Securities Law & Instruments

Headnote

The relief provides an exemption, pursuant to section 233 of Regulation 1015 made under the Securities Act (Ontario) (the Regulation) from the prohibition in section 227(2)(b)(ii) of the Regulation. The prohibition prevents a registrant, when acting as a portfolio manager with discretionary authority, from providing advice with respect to a client's account to purchase and/or sell the securities of a related issuer or a connected issuer of the registrant, unless the registrant (i) secures the specific and informed written consent of the client once in each twelve month period and (ii) provides the client with its statement of policies.

Statutes Cited

Regulation 1015 made under the Securities Act (Ontario), ss. 227(2)(b)(ii), 233.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, CHAPTER S.5, AS AMENDED

(the Act)

AND

IN THE MATTER OF

ONTARIO REGULATION 1015,

R.R.O. 1990, AS AMENDED

(the Regulation)

AND

IN THE MATTER OF

MACKENZIE FINANCIAL CORPORATION

 

ORDER

(Section 233 of the Regulation)

UPON the application (the Application) of Mackenzie Financial Corporation (the Applicant) to the Ontario Securities Commission (the Commission) for an order, pursuant to Section 233 of the Regulation, exempting the Applicant from the requirement in subsection 227(2)(b) of the Regulation that a registrant acting as an adviser and exercising discretionary authority with respect to the investment portfolio or account of a client not purchase or sell the securities of a related issuer or, in the course of a distribution, securities of a connected issuer of the registrant, to invest in securities of funds managed, or to be managed, by the Applicant, unless once in each twelve month period it provides the client with a copy of its statement of policies and secures the specific and informed written consent of the client to the exercise of the discretionary authority in respect of the securities;

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

AND UPON the Applicant having represented to the Commission that:

1. The Applicant is a corporation amalgamated under the laws of Ontario and an indirect wholly-owned subsidiary of Power Financial Corporation. Its head office is located in Toronto. The Applicant is registered as an adviser in the categories of investment counsel and portfolio manager in Ontario, Manitoba and Alberta. The Applicant is also registered in Ontario as a dealer in the category of limited market dealer, as well as registered as a commodity trading manager under the Commodity Futures Act (Ontario). The Applicant is not in default of securities legislation in any jurisdiction.

2. The Applicant provides discretionary investment management services to certain high net worth and institutional investors (in each case, a Client). Each Client has a segregated, separate portfolio of securities managed by the Applicant.

3. The Applicant is also the portfolio manager for a suite of mutual funds that are subject to, among other rules, National Instrument 81-102 Mutual Funds and National Instrument 81-107 Independent Review Committee for Investment Funds. In connection with those activities, the Applicant is able, pursuant to certain conditions, to invest the assets of its mutual funds in securities of related and/or connected issuers.

4. Clients whose investments are managed by the Applicant will enter into an investment management agreement with the Applicant that authorizes the Applicant, where it may be desirable, to invest in the securities of related and connected issuers listed in Schedule A hereto (the Related/Connected Issuers) (the Investment Management Agreement). Most of the Related/Connected Issuers are related issuers to the Applicant by virtue of the ownership of equity interests, directly or indirectly, by affiliates or subsidiaries of Power Financial Corporation. The others are connected issuers to the Applicant because a director or officer of a Applicant's related issuer is also a director and/or officer of the issuer, and as a result of this relationship, a reasonable prospective purchaser may question if the issuer and the Applicant are independent.

5. Each Client will receive a copy of the Applicant's Statement of Policies (the Statement of Policies), as prescribed by the Regulation. The Statement of Policies includes a conflicts statement listing the Related/Connected Issuers of the Applicant, as those terms are defined in National Instrument 33-105 Underwriting Conflicts. The Statement of Policies will specifically identify the relationship between the Applicant and the Related/Connected Issuers. In the event of a significant change in its Statement of Policies, as required by the Regulation, the Applicant provides to each of its Clients a copy of the revised version of, or amendment to, the Statement of Policies.

6. Pursuant to the Investment Management Agreement, each Client will consent to invest, where it may be desirable, in the securities of the Related/Connected Issuers. Each Client will specifically consent to the Applicant exercising its discretion under the Investment Management Agreement to buy and sell securities of the Related/Connected Issuers.

7. Clients receive statements of account on a quarterly basis that set out their portfolio holdings, including whether the Client holds securities of the Related/Connected Issuers.

8. Although the Applicant currently does not seek to invest the assets of its Clients in securities of its other related issuers, including its mutual funds and parent company IGM Financial Inc., these and all other applicable related and connected issuers are listed, or will be listed, in the Applicant's latest revised version of its Statement of Policies.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to section 233 of the Regulation, that the Applicant is exempt from the requirement in subsection 227(2)(b) of the Regulation that a registrant acting as an adviser and exercising discretionary authority with respect to the investment portfolio or account of a client not purchase or sell the securities of a related issuer or, in the course of a distribution, securities of a connected issuer of the registrant, to invest in securities of funds managed, or to be managed, by the Applicant, unless once in each twelve month period it provides the client with a copy of its statement of policies and secures the specific and informed written consent of the client to the exercise of the discretionary authority in respect of the securities, provided that:

(a) the Applicant will secure the specific and informed consent of its Clients in advance of the exercise of discretionary authority in respect of the purchase or sale of securities of the Related/Connected Issuers;

(b) the Applicant has previously provided its Clients with a Statement of Policies which identifies the relationship between the Applicant and the Related/Connected Issuers and, in the event of a significant change in the Statement of Policies, will provide to each of its Clients a copy of the revised version of, or amendment to, the Statement of Policies; and

(c) regardless of any requirements under the Regulation, any account statement provided by the Applicant to the Client discloses which issuers are related and/or connected issuers of the Applicant.

January 9, 2009

"David L. Knight"
Commissioner
Ontario Securities Commission
 
"Carol S. Perry"
Commissioner
Ontario Securities Commission

 

Schedule A

Related/Connected Issuers

Adaltis Inc.
Alpha Energy Flow-Through (2006) Limited Partnership
BELLUS Health Inc.
The Canada Life Assurance Company
Canada Life Capital Trust
Canada Life Financial Corporation
Counsel Mutual Funds
The Great-West Life Assurance Company
Great-West Life Capital Trust
Great-West Lifeco Finance (Delaware) L.P.
Great-West Lifeco Finance (Delaware) L.P. II
Great-West Lifeco Inc.
Groupe Bruxelles Lambert S.A.
Howson Tattersall Pool Funds
IGM Financial Inc.
Imerys S.A.
Investors Group Corporate Class Inc.
Investors Group Mutual Funds
Investors Group Trust Co. Ltd.
Investors Syndicate Limited
Keystone Funds
M.R.S. Trust Company
MSP 2007 Resource Limited Partnership
MSP 2008 Resource Limited Partnership
MSP Maxxum Trust
Mackenzie Alternative Strategies Fund
Mackenzie Cundill Funds
Mackenzie Destination Funds
Mackenzie Financial Capital Corporation
Mackenzie Focus Funds
Mackenzie Funds
Mackenzie Ivy Funds
Mackenzie Master Limited Partnership
Mackenzie Maxxum Funds
Mackenzie Putnam Funds
Mackenzie Sentinel Funds
Mackenzie Universal Funds
Maxim Series Fund, Inc.
Multi-Class Investment Corp.
PanAgora Emerging Markets Multi-Alpha Fund, Ltd.
Pargesa Holdings S.A.
Power Corporation of Canada
Power Financial Corporation
Putnam Private Pooled Funds
Quadrus Mutual Funds
Saxon Mutual Funds
Setanta Constituted Unit Trusts
Symmetry Funds

and any future issuers related or connected to Mackenzie Financial Corporation.