Securities Law & Instruments

Headnote

Under 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. The Filers are affiliated entities and have valid business reasons for the individuals to be registered with both firms. The Filers have policies in place to handle potential conflicts of interest. The Filers are exempted from the prohibition.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System, s. 4.7.

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

February 14, 2014

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 SUN LIFE GLOBAL INVESTMENTS (CANADA) INC. (SLGI) AND SUN LIFE INVESTMENT MANAGEMENT INC. (SUN LIFE IM, and together with SLGI, 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 relief from the restriction under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) (the Dual-Registration Restriction), pursuant to section 15.1 of NI 31-103, to permit the individuals identified in Schedule "A" (currently registered with SLGI) and any future advising representatives, associate advising representatives, and/or dealing representatives (collectively, the Representatives) to each be registered as an advising representative, associate advising representative, and/or dealing representative, as the case may be, of each of SLGI and Sun Life IM (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) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102Passport System (MI 11-102) is intended to be relied upon by the Filers in each jurisdiction of Canada outside of Ontario (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:

1. SLGI is registered as an investment fund manager, commodity trading manager, mutual fund dealer and portfolio manager in Ontario; as an investment fund manager and mutual fund dealer in each of Newfoundland and Labrador and Québec; and as a mutual fund dealer in each of Alberta, British Columbia, Manitoba, New Brunswick, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Saskatchewan and Yukon. The head office of SLGI is located in Toronto, Ontario.

2. Sun Life IM is registered as an investment fund manager, exempt market dealer and portfolio manager in each of the Jurisdictions. Sun Life IM has applied for registration as a commodity trading manager in Ontario. Sun Life IM currently intends to name Douglas James Gardiner, one of the Representatives listed in Schedule "A", as one of its Supervisory Procedures Persons in respect of commodity futures and register Douglas James Gardiner with the Ontario Securities Commission under the Commodity Futures Act (Ontario). The head office of Sun Life IM is located in Toronto, Ontario.

3. Sun Life Financial Inc. (SLF Inc.) is a publicly-listed company that trades on the Toronto, New York and Philippine stock exchanges and wholly-owns, indirectly, SLGI and Sun Life IM.

4. Sun Life Assurance Company of Canada (Sun Life Assurance) is wholly-owned by SLF Inc. and is an operating life insurance company that is regulated by the Office of the Superintendent of Financial Institutions. As part of its insurance operations, Sun Life Assurance invests monies that account for its general fund into various asset classes, including mortgages, real estate, private fixed income, derivatives, equities and bonds. The team that manages the general fund of Sun Life Assurance consists of over 200 investment professionals (theInvestments Team).

5. Since each of Sun Life Assurance, SLGI and Sun Life IM are under SLF Inc.'s common control, each such entity is an affiliate of the other.

6. SLGI and Sun Life IM obtain the services of Sun Life Assurance for administrative matters, including finance, accounting and legal work. In this respect, some of their operations may be considered to have a significant level of common infrastructure.

7. Each of the current Representatives listed in Schedule "A" is registered as an advising representative of SLGI in Ontario and is a resident of Ontario. Each current Representative is employed by Sun Life Assurance in the Investments Team and provides services to SLGI pursuant to an administrative services agreement between Sun Life Assurance and SLGI.

8. SLGI is the investment fund manager and portfolio manager of prospectus-qualified mutual funds that are sold primarily to retail investors in Canada (the SLGI Funds). SLGI also provides portfolio management services to portfolios and accounts of other entities in the Sun Life Financial group of companies.

9. Sun Life IM was incorporated with the intention of establishing an asset management business offering the investment capabilities of Sun Life Assurance's Investments Team to institutional clients. It is anticipated that Sun Life IM will act as investment fund manager, portfolio manager and exempt market dealer of pooled funds consisting of real estate assets, commercial mortgages, private fixed income assets and public bonds and derivatives, or a combination thereof, that will be sold primarily to institutional clients (and may also be sold to certain high net worth clients that qualify as "accredited investors" as defined in National Instrument 45-106 Prospectus and Registration Exemptions) in each of the Jurisdictions (the Pooled Funds). It is also anticipated that Sun Life IM will act as portfolio manager to third-party managed accounts of institutional clients.

10. The current Representatives provide portfolio management services in respect of various portfolios and accounts of entities within the Sun Life Financial group of companies. It is proposed that the Representatives will also provide portfolio management and/or distribution services in respect of the Pooled Funds and third-party managed accounts in their capacities as advising representatives, associate advising representatives and/or dealing representatives of Sun Life IM (the Dual Registration).

11. There are valid business reasons for the Representatives to be registered with each of the Filers. Specifically, the Dual Registration is being requested to permit the Representatives, who provide portfolio management services in respect of various portfolios and accounts of entities within the Sun Life Financial group of companies in their capacities as advising, associate advising and/or dealing representatives of SLGI, to provide portfolio management and/or distribution services in respect of the Pooled Funds and third party managed accounts of institutional clients in their capacities as advising, associate advising and/or dealing representatives of Sun Life IM.

12. Since the Representatives will be dealing with a different client base in their respective roles with SLGI and Sun Life IM, there is minimal potential for conflicts of interest or client confusion in this respect. In addition, the Filers are affiliates 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 the Filers are aligned, and as the Representatives' role is to support the business activities and interests of the Sun Life Financial group of companies (including SLGI and Sun Life IM), the potential for conflicts of interest is remote.

13. The Filers each have adequate policies and procedures in place to address any potential conflicts of interest that may arise as a result of the Dual Registration of the Representatives and will be able to appropriately deal with any such conflicts.

14. The Representatives will be subject to supervision by, and the applicable compliance requirements and policies and procedures of, both Filers and Sun Life Assurance. Existing compliance and supervisory structures will apply to the Representatives, including in respect of the Dual Registration, depending on with which regulated entity the client assets are held.

15. The Filers' respective Chief Compliance Officers will ensure that each Representative has sufficient time and resources to adequately serve each Filer and its clients.

16. In order to minimize client confusion, the relationship between SLGI and Sun Life IM, and the fact that the Representatives are dually registered with both SLGI and Sun Life IM, will be fully disclosed to clients of each of SLGI and Sun Life IM that deal with those Representatives.

17. The Representatives shall act in the best interest of all clients of the Filers and will deal fairly, honestly and in good faith with those clients.

18. The Filers are not in default of any requirement of securities, commodity futures or derivatives legislation in any of the Jurisdictions.

19. In the absence of the Exemption Sought, the Filers would be prohibited by the Dual-Registration Restriction from permitting a Representative to act as an advising representative, associate advising representative, and/or dealing representative, as the case may be, of each of the Filers, even though the Filers are affiliates.

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 circumstances described above in paragraphs 13, 14, 15, 16 and 17 remain in place.

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

Schedule "A"

List of Representatives

Name

NRD Number

 

Kathryn Ruth Fric

2613431

 

Douglas James Gardiner

2226061

 

Jonathan Marc Hurley

2760621

 

Randy Paul Leo Malcolm

384421

 

Todd Jeffrey Williamson

1313881

 

Alexandra Andriyivna Zvarych

2869001