions, ss. 2.1, 3.1, 3.42, 8.5.

National Instrument 31-103, Registration Requirements and Exemptions, s. 8.5.

March 2, 2012

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

CONNOR, CLARK & LUNN

FINANCIAL OPPORTUNITIES FUND

(the Fund)

AND

CONNOR, CLARK & LUNN

CAPITAL MARKETS INC.

(the Manager)

(collectively, 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 an exemption from the dealer registration requirements in the Legislation in respect of certain trades (the Warrant Offering Activities) to be carried out by the Manager and the Investment Manager (as defined below), on behalf of the Fund, in connection with a proposed distribution (the Warrant Offering) of Class A warrants (the Class A Warrants) to acquire Class A units (the Class A Units) of the Fund and Class F warrants (the Class F Warrants) to acquire Class F units (the Class F Units) of the Fund, such distribution to be made in Ontario and each of the Passport Jurisdictions (as defined below) pursuant to a (final) short form prospectus (the Warrant Prospectus) (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) each 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 provinces (other than Ontario) and territories of Canada (collectively, the Passport 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. The Fund is an investment trust established under the laws of the Province of Ontario pursuant to a trust agreement dated as of June 28, 2007 as amended September 30, 2011 (the Trust Agreement) between the Manager and RBC Dexia Investor Services Trust (the Trustee).

2. The Manager acts as the investment fund manager and portfolio manager of the Fund. The Manager is part of the Connor, Clark & Lunn Financial Group. The head office of each of the Fund and the Manager is located at 181 University Avenue, Suite 300, Toronto, Ontario, M5H 3M7. The Manager is registered as an investment fund manager and as an adviser in the category of portfolio manager in Ontario. The Manager is not in default of any of its obligations under securities legislation in any jurisdiction.

3. The authorized share capital of the Fund consists of an unlimited number of Class A Units and Class F Units, each representing an equal, undivided interest in the net assets of the Fund. The Class A Units are listed and posted for trading on the Toronto Stock Exchange (the TSX). The Class F Units are not listed on any exchange, including the TSX.

4. The investment objectives of the Fund are: (a) to achieve long term capital growth principally through investment in equities of financial sector companies on an international basis; and (b) to provide holders of Class A Units and Class F Units (collectively, the Units) with cash distributions initially targeted to be $0.33 per Unit per annum.

5. To achieve the Fund's investment objectives, the Fund invests in a concentrated, international portfolio principally comprised of financial services companies and to a lesser extent property related companies considered to be undervalued and which exhibit favourable growth prospects arising from characteristics such as proven management or strong products or services.

6. Jupiter Asset Management Limited (the Investment Manager) has been retained to provide investment advisory and portfolio management services to the Manager in respect of the Fund subject to the investment objectives, investment strategy and investment restrictions of the Fund. The Investment Manager is not registered in any of the provinces or territories of Canada. It is authorized by the Financial Services Authority in the United Kingdom to advise on investments. The Investment Manager provides its investment advice to the Manager pursuant to Section 7.3 of OSC Rule 35-502 Non-Resident Advisers.

7. The Fund does not engage in the continuous distribution of its securities.

8. In connection with the Warrant Offering, the Fund has filed a preliminary short form prospectus dated February 17, 2012 under the securities legislation of the Province of Ontario and each Passport Jurisdiction. Under the Warrant Offering, each holder of a Class A Unit as at a specified record date will be entitled to receive, for no consideration, one Class A Warrant for each Class A Unit held by such holder and each holder of a Class F Unit as at a specified record date will be entitled to receive, for no consideration, one Class F Warrant for each Class F Unit held by such holder. The Class A Warrants and the Class F Warrants are collectively referred to herein as the Warrants.

9. Holders of the Class A Warrants and Class F Warrants will be entitled, upon the exercise of their Class A Warrants and Class F Warrants, to subscribe for Class A Units and Class F Units, respectively, pursuant to subscription privileges provided for in the Warrants, at a subscription price to be specified in the Warrant Prospectus. Each Warrant of a class will entitle the holder to subscribe for one Unit of the applicable class under a basic subscription privilege. Holders of Warrants who exercise their Warrants under the basic subscription privilege may also subscribe, pro rata, for additional Units of the applicable class that are not subscribed for by other holders under the basic subscription privilege pursuant to the terms of an additional subscription privilege. The Warrants (including both the basic subscription privilege and the additional subscription privilege) may be exercised on each Monday (and if a Monday is not a business day then the next business day immediately following such Monday) commencing on market open (Toronto time) until 5:00 p.m. (Toronto time) on such business day until 5:00 p.m. (Toronto time) on November 26, 2012.

10. The Fund intends to apply to list the Class A Warrants to be distributed under the Warrant Prospectus on the TSX.

11. The Warrant Offering Activities will consist of:

(a) the distribution of the Warrant Prospectus and the issuance of Warrants to the holders of Units (as at the record date specified in the Warrant Prospectus), after the Warrant Prospectus has been filed, and receipts obtained, under the securities legislation of the Province of Ontario and each Passport Jurisdiction; and

(b) the distribution of Units to holders of the Warrants, upon the exercise of Warrants by their holders, through registered dealers that are registered in categories that permit them to make such distribution.

12. The Fund is in the business of trading securities by virtue of its portfolio investing activities, which to the extent carried out in Ontario, are made pursuant to section 8.5 [Trades through or to a registered dealer] of National Instrument 31-103 -- Registration Requirements, Exemptions and Ongoing Registrant Obligations. As a result, its capital raising activities, including the Warrant Offering Activities, would require the Fund and the Manager, acting on the Fund's behalf, to register as a dealer in the absence of the Requested Relief (or another available exemption from the dealer registration requirements).

13. Section 8.5 of National Instrument 45-106 -- Prospectus and Registration Exemptions (NI 45-106) provides that, after March 26, 2010, the exemptions from the dealer registration requirements set out in sections 3.1 [Rights offering] and section 3.42 [Conversion, exchange or exercise] of NI 45-106 no longer apply.

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 Fund and the Manager, acting on behalf of the Fund, are not subject to the dealer registration requirement in respect of the Warrant Offering Activities.

"Margot C. Howard"
Commissioner
 
"Mary Condon"
Vice-Chair