Decision of the Director pursuant to section 127(2)(h) of the Regulation, that a registered salesperson would be exempt from the full-time employment requirement in section 127(1) of the Regulation in the circumstances described, subject to certain conditions and restrictions.
February 13, 2007
IN THE MATTER OF
THE SECURITIES ACT, R.S.O 1990,
CHAPTER S. 5, AS AMENDED (the Act)
IN THE MATTER OF
ONTARIO REGULATION 1015, R.R.O 1990,
AS AMENDED (the Regulation)
IN THE MATTER OF
EQUITY ASSOCIATES INC.
UPON the application (the Application) of Equity Associates Inc. (Equity Associates) and Elaine Politsky (together, the Applicants) to the Ontario Securities Commission for a decision pursuant to section 127(2)(h) of the Regulation that Elaine Politsky be exempt from the full time employment requirement in section 127(1) of the Regulation in her position as a registered salesperson with Equity Associates, in the circumstances described;
AND UPON considering the Application and the recommendation of the staff of the Commission;
AND UPON the Applicants having represented to the Commission that:
1. Equity Associates is a corporation incorporated under the laws of Ontario and carrying on business as a mutual fund dealer and a limited market dealer in Ontario.
2. Elaine Politsky is registered in Ontario as a salesperson with Equity Associates and carries on her business under the trade name ESI Wealth Management.
3. Crystal Wealth Management System Limited (Crystal) is a corporation incorporated under the laws of Ontario and is registered in Ontario as an advisor in the categories of investment counsel and portfolio manager, as a dealer in the category of a limited market dealer and as a commodity trading manager under the Commodity Futures Act (Ontario).
4. Crystal is currently the advisor for several mutual funds that are offered on a private placement basis pursuant to prospectus exemptions. One of these mutual funds, the ESI Managed Portfolio (the Fund) was developed with input from Elaine Politsky and intended to serve as an investment vehicle for some of Elaine Politsky's clients.
5. In her role as a salesperson with Equity Associates, Elaine Politsky is currently selling units of the Fund to interested clients.
6. Crystal wishes to add Elaine Politsky as a member of the investment advisory committee (the Investment Committee) for the Fund.
7. Equity Associates has provided its consent to Elaine Politsky to become a member of the Investment Committee.
8. Elaine Politsky would be expected to attend one meeting per month and would be paid a nominal amount per meeting for her services as member of the Investment Committee.
9. Crystal, as the Fund's advisor, is responsible for all the investment decisions in respect of the Fund's portfolio and is not obligated to follow any recommendations of the Investment Committee.
10. In the absence of the relief requested, Elaine Politsky would not be able to become a member of the Investment Committee.
AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;
IT IS ORDERED THAT pursuant to section 127(2)(h) of the Regulation, in the opinion of the Director, the activities of Elaine Politsky as a member of the Investment Committee will not interfere with her duties or responsibilities to Equity Associates, and therefore she shall be exempt from section 127(1) of the Regulation for purposes of serving as a member of the Investment Committee, provided that:
1. Equity Associates consents to Elaine Politsky being a member of the Investment Committee;
2. the fees or other remuneration paid to Elaine Politsky as a member of the Investment Committee shall be a fixed amount and not dependent on the performance of the Fund or the number of clients she refers to the Fund;
3. any client of Elaine Politsky wanting to purchase units of the Fund be provided, in advance of such purchase, with a conflict disclosure letter which discloses Elaine Politsky's membership on the Investment Committee; and
4. each client provides prior written consent to their purchase of units of the Fund which specifically acknowledges the potential conflict of interest from Elaine Politsky's membership on the Investment Committee of the Fund.
"David M. Gilkes"