Trapeze Capital Corp. et al.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- 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 -- policies in place to handle potential conflicts of interest -- Filer exempted from prohibition.

Applicable Legislative Provisions

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

July 20, 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

TRAPEZE CAPITAL CORP.

(TCC)

AND

TRAPEZE ASSET MANAGEMENT INC.

(TAMI)

AND

ANTHONY VISANO

(the Filers)

DECISION

Background

The regulator in Ontario has received an application from the Filers (the Application) for a decision under the securities legislation of the Jurisdiction of the regulator (the Legislation) for relief from the requirement under paragraph 4.1(1)(b) of National Instrument 31-103Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) to permit Anthony Visano (the Representative) to be registered as both a dealing representative of TCC and an advising representative of TAMI (the Dual Registration) (the Relief Sought).

Interpretation

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

Representations

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

1. TCC is registered under NI 31-103 as an investment dealer in Ontario, Alberta, Quebec and British Columbia and is a member of Investment Industry Regulatory Organization of Canada (IIROC).

2. TAMI is registered under NI 31-103 as a portfolio manager and an exempt market dealer in Ontario and a portfolio manger in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia and Saskatchewan.

3. The Filers are affiliated as they are both owned by the same entity, 1346049 Ontario Limited, which is controlled by Randall Abramson.

4. TAMI and TCC also share common officers and directors and have approximately 6 individuals that are dually registered.

5. The Representative is currently registered in Ontario as a dealing representative under the category of investment dealer with TCC. He also carries out the activities of an advising representative under TTC but is exempt from registration in such capacity under section 8.24 of NI 31-103. He has applied for registration as an advising representative of TAMI in Ontario only and is not seeking registration in other jurisdictions at this time.

6. TCC was established by the principals in 1998 in order to provide investment services (portfolio management and brokerage) to clients, many of whom were brought over from the principals' previous sponsoring firm, which was also an investment dealer. TAMI was established in 1999 by the principals of TCC, along with another individual (who is no longer an employee or shareholder of TAMI), to provide portfolio management services to clients through separately managed accounts and pooled funds marketed to institutional clients, as well as to individuals. Currently, TCC does little or no marketing and most new client accounts are opened at TAMI.

7. The Representative has been a full time employee of both TAMI and TCC since 2004 and has been conducting research and analysis of equity and fixed income securities to support the portfolio managers in making investment decisions. The intention is for the Representative to spend a portion of time in an advising capacity for client accounts at TAMI, including client accounts for the Representative's family members. TAMI may wish assign Anthony as a portfolio manager for existing (e.g., Trapeze Value Trust, Trapeze Value Class) or new investment funds managed by TAMI.

8. Each TAMI and TCC client receives a disclosure explaining that (a) the TAMI and TCC are related to one another (b) TAMI may use TCC exclusively for brokerage services (c) TAMI and TCC share officers and directors and (d) TAMI and TCC share the same office premises.

9. The corporate Filers have in place policies and procedures to address conflicts of interest that may arise as a result of the Dual Registration, and believe that they will be able to appropriately deal with these conflicts. They currently have 6 dually registered individuals and the corporate Filers have represented that they have been able to deal with the potential of conflicts.

10. The Representative will be subject to supervision by, and the applicable compliance requirements of, both firms. Existing compliance and supervisory structures will apply depending on which regulatory entity the client has engaged for advisory purposes.

11. In addition, the Filers have represented that TAMI and TCC have the identical standard fee schedules for their clients (subject to certain exceptions for legacy accounts of each of TAMI and TCC for which a different fee agreement may apply). This has eliminated any financial incentives to direct a potential client to one over the other. Accordingly, there is limited inherent conflict of interest with respect to business development activities.

12. The corporate Filers are each wholly-owned subsidiaries of 1346049 Ontario Limited and accordingly, the Dual Registration will not give rise to the conflicts of interest present in a similar arrangement involving unrelated, arm's length firms. The interests of TAMI and TCC are aligned and therefore, the potential for conflicts of interest are remote.

13. None of the Filers is in default of any requirements of securities legislation in any jurisdiction of Canada

14. In the absence of the Relief Sought, the corporate Filers would be prohibited from permitting a Representative to act as an advising representative of TAMI while the individual is a dealing representative of TCC even though TAMI is an affiliate of TCC.

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.

"Marrianne Bridge"
Deputy Director, Compliance and Registrant Regulation
Ontario Securities Commission