Securities Law & Instruments

Headnote

Multilateral Instrument 11-102 Passport System -- Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 33-109 Registration Information (NI 33-109) -- relief from certain filing requirements of NI 33-109 in connection with a bulk transfer of business locations and registered and non-registered individuals under an amalgamation.

Multilateral Instruments Cited

Multilateral Instrument 11-102 Passport System.

National Instruments Cited

National Instrument 33-109 Registration Information.

October 19, 2009

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

SCOTIA CASSELS INVESTMENT COUNSEL

LIMITED (SCICL), SCOTIA ASSET MANAGEMENT L.P.

(SAM LP), SCOTIA SECURITIES INC. (SSI) AND

2210190 ONTARIO INC. (New SSI)

(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 Ontario (the Legislation) for relief pursuant to section 7.1 of National Instrument 33-109 Registration Information (NI 33-109) and Section 7.1 of Ontario Securities Commission Rule 33-506 Registration Information (Rule 33-506) to allow the bulk transfer of (a) all of the registered individuals and all of the locations of SCICL to a newly formed Ontario limited partnership, SAM LP and (b) all of the registered individuals and all of the locations of SSI to a newly formed Ontario company, New SSI, to replace SSI (as described below) (the Bulk Transfer), effective on November 1, 2009 in accordance with section 3.4 of the companion policy to NI 33-109 and section 3.4 of the companion policy to Rule 33-506 (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

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

(ii) the Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by each of the Filers on the same basis in all of the other provinces and territories of Canada (together 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:

SCICL

1. SCICL is a wholly-owned subsidiary of The Bank of Nova Scotia (BNS). The head office of SCICL is in Ontario.

2. SCICL is registered as an adviser in the category of portfolio manager in each province and territory of Canada except the Northwest Territories and Nunavut and as a dealer in the category of exempt market dealer under the Securities Act (Ontario). SCICL is also registered as an adviser in the category of commodity trading manager under the Commodity Futures Act (Ontario).

3. SCICL is not in default of the securities legislation in any of the Jurisdictions.

SSI

4. SSI is a wholly-owned subsidiary of BNS. The head office of SSI is in Ontario.

5. SSI is registered as a dealer in the category of mutual fund dealer in each province and territory of Canada and is a member of the Mutual Fund Dealers Association of Canada (MFDA).

6. SSI is not in default of the securities legislation in any of the Jurisdictions.

SAM LP

7. SAM LP is an Ontario limited partnership all of the limited partnership units of which are owned directly or indirectly by BNS. SAM LP is owned 99.999% by Scotia Securities Inc. (which is 100% owned by BNS) and 00.001% by its general partner, Scotia Asset Management G.P. Inc. which is 100% owned by Scotia Securities Inc. (which in turn is 100% owned by BNS). The head office of SAM LP is in Ontario.

8. SAM LP is registered as an adviser in the category of portfolio manager in each province and territory of Canada except the Northwest Territories and Nunavut and as a dealer in the category of exempt market dealer under the Securities Act (Ontario). SAM LP is also registered as an adviser in the category of commodity trading manager under the Commodity Futures Act (Ontario).

9. SAM LP is not in default of the securities legislation in any of the Jurisdictions.

New SSI

10. New SSI is wholly-owned directly and indirectly by BNS. The head office of New SSI is in Ontario.

11. New SSI is registered as a dealer in the category of mutual fund dealer in each province and territory of Canada and is a member of the MFDA.

12. New SSI is not in default of the securities legislation in any of the Jurisdictions.

Reorganization

13. The Filers have confirmed that, as part of the reorganization of Scotia's asset management and investment fund manager businesses into a single entity, SAM LP, the mutual fund dealer business of SSI will transfer to New SSI, the asset management and investment fund manager businesses of SCICL and SSI will transfer to SAM LP, in each case effective on November 1, 2009, and SCICL and SSI will cease operations on the commencement of SAM LP's and New SSI's businesses.

14. Effective on November 1, 2009, all of the current registrable activities of SSI will become the responsibility of New SSI and all the current registrable activities of SCICL will become the responsibility of SAM LP. New SSI will assume all of the existing registrations and approvals for all of the registered individuals and all of the locations of SSI transferred to it and SAM LP will assume all of the existing registrations and approvals for all of the registered individuals and all of the locations of SCICL transferred to it. It is not anticipated that there will be any disruption in the ability of SAM LP and New SSI to conduct their respective businesses (as applicable) on behalf of their respective clients, and SAM LP and New SSI should be able to advise and trade (as and where applicable) on behalf of such clients immediately after the reorganization.

15. SAM LP will be registered in the same categories of registration as SCICL was registered immediately prior to the reorganization in the respective Jurisdictions, and will be subject to, and will comply with, all applicable securities laws, and New SSI will be registered in the same category of registration as SSI was registered immediately prior to the reorganization in the respective Jurisdictions, and will be subject to, and will comply with, all applicable securities laws.

16. SAM LP will carry on the same business of SCICL and SSI transferred to it and New SSI will carry on the same mutual fund dealer business of SSI transferred to it, in each case in substantially the same manner with essentially the same personnel.

17. The Exemption Sought will not be contrary to the public interest and will have no negative consequences on the ability of either New SSI or SAM LP to comply with all applicable regulatory requirements or the ability to satisfy any obligations in respect of the clients of SSI and SCICL, respectively.

18. Given the significant number of registered individuals of SSI and SCICL, it would be extremely difficult to transfer each individual to New SSI and SAM LP, respectively, in accordance with the requirements of NI 33-109 and Rule 33-506 if the Exemption Sought is not granted.

19. A customer communication plan has been developed and customers of SSI and SCICL have been advised of the reorganization with their September quarterly account statements.

20. The head office of SAM LP will be SCICL's current head office location, which is 1 Queen St. East, Suite 1200, Toronto, Ontario, M5C 2W5. The head office of New SSI will be SSI's current head office, which is located at 40 King St. West, 5th Floor, Toronto, Ontario, M5H 1H1.

21. All of the officers of SCICL will become officers of SAM LP; all of the officers of SSI engaged in SSI's investment fund manager business will be officers of SAM LP; and all of the officers and directors of SSI will be officers and directors of New SSI.

22. The compliance departments of SAM LP and New SSI will carry on in substantially the same manner with essentially the same personnel as the compliance departments of SCICL and SSI, and there will be written policies and procedures for each of SAM LP and New SSI based on the written policies and procedures of the predecessor businesses.

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, provided that the Filers make acceptable arrangements with CDS Inc. for the payment of the costs associated with the Bulk Transfer, and make such payment in advance of the Bulk Transfer.

"Erez Blumberger"
Manager
Registrant Regulation