Ontario Securities Commission Bulletin

Issue 33/01 - January 08, 2010

Ont. Sec. Bull. Issue 33/01

Table of Contents

Chapter 1 - Notices / News Releases

Notices

• Current Proceedings before the Ontario Securities Commission

• Notice of Amendments to the Securities Act and the Commodity Futures Act

• The Investment Funds Practitioner

• OSC Staff Notice 11-739 (Revised) -- Policy Reformulation Table of Concordance and List of New Instruments

• Notice of Commission Approval -- IIROC -- UMIR Amendments -- Provisions Respecting Trading During Certain Securities Transactions

Notices of Hearing

• Rezwealth Financial Services Inc. et al. -- ss. 127(7), 127(8)

News Releases

• OSC Lays Charges Against Danny Silva De Melo and Steven John Hill in Ontario Court of Justice

Notices from the Office of the Secretary

• HSBC Bank Canada

• Canadian Imperial Bank of Commerce and CIBC World Markets Inc.

• Roger D. Rowan et al.

• Barry Landen

• MI Developments Inc.

Chapter 2 - Decisions, Orders and Rulings

Decisions

• Mackenzie Financial Corporation et al.

• Contrans Income Fund -- s. 1(10)

• Gildan Activewear Inc.

• PowersShares India Class

• Suncor Energy Inc.

• Canwel Building Materials Income Fund and Canwel Holding Partnership

• Toromont Industries Ltd.

• Western Canadian Coal Corp.

• EPCOR Power Equity Ltd. and EPCOR Power L.P.

• Great-West Lifeco Inc. et al.

• Southern Pacific Resource Corp.

• The Fédération des Caisses Desjardins du Québec and the Funds Listed in Schedule "A"

• Investia Financial Services Inc.

• Blackmont Capital Inc. and Broadridge Investor Communications Corporation -- MRRS Decision

Orders

• HSBC Bank Canada

• Canadian Imperial Bank of Commerce and CIBC World Markets Inc.

• Roger D. Rowan et al.

• McLaren Resources Inc. -- s. 144

• Barry Landen -- s. 127

• Rezwealth Financial Services Inc. et al. -- ss. 127(1), 127(5)

• Irwin Boock et al. -- ss. 127, 127.1

Chapter 3 - Reasons: Decisions, Orders and Rulings

OSC Decisions, Orders and Rulings

• Roger D. Rowan et al.

• MI Developments Inc.

Chapter 4 - Cease Trading Orders

• Temporary, Permanent & Rescinding Issuer Cease Trading Orders

• Temporary, Permanent & Rescinding Management Cease Trading Orders

• Outstanding Management & Insider Cease Trading Orders

Chapter 8 - Notice of Exempt Financings

• Reports of Trades Submitted on Forms 45-106F1 and 45-501F1

Chapter 9 - Legislation

• Bill 218, Ontario Tax Plan For More Jobs And Growth Act, 2009

• Bill 212, Good Government Act, 2009

Chapter 11 - IPOs, New Issues and Secondary Financings

Chapter 12 - Registrations

• Registrants

Chapter 13 - SRO Notices and Disciplinary Proceedings

• MFDA Issues Notice of Hearing Regarding Nathan H. Disenhouse

• MFDA Hearing Panel Reschedules Marlene Legare Hearing

• IIROC Rules Notice -- Notice of Approval -- UMIR -- Provisions Respecting Trading During Certain Securities Transactions

Chapter 25 - Other Information

Consents

• East West Resource Corporation -- s. 4(b) of the Regulation

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Chapter 1 -- Notices / News Releases

Current Proceedings Before The Ontario Securities Commission

JANUARY 8, 2010

CURRENT PROCEEDINGS

BEFORE

ONTARIO SECURITIES COMMISSION

Unless otherwise indicated in the date column, all hearings will take place at the following location:

The Harry S. Bray Hearing Room

Ontario Securities Commission

Cadillac Fairview Tower

Suite 1700, Box 55

20 Queen Street West

Toronto, Ontario

M5H 3S8

Late Mail depository on the 19^th Floor until 6:00 p.m.

THE COMMISSIONERS

SCHEDULED OSC HEARINGS

ADJOURNED SINE DIE

Global Privacy Management Trust and Robert Cranston

S. B. McLaughlin

Livent Inc., Garth H. Drabinsky, Myron I. Gottlieb, Gordon Eckstein, Robert Topol

Portus Alternative Asset Management Inc., Portus Asset Management Inc., Boaz Manor, Michael Mendelson, Michael Labanowich and John Ogg

Maitland Capital Ltd., Allen Grossman, Hanouch Ulfan, Leonard Waddingham, Ron Garner, Gord Valde, Marianne Hyacinthe, Diana Cassidy, Ron Catone, Steven Lanys, Roger McKenzie, Tom Mezinski, William Rouse and Jason Snow

Global Petroleum Strategies, LLC, Petroleum Unlimited, LLC, Aurora Escrow Services, LLC, John Andrew, Vincent Cataldi, Charlotte Chambers, Carl Dylan, James Eulo, Richard Garcia, Troy Gray, Jim Kaufman, Timothy Kaufman, Chris Harris, Morgan Kimmel, Roger A. Kimmel, Jr., Erik Luna, Mitch Malizio, Adam Mills, Jenna Pelusio, Rosemary Salveggi, Stephen J. Shore and Chris Spinler

LandBankers International MX, S.A. De C.V.; Sierra Madre Holdings MX, S.A. De C.V.; L&B LandBanking Trust S.A. De C.V.; Brian J. Wolf Zacarias; Roger Fernando Ayuso Loyo, Alan Hemingway, Kelly Friesen, Sonja A. McAdam, Ed Moore, Kim Moore, Jason Rogers and Dave Urrutia

Hollinger Inc., Conrad M. Black, F. David Radler, John A. Boultbee and Peter Y. Atkinson

Notice of Amendments to the Securities Act and the Commodity Futures Act

NOTICE OF AMENDMENTS TO

THE SECURITIES ACT AND

THE COMMODITY FUTURES ACT

On December 15, 2009, the Government's Bill 218 (Ontario Tax Plan for More Jobs and Growth Act, 2009) received Royal Assent. Technical amendments to the Securities Act and the Commodity Futures Act were included in Bill 218. On the same date, the Government's Bill 212 (Good Government Act, 2009), containing further technical amendments to the Commodity Futures Act, also received Royal Assent.

An explanation of these amendments is provided in Chapter 9.

Questions may be referred to:

The Investment Funds Practitioner

January, 2010

THE INVESTMENT FUNDS PRACTITIONER

From the Investment Funds Branch, Ontario Securities Commission

What is the Investment Funds Practitioner?

The Practitioner is an overview of recent issues arising from applications for discretionary relief, prospectuses, and continuous disclosure documents that investment funds file with the OSC. It is intended to assist investment fund managers and their staff or advisors who regularly prepare public disclosure documents and applications for exemptive relief on behalf of investment funds.

The Practitioner is also intended to make you more broadly aware of some of the issues we have raised in connection with our reviews of documents filed with us and how we have resolved them. We hope that fund managers and their advisors will find this information useful and that the Practitioner can serve as a useful resource when preparing applications and disclosure documents.

The information contained in the Practitioner is based on particular factual circumstances. Outcomes may differ as facts change or as regulatory approaches evolve. We will continue to assess each case on its own merits.

The Practitioner has been prepared by staff of the Investment Funds Branch and the views it expresses do not necessarily reflect the views of the Commission or the Canadian Securities Administrators.

Request for Feedback

This is the fourth edition of the Practitioner. Previous editions of the Practitioner are available on the OSC website www.osc.gov.on.ca under Investment Funds -- Related Information. We welcome your feedback and any suggestions for topics that you would like us to cover in future editions. Please forward your comments by email to investmentfunds@osc.gov.on.ca.

Applications for Relief

NI 81-107 and the Conflicts Provisions

As noted in the third edition of the Practitioner, we continue to see a number of novel applications for relief from the various conflicts provisions under the Act and NI 81-102 based on IRC approval. We remind filers that the CSA deliberately chose to maintain the various conflicts provisions in the legislation and codify only limited exemptions from them in NI 81-107, rather than replace them wholesale with a fund governance agency.

We intend to complete a series of reviews with a view to assessing how the IRC approval system is working with the existing codified exemptions. In the interim, we encourage filers to carefully consider the basis for any novel relief from the conflicts provisions before filing an application.

Mergers and Reorganizations

We have recently noted a number of recurring issues in connection with mutual fund mergers and reorganizations:

• Not factoring securities regulatory approval into the transaction planning process: Some filers have not properly factored securities regulatory approval into their transaction planning process. In a couple of instances, this put the planned closing dates for the transactions at risk. We remind filers that mergers or reorganizations of mutual funds that do not meet the pre-approval criteria in section 5.6 of NI 81-102 require the approval of the securities regulatory authority under section 5.5 before the transaction is implemented. If the transaction requires securityholder approval, staff may review the information circular that will be sent to securityholders as part of the review of the application. Accordingly, it is generally a good idea to file the application for regulatory approval before materials are sent to securityholders.

• Applications missing required information: Section 5.7 of NI 81-102 sets out the basic information that should be included in an application for securities regulatory approval including a description of those elements of the proposed transaction that make section 5.6 inapplicable. Recently, we have found that some applications lack the required information. In some instances, filers have sought to rely upon staff to conduct this analysis on their behalf. We remind filers of their responsibility to provide all of the information set out in section 5.7 including their analysis of the elements of the proposed transaction that make section 5.6 inapplicable.

• Materials to be sent to securityholders: Section 5.6(f) of NI 81-102 sets out what must be included in the materials sent to securityholders including, if not previously sent to securityholders, the current simplified prospectus. We remind filers of the requirement to send the simplified prospectus and financial statements. We note that, historically, the Director has only provided limited relief from this requirement to facilitate filers sending a tailored prospectus, rather than relief from the requirement in its entirety.

• IRC review of fund mergers: We have been raising comments on merger approval applications to question whether the fund manager has submitted the merger to the funds' independent review committee for its review and recommendation as we generally view a merger to be a conflict of interest matter referable to the funds' IRC under NI 81-107.

Fund on Fund Relief and the Conflicts Provisions

The Director sometimes grants relief under NI 81-102 to facilitate fund on fund arrangements that do not comply with all of the conditions in section 2.5(2) of NI 81-102. Such applications are sometimes accompanied by a parallel application for relief from the conflicts of interest prohibitions under the Act. This second application is normally filed out of concern that the exemption codified under section 2.5(7) of NI 81-102 may not apply in instances where the fund on fund arrangement is exempt from some of the conditions in section 2.5(2). We generally do not request that applicants file the parallel Act application. We intend to amend section 2.5(7) at the next available opportunity to clarify that it still applies even where a fund has obtained an exemption from some of the conditions in section 2.5(2).

Prospectuses

Timing for obtaining a Prospectus Receipt

We remind filers and their advisors wishing to receive a receipt for either a preliminary prospectus or a prospectus on a specific day that the preliminary prospectus or prospectus and all accompanying material should be received by us in acceptable form on or before 12:00 noon on the day the receipt is required. If you are filing a prospectus for an investment fund during peak filing periods, please note that it may take longer to issue a final receipt. In those cases, we will use our best efforts to issue a final receipt within 24 hours.

If materials are filed after 12:00 noon, the receipt will normally be issued before noon on the next business day and dated as of that day.

For more information, please refer to OSC Staff Notice 41-701 Issuance of Receipts for Preliminary Prospectuses and Prospectuses.

We have recently noted an increasing number of requests in connection with closed-end and exchange traded funds for us to issue final receipts by either the last Thursday or Friday of a month in order to accommodate the underwriters' desire to book offerings as business for that particular month. We do not generally consider this to be a compelling reason to expedite our prospectus review process. We encourage filers and their underwriters that wish a final receipt by a particular month-end to file their preliminary materials and any necessary applications for exemptive relief sufficiently in advance of month-end to allow for review and resolution of any regulatory issues that may arise.

At a minimum, filers and their underwriters should consider filing their preliminary materials and any necessary applications for exemptive relief in the month before the month-end they wish to go final. You may also wish to review the service standards posted on our website which provide that we will use our best efforts to complete our review of investment fund prospectuses within 40 working days. Our reviews may take longer than this period when a fund is novel or includes novel features.

Two-tiered Structured Products - Top and Bottom Fund Prospectuses

We have recently advised filers seeking prospectus receipts for top and bottom funds in two-tiered structures, where the returns of the top fund are tied to the investments of the bottom fund, to submit the prospectuses for both funds at the same time for staff's review. This is because changes to the bottom fund's prospectus as a result of staff's comments may need to be reflected in the prospectus of the top fund. Filers should factor into their overall transaction timelines that both the top and bottom fund prospectuses need to be reviewed and receipted.

Two-tiered Structured Products -- Continuous Disclosure Undertakings

We have been raising comments on prospectuses filed for structured products where one fund obtains economic exposure to another through the use of a forward agreement. The comments are aimed at ensuring that investors will also receive on-going disclosure regarding the fund that forms the underlying interest under the forward agreement because this is where the actual substantive portfolio of the top fund is held. Filers have typically resolved these comments by agreeing to file an undertaking to provide investors with the option of also receiving continuous disclosure of the underlying interest and providing disclosure to that effect in the prospectuses.{1}

Yield Disclosure

We have been raising comments in connection with indicative portfolio and yield disclosure in long form prospectuses for bond or dividend funds. The following responses have generally resolved the comments and, in our view, resulted in more balanced disclosure:

• Removing the indicative portfolio and any yield information from the cover page or summary and including it in the body of the prospectus only.

• Including cautionary disclosure about the differences there may be between the indicative portfolio and the fund's actual portfolio with respect to composition and yield.

• Removing any disclosure that describes what an investor would have earned on the investment had the fund been invested in the indicative portfolio for some past period of time.

• Including disclosure regarding the risk of default for bonds shown in an indicative bond portfolio in proximity to the indicative portfolio.

Filers may also wish to review the discussion contained in the Fall 2007 edition of the Practitioner regarding the disclosure of performance data.

Lapse Dates

We remind filers of section 2.7(4) of the Companion Policy to NI 81-101. This provision notes that an amendment to a prospectus of a mutual fund, even if it amends and restates the prospectus, does not change the date under Canadian securities legislation by which the mutual fund must renew the prospectus.

90 Day Limit between Prelim and Final

We remind filers that NI 41-101 and NI 81-101 prohibit a final prospectus from being filed more than 90 days after the preliminary receipt was issued. We encourage filers to keep track of this 90 day period.

In some cases, the Director has granted relief to allow filers to file the final prospectus beyond the 90 day period. These applications are more easily dealt with if the application is filed in a timely manner prior to the expiration of the 90 day period.

Auditor Consents

We remind filers of the requirements to file auditor consents contained in sections 2.6(1)(a) and 2.6(2) of NI 81-101. Section 2.6(2) also includes a requirement to file a consent in connection with future statements incorporated by reference at the time those future financial statements are filed.

The following is a general summary of some staff practices relating to the filing of auditor consents under NI 81-101 in connection with an amendment to a simplified prospectus and/or AIF.

• For slip-sheet amendments and amended and restated simplified prospectuses and AIFs, if new annual financial statements have been incorporated by reference since the date of filing the simplified prospectus and AIF, we will generally issue a comment regarding the filing of a new auditor's consent letter in respect of the new audited annual financial statements if the consent letter wasn't filed concurrently with the annual financial statements (see section 2.6 of NI 81-101).

• If there have been no new annual financial statements filed since the date of the simplified prospectus and AIF, but the slip-sheet amendment or the amended and restated simplified prospectus and AIF refers to a correction to the annual financial statements or contains amended information derived from annual financial statements, we will generally raise a comment regarding the filing of a new auditor's consent letter.

Best Efforts Offerings

We have noted a couple of recurring issues recently involving best efforts offerings. We remind long-form prospectus filers that conduct best-efforts offerings of the new 90 day limit to complete a best efforts offering. This limit is imposed under section 8.2 of NI 41-101.

Flow-Through LP Rollovers

• IRC Review: Prospectuses filed by flow-through LPs typically disclose that they will roll their assets into a related mutual fund and provide investors with units of the related mutual fund. This provides investors with a source of liquidity upon the termination of the flow-through LP. We have been raising comments to ask whether the manager of the mutual fund intends to refer the mutual fund's acquisition of the flow-through LP's assets to the mutual fund's IRC as we generally view the rollover to be a conflict of interest matter referable to the IRC of the mutual fund under NI 81-107.

• Rollover Funds that are not Reporting Issuers: As noted in the April 2007 edition of the Practitioner, we are continuing to raise comments if the flow-through LP discloses that it will roll its assets into a mutual fund that is not a reporting issuer due to our concerns with non-reporting issuers distributing securities to retail investors that may not otherwise qualify as exempt purchasers.

Unit Offerings and Calculation of Diluted NAV

We have been raising comments on unit offerings where the unit consists of a unit and a sweetener warrant that is exercisable at a set price for a limited period of time. The comments generally seek to confirm whether the fund intends to calculate and publish both a basic NAV and a diluted NAV.

Use of Consultants

We have noted an increasing trend of funds using consultants and managers marketing funds based upon the fund's relationship with a particular consultant. The fund's name often includes the name of the consultant and the prospectus discloses that the consultant will be providing the fund or the portfolio manager with varying forms of advice. We have been raising comments regarding whether the consultant is registered as an adviser. We encourage filers to think about this issue before filing a prospectus particularly when the fund is being prominently marketed based on its relationship with the consultant.

Continuous Disclosure

Review of NI 81-107 Related Disclosure

Investment Funds staff have started to review, on an issue-oriented basis, a sample of investment funds to evaluate compliance with the disclosure obligations introduced by NI 81-107. Our review began in Fall, 2009 and letters informing selected fund managers and funds of our review will be sent in due course.

Investment funds selected for review will be selected based on criteria designed to ensure a fair representation of fund family size and fund type.

Split Shares -- MER Disclosure

We remind filers of the requirement contained under section 15.1(4) of NI 81-106 to calculate the MER for each class of securities. In the case of investment funds having capital shares and preferred shares outstanding, section 15.1(4) requires that MER be calculated for each of the capital shares and the preferred shares. We recognize that the preferred shares do not normally bear any costs until the net asset value of the capital shares has diminished completely. Preferred shares may also be considered as a liability to the capital shares and any distribution made to the preferred shares as interest costs to the capital shares. Consequently, we have been raising comments on both prospectus and continuous disclosure reviews to confirm whether a filer will be calculating MERs for each of the capital and preferred shares and whether the MER for the capital shares will include distributions paid on the preferred shares.

Public Inquiries

Related Party Underwritings of Approved Rating Debt Securities

We have received several inquiries regarding the meaning of approved rating under paragraph 4.1(4)(b) of NI 81-102. Section 4.1(4) provides an exemption from the prohibition contained under section 4.1(1) subject to several conditions including IRC approval and, if the securities underwritten are debt securities, the securities have been given and continue to have an approved rating by an approved rating organization.

Consistent with exemptive relief granted prior to the codification of the exemption under section 4.1(4), approved rating is intended to mean approved rating as defined under NI 44-101 and not approved credit rating as defined under NI 81-102.

{1} See, for instance, the disclosure provided in the prospectuses filed by Horizons AlphaPro Fiera Tactical Bond Fund dated June 29, 2009 and Marret High Yield Strategies Fund dated May 28, 2009 at pages 60 and 44 respectively.

OSC Staff Notice 11-739 (Revised) -- Policy Reformulation Table of Concordance and List of New Instruments

OSC STAFF NOTICE 11-739 (REVISED)

POLICY REFORMULATION TABLE OF CONCORDANCE AND LIST OF NEW INSTRUMENTS

The following revisions have been made to the Table of Concordance and List of New Instruments. A full version of the Table of Concordance and List of New Instruments as of December 31, 2009 has been posted to the OSC Website at www.osc.gov.on.ca under Policy and Regulation/Status Summaries.

Table of Concordance

- - - - - - - - - - - - - - - - - - - -

Item Key

The third digit of each instrument represents the following: 1-National/Multilateral Instrument; 2-National/Multilateral Policy;

3-CSA Notice; 4-CSA Concept Release; 5-Local Rule; 6-Local Policy; 7-Local Notice; 8-Implementing Instrument;

9-Miscellaneous

- - - - - - - - - - - - - - - - - - - -

Reformulation

New Instruments

For further information, contact:

January 8, 2010

Notice of Commission Approval -- IIROC -- UMIR Amendments -- Provisions Respecting Trading During Certain Securities Transactions

INVESTMENT INDUSTRY REGULATORY

ORGANIZATION OF CANADA (IIROC)

AMENDMENTS TO

UNIVERSAL MARKET INTEGRITY RULES (UMIR)

PROVISIONS RESPECTING TRADING

DURING CERTAIN SECURITIES TRANSACTIONS

NOTICE OF COMMISSION APPROVAL

The Ontario Securities Commission approved amendments to UMIR relating to provisions respecting trading during certain securities transactions. In addition, the British Columbia Securities Commission did not object to, and the Alberta Securities Commission, the Autorité des marchés financiers, the Saskatchewan Financial Services Commission, the Nova Scotia Securities Commission and the New Brunswick Securities Commission approved, the proposed amendments.

The objective of the proposed amendments is to:

• peg the price restriction on purchases of a restricted security to the "best independent bid price" at the time of the entry of the order rather than the "last independent sale price" immediately prior to the execution of the order;

• provide that any mutual fund listed on an exchange that meets certain conditions would be an "Exempt Exchange-traded Fund" unless otherwise designated by a Market Regulator;

• make consequential amendments to the definition of "restricted private placement" as a result of changes to applicable securities legislation;

• clarify the definitions of "dealer-restricted person" and "restricted period";

• clarify that the orders to be taken into account in determining "best ask price" and "best bid price" are limited to orders on marketplaces then open for trading; and

• make a number of editorial amendments including: repealing the definition of "last independent sale price"; changing references from "Exchange-traded Fund" to "Exempt Exchange-traded Fund"; and clarifying the definition of "connected security".

The proposed amendments were published for comment on March 21, 2008, at (2008) 31 OSCB 3440. IIROC summarized the comments it received on the proposed amendments and provided responses. A summary of the comments and IIROC's responses, a blacklined copy of the proposed amendments showing the changes to the version published in March 2008 and a clean version are included in Chapter 13 of this Bulletin.

Rezwealth Financial Services Inc. et al. -- ss. 127(7), 127(8)

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

REZWEALTH FINANCIAL SERVICES INC.,

PAMELA RAMOUTAR, CHRIS RAMOUTAR,

JUSTIN RAMOUTAR, TIFFIN FINANCIAL

CORPORATION, DANIEL TIFFIN,

2150129 ONTARIO INC. and SYLVAN BLACKETT

NOTICE OF HEARING

Sections 127(7) & 127(8)

WHEREAS the Ontario Securities Commission (the "Commission") issued a temporary order on December 22, 2009 (the "Temporary Order") pursuant to sections 127(1) and 127(5) of the Securities Act, R.S.O. 1990, c S.5. as amended (the "Act") ordering the following:

1. that all trading in any securities by Rezwealth Financial Services Inc. ("Rezwealth"), Tiffin Financial Corporation ("Tiffin Financial"), and 2150129 Ontario Inc. ("215 Inc.") or their agents or employees shall cease;

2. that all trading in securities by Pamela Ramoutar ("Pamela"), Chris Ramoutar ("Chris"), Justin Ramoutar ("Justin"), Daniel Tiffin ("Tiffin") and Sylvan Blackett ("Blackett") shall cease;

3. that the exemptions contained in Ontario securities law do not apply to Rezwealth, Tiffin Financial and 215 Inc. or their agents or employees; and

4. that the exemptions contained in Ontario securities law do not apply to Pamela, Chris, Justin, Tiffin and Blackett.

TAKE NOTICE THAT the Commission will hold a hearing pursuant to subsections 127(7) and 127(8) of the Act at the offices of the Commission, 17th Floor, 20 Queen Street West, Toronto, commencing on January 6, 2010 at 11:00 am or as soon thereafter as the hearing can be held;

TO CONSIDER whether it is in the public interest for the Commission:

1. to extend the Temporary Order pursuant to subsections 127(7) and 127(8) of the Act until the conclusion of the hearing or until such further time as considered necessary by the Commision; and

2. to make such further orders as the Commission considers appropriate;

BY REASON OF the facts recited in the Temporary Order and of such allegations and evidence as counsel may advise and the Commission may permit;

AND TAKE FURTHER NOTICE that any party to the proceeding may be represented by counsel at the hearing;

AND TAKE FURTHER NOTICE that upon failure of any party to attend at the time and place aforesaid, the hearing may proceed in the absence of that party and such party is not entitled to further notice of the proceeding.

Dated at Toronto this 22nd day of December, 2009

OSC Lays Charges Against Danny Silva De Melo and Steven John Hill in Ontario Court of Justice

FOR IMMEDIATE RELEASE

January 5, 2010

OSC LAYS CHARGES AGAINST

DANNY SILVA DE MELO AND

STEVEN JOHN HILL IN

ONTARIO COURT OF JUSTICE

TORONTO -- The Ontario Securities Commission announces that on December 22, 2009 charges were laid in the Ontario Court of Justice under section 122 of the Securities Act against Danny Silva De Melo and Steven John Hill.

De Melo and Hill have been served with a summons to appear on January 15, 2010 at 9:00 am in the Ontario Court of Justice, 60 Queen Street West, in Toronto in courtroom 111.

De Melo and Hill are charged with breaching cease trade orders made by the Commission on July 21, July 24 and August 5, 2009.

Pursuant to section 122 of the Securities Act, anyone found guilty of an offence is liable on conviction to a fine of not more than $5 million or to imprisonment for a term of not more than five years less a day, or to both.

For media inquiries:

For investor inquiries:

HSBC Bank Canada

FOR IMMEDIATE RELEASE

December 21, 2009

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

HSBC BANK CANADA

TORONTO -- Following a hearing held today, the Commission issued an Order approving the Settlement Agreement reached between Staff of the Commission and HSBC Bank Canada.

A copy of the Order dated December 21, 2009 with the settlement agreement attached as Appendix A is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Canadian Imperial Bank of Commerce and CIBC World Markets Inc.

FOR IMMEDIATE RELEASE

December 21, 2009

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

CANADIAN IMPERIAL BANK OF COMMERCE

AND CIBC WORLD MARKETS INC.

TORONTO -- Following a hearing held today, the Commission issued an Order approving the Settlement Agreement reached between Staff of the Commission and Canadian Imperial Bank of Commerce and CIBC World Markets Inc.

A copy of the Order dated December 21, 2009 with the settlement agreement attached as Appendix A is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Roger D. Rowan et al.

FOR IMMEDIATE RELEASE

December 22, 2009

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

ROGER D. ROWAN, WATT CARMICHAEL INC.,

HARRY J. CARMICHAEL AND

G. MICHAEL McKENNEY

TORONTO -- The Commission issued its Reasons and Decision on Sanctions and Costs and an Order in the above noted matter.

A copy of the Reasons and Decision on Sanctions and Costs and the Order dated December 21, 2009 are available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Barry Landen

FOR IMMEDIATE RELEASE

December 23, 2009

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

BARRY LANDEN

TORONTO -- The Commission issued an Order which provides that the hearing is adjourned to January 8, 2010 at 2:00 p.m. or such other date as is agreed by the parties and determined by the Office of the Secretary for the purpose of continuing the pre-hearing conference.

A copy of the Order dated December 23, 2009 is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

MI Developments Inc.

FOR IMMEDIATE RELEASE

December 29, 2009

IN THE MATTER OF

THE SECURITIES ACT,

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

(the "Act")

AND

IN THE MATTER OF

MI DEVELOPMENTS INC.

("MID")

TORONTO -- The Commission issued its Reasons and Decision in the above named matter.

A copy of the Reasons and Decision dated December 23, 2009 is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Chapter 2 -- Decisions, Orders and Rulings

Mackenzie Financial Corporation et al.

Headnote

MP 11-102 and NP 11-203 -- exemption granted from: a) Investment Restrictions -- s. 2.3(e), (f) and (h) of NI 81-102 to permit the Fund to invest up to 100% its net assets in gold, and up to 20% of its net assets in any combination of silver, platinum, gold or palladium, provided that at no time greater than 10% of the Fund's net assets be invested in any one of silver, platinum or palladium; and b) Custodian -- s. 6.1(2), s. 6.1(3)(b), s. 6.2, s. 6.3 of NI 81-102 to permit the Fund to acquire, store and hold portfolio assets in and outside Canada through Brinks or Via Mat, for purposes other than facilitating portfolio transactions of the Fund.

Applicable Legislative Provisions

National Instrument NI 81-102 Mutual Funds, ss. 2.3(e), (f) and (h), 6.1(2), 6.1(3)(b), 6.2, 6.3, 19.1.

December 18, 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

MACKENZIE FINANCIAL CORPORATION

(the Manager)

AND

IN THE MATTER OF

MACKENZIE UNIVERSAL GOLD BULLION CLASS

(the Fund)

AND

IN THE MATTER OF

CANADIAN IMPERIAL BANK OF COMMERCE

(the Custodian)

AND

IN THE MATTER OF

THE BANK OF NOVA SCOTIA

(the Bullion Custodian)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Manager for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption, pursuant to section 19.1 of National Instrument 81-102 Mutual Funds (NI 81-102), from the following provisions of NI 81-102:

(a) clause 2.3(e), to permit the Fund to purchase gold or a permitted gold certificate if, immediately after the purchase, more than 10% of the assets of the mutual fund, taken at market value at the time of the purchase, would consist of gold and permitted gold certificates;

(b) clauses 2.3(f) and (h), to permit the Fund to purchase silver, silver certificates, platinum, platinum certificates, palladium, palladium certificates, and/or derivatives of which the underlying interest is silver, platinum or palladium;

(c) clause 6.1(2)(b), to permit portfolio assets of the Fund to be held outside Canada by a custodian or sub-custodian, for purposes other than facilitating portfolio transactions of the Fund outside Canada;

(d) clause 6.1(3)(b), to permit the Custodian or the Bullion Custodian to appoint the Brinks Company or its subsidiaries or affiliates (Brinks), or Via Mat International Ltd. or its subsidiaries or affiliates (Via Mat), which are persons or companies that are not described in section 6.2 or 6.3, to act as sub-custodians to hold the Fund's physical bullion;

(e) section 6.2 to permit Brinks and Via Mat to be appointed as sub-custodians of the Fund to hold the Fund's physical bullion in Canada; and

(f) section 6.3, to permit Brinks and Via Mat to be appointed as sub-custodians of the Fund to hold the Fund's physical bullion outside Canada

(collectively, 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 Manager has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, the Yukon Territory and Nunavut, where applicable.

Interpretation

Terms defined in NI 81-102, 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 Manager:

The Fund

1. The Manager is a corporation incorporated under the laws of the Province of Ontario and holds a registration in the category of "portfolio manager" in Ontario, Alberta and Manitoba. The head office of the Manager is in Toronto, Ontario. The Manager will act as the manager and portfolio adviser for the Fund.

2. The Fund will be an open-end mutual fund. The Fund will be a class of Mackenzie Financial Capital Corporation, a mutual fund corporation existing under the laws of the Province of Ontario.

3. Neither the Manager nor any of the mutual funds for which it acts as manager is in default of securities legislation in any Jurisdiction.

4. A preliminary simplified prospectus and annual information form for the Fund was filed via SEDAR under project No. 1488675 on October 23, 2009. Once a final prospectus (the Final Prospectus) and annual information form (the Final Annual Information Form) for the Fund is filed and receipt is obtained, the Fund will be a "reporting issuer" or equivalent in each Jurisdiction.

5. The investment objective of the Fund is to pursue long-term growth of capital by investing primarily, directly or indirectly, in gold. The Fund may also invest from time to time, directly or indirectly, in silver, platinum, palladium and/or equity securities of companies which produce or supply precious metals.

6. The Fund will seek to achieve its investment objective by investing:

(a) a minimum of 80% and up to 100% of its net asset value, taken at the market value at the time of investment, in gold bullion and/or permitted gold certificates (as such term is defined in securities legislation); and

(b) an aggregate of up to 20% of its net asset value, taken at the market value at the time of investment, in silver bullion, platinum bullion, palladium bullion, derivatives of which the underlying interest is silver, platinum or palladium, silver certificates, platinum certificates, palladium certificates and/or equity securities of companies which produce or supply precious metals, provided that no more than 10% of the Fund's net asset value, taken at market value at the time of investment, will be invested in any one of silver, platinum or palladium (including derivatives or certificates).

Instead of investing directly in equity securities, the Fund may also from time to time invest up to 10% of its net assets in securities of other mutual funds managed by the Manager (Underlying Funds). The criteria used for selecting Underlying Funds are the same as the criteria for selecting individual securities, as described elsewhere in the Fund's investment objectives and strategies. There will be no duplication of management fees, incentive fees or sales charges between the mutual funds.

Custody of Bullion Held by the Fund

7. Pursuant to a Master Custodian Agreement dated February 24, 2005, the Custodian acts as the custodian for all mutual funds managed by the Manager. The Custodian will hold the property of the Fund other than the Fund's physical gold, silver, platinum and palladium bullion. The terms of the Custodian Agreement will comply with all requirements in Part 6 of NI 81-102.

8. The Custodian will appoint the Bullion Custodian to be a sub-custodian of the Fund, to hold the Fund's physical gold, silver, platinum and palladium bullion. The custody arrangements with respect to the Fund's physical gold, silver, platinum and palladium bullion will be governed by the terms of an agreement between the Custodian and the Bullion Custodian (the Bullion Custodian Agreement). Except as represented below, the terms of the Bullion Custodian Agreement will comply with all requirements in Part 6 of NI 81-102.

9. The Fund's physical gold, silver, platinum and palladium bullion will be stored and held on an allocated and segregated basis in the vault facilities of ScotiaMocatta, a division of the Bullion Custodian, in Canada, London or New York. ScotiaMocatta is one of the largest providers of physical precious metals trading and custodial services in the world. The Manager has determined that the Bullion Custodian would be the appropriate choice to provide custodial services to the Fund, because ScotiaMocatta is experienced in providing gold, silver, platinum and palladium storage and custodial services, and is familiar with the requirements relating to the physical handling and storage of gold, silver, platinum and palladium bullion.

10. The Fund will not insure its physical gold, silver, platinum or palladium bullion. The Bullion Custodian maintains insurance on such terms and conditions as it considers appropriate against all risk of physical loss of, or damage to, bullion stored in ScotiaMocatta's vaults except the risk of war, nuclear incident, terrorism events or government confiscation. Neither the Manager, the Fund nor the Custodian is a beneficiary of any such insurance and none of them have the ability to dictate the existence, nature or amount of coverage.

11. The Manager has discussed such insurance coverage with the Bullion Custodian, and believes that the insurance that the Bullion Custodian has obtained will be appropriate for the Fund. The Bullion Custodian Agreement shall provide that the Bullion Custodian shall not cancel its insurance except upon 30 days prior written notice to the Manager. The Fund will disclose the material details of that insurance arrangement in its Final Annual Information Form.

12. The Bullion Custodian has advised the Manager and the Custodian that due to physical storage capacity constraints, having regard to the amount of gold, silver, platinum and palladium bullion which the Fund may acquire, there may not be sufficient space in the vault facilities of ScotiaMocatta, in Canada, London and New York, to store all of the Fund's physical gold, silver, platinum and palladium bullion.

13. As a result, the Bullion Custodian will be required to use the services of sub-custodians to store some of the Fund's physical gold, silver, platinum and palladium bullion.

14. The Bullion Custodian has advised the Custodian and the Manager that it proposes to use Brinks and Via Mat, as sub-custodians to hold the physical gold, silver, platinum and palladium bullion of the Fund. Brinks and Via Mat are not entities that are currently approved to act as a custodian or sub-custodian for assets held in Canada, or to act as a sub-custodian for assets held outside of Canada as Brinks and Via Mat are not, among other things, a bank listed in Schedule I, II or III of the Bank Act (Canada) or a trust company incorporated under the laws of Canada.

15. Brinks and Via Mat are leading providers of secure logistics for valuables, including diamonds, jewellery, precious metals, securities, currency and secure data, serving banks, retailers, governments, mines, refiners, metal traders, and diamantaires. Brinks and Via Mat are both authorized depositories for the London Bullion Market Association and have vault facilities that are accepted as warehouses for the London Bullion Market Association. Brinks is also an authorized depository for NYMEX/COMEX.

16. The number of entities in Canada which are eligible to act as sub-custodians for the physical storage of silver bullion is limited. Of these eligible entities, some already have exclusive relationships with other investment funds for storage purposes whereas others simply may not have the excess capacity that the Fund may need to store physical silver bullion and have advised that they may be required to secure additional space through the vaulting facilities of service providers. These capacity constraints have been intensified due to the relatively recent run-up in demand for physical commodities and the corresponding need to arrange for safe-keeping.

17. The Manager and the Bullion Custodian believe that both Brinks and Via Mat are appropriate sub-custodians for the Fund's physical gold, silver, platinum and palladium bullion. The Bullion Custodian has engaged in a review of the facilities, procedures, records and the level of insurance coverage of Brinks and Via Mat, and will engage in a similar review annually, to satisfy itself as to the continuing appropriateness of using Brinks and Via Mat as sub-custodians of the Fund's physical bullion.

18. The custody arrangements with respect to the holding of the Fund's physical gold, silver, platinum and palladium bullion by Brinks or Via Mat will be governed by the terms of an agreement between the Bullion Custodian and Brinks or Via Mat, as applicable (the Bullion Sub-Custodian Agreements), the terms of which will comply with Sections 6.4 and 6.5 of NI 81-102.

19. The sub-custodial activities of Brinks and Via Mat will be limited to holding the Fund's physical gold, silver, platinum and palladium bullion. All physical gold, silver, platinum and palladium bullion of the Fund held by Brinks and Via Mat will be held in vault facilities in Canada, London or New York, on an allocated and segregated basis. The Bullion Custodian will exercise its audit rights under each Bullion Sub-Custodian Agreement on an on-going basis in order to satisfy itself that Brinks and Via Mat are in substantial compliance with the terms of the relevant Bullion Sub-Custodian Agreement and, in particular, that the bullion of the Fund which the Bullion Custodian has transferred to Brinks and Via Mat on behalf of the Fund (i) is held by Brinks and Via Mat at vault facilities that are accepted as warehouses for the London Bullion Market Association, (ii) is physically segregated and specifically identified, both in the vault facilities in which such bullion is held by Brinks and Via Mat and on the books and records of Brinks and Via Mat, as constituting the property of the Bullion Custodian or the Fund, (iii) has not sustained loss, damage or destruction (but with no obligation on the part of the Bullion Custodian to verify the weight, quality, fineness, assay characteristics, authenticity or composition of such bullion or that such bullion conforms to any good delivery standards of the London Bullion Market Association, NYMEX/COMEX, the London Platinum and Palladium Market Association or any other bullion trading body or that such bullion is otherwise fit for any purpose), and (iv) remains the subject of a subsisting policy of insurance that covers Brinks' and Via Mat's liability for the loss, damage or destruction of such bullion.

20. The Bullion Custodian has advised the Fund and the Manager that each of Brinks and Via Mat have arranged for sufficient insurance coverage in respect of any of the Fund's physical gold, silver, platinum and/or palladium bullion held by the Bullion Custodian through the vault facilities of Brinks or Via Mat. The Manager has discussed the insurance coverage obtained by Brinks and Via Mat with the Bullion Custodian, and believes that the insurance coverage obtained by Brinks and Via Mat is appropriate for the Fund.

21. Pursuant to the Custodian Agreement, in safekeeping the property of the Fund the Custodian is required to exercise (a) the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances; or (b) at least the same degree of care as it exercises with respect to its own property of a similar kind, if this is a higher degree of care than the degree of care referred to in (a). In addition, pursuant to the Custodian Agreement, the Custodian is not entitled to an indemnity from the Fund in the event the Custodian breaches its standard of care. The Bullion Custodian Agreement will include a similar standard of care in respect of the obligations of the Bullion Custodian and a similar provision in respect of the Bullion Custodian's indemnity. The Bullion Custodian has satisfied itself that the degree of care to which Brinks and Via Mat are subject in respect of the Bullion Sub-Custodian Agreements is no less than the degree of care referred to in (a).

22. The Bullion Custodian Agreement provides that, in addition to any other rights of the Fund thereunder, the Bullion Custodian shall indemnify and hold harmless the Fund in respect of all direct loss, damage or expense arising out of any negligence, wilful misconduct, fraud or lack of good faith by the Bullion Custodian or any subcustodian or sub-subcustodian (including Brinks and Via Mat) in respect of the services contemplated thereunder, provided however, that the liability for any loss, damage or expense to which the above indemnity would apply shall be limited to losses, damages or expenses as follows:

a. in the case of the loss of bullion or any other property of the Fund, such bullion or other property shall be replaced where commercially practicable and reasonably feasible; provided, however, that, in the context of bullion, the replacement bullion which is to be provided by the Bullion Custodian shall be of the same fineness and shall be in the same form as the allocated bullion actually delivered and then held by the Bullion Custodian at the time of the incurrence of the relevant loss (and, in such respect, the Bullion Custodian's opinion shall be determinative as to such fineness and form);

b. where replacement of such bullion or other property is not commercially practicable and reasonably feasible, the Fund shall be paid the market value of such bullion based upon fineness and the form of the allocated bullion actually delivered and then held by the Custodian at the time of the incurrence of the relevant loss (and, in such respect, the Bullion Custodian's opinion shall be determinative as to such fineness and form) or other property at the time the loss is discovered; and

c. in any other case, the amount of any interest or income to which the Fund is entitled, but which is not received by the Fund, shall be paid to it.

23. The Bullion Custodian Agreement provides that if the Fund suffers a loss as a result of any act or omission of a subcustodian (including Brinks and Viamat), or of any other agent appointed by the Bullion Custodian (rather than appointed by the Manager) and if such loss is directly attributable to the failure of such agent to comply with its standard of care in the provision of any service to be provided by it under the Bullion Custodian Agreement or the applicable Bullion Sub-Custodian Agreement, then the Bullion Custodian shall assume liability for such loss directly, and shall reimburse the Fund accordingly.

24. The Fund's auditors will be present during, and will verify, a physical count of all of the Fund's physical gold, silver, platinum and palladium bullion, whether held by the Bullion Custodian, Brinks or Via Mat, at least once every year. The Fund and its auditors will have the ability, with sufficient advance notice to the Bullion Custodian, Brinks and/or Via Mat, to attend at the vaults of the Bullion Custodian, Brinks and/or Via Mat as required to verify the gold, silver, platinum and palladium bullion held by the Bullion Custodian, Brinks or Via Mat on behalf of the Fund.

25. All bullion purchased by the Fund will be certified by the relevant vendor as bullion conforming to the good delivery standards of the London Bullion Market Association, the London Platinum and Palladium Market, or another internationally recognized bullion trading body.

Investment in Gold

26. The Fund's investment objectives and investment strategies are designed to offer investors an opportunity to obtain exposure primarily to gold. To fulfill its investment objectives, the Fund requires the ability to invest primarily in gold and/or permitted gold certificates beyond the limits set out in clause 2.3(e) of NI 81-102.

27. The Manager submits that there are no liquidity concerns with permitting the Fund to invest in gold bullion or permitted gold certificates beyond the limits of NI 81-102, since the market for gold bullion and permitted gold certificates is highly liquid.

Investment in Silver, Platinum and Palladium

28. The Manager has also requested exemptive relief that would permit it to invest an aggregate of up to 20% of its net asset value, taken at the market value at the time of investment, in silver bullion, platinum bullion, palladium bullion, derivatives of which the underlying interest is silver, platinum or palladium, silver certificates, platinum certificates, palladium certificates and/or equity securities of companies which produce or supply precious metals, provided that no more than 10% of the Fund's net asset value, taken at market value at the time of investment, will be invested in any one of silver, platinum or palladium (including derivatives or certificates).

29. Similar to the market for gold bullion and gold certificates, the Manager submits that the markets for silver, platinum and palladium are also highly liquid, and there are no liquidity concerns with permitting the Fund to invest in these precious metals to a limit not to exceed an aggregate limit of 20% of the net assets of the mutual fund, taken at market value at the time of purchase.

30. The Manager submits that permitting the investments in silver, platinum, and palladium along with gold, will give the portfolio manager additional flexibility in certain market conditions, which may have otherwise caused the Fund to have significant cash positions and therefore deter from its ability to achieve its investment objective of providing long-term growth of capital.

31. The Manager submits that the potential volatility or speculative nature of silver, platinum or palladium (or the equivalent in certificates or specific derivatives of which the underlying interest is silver, platinum or palladium) is no greater than that of gold or of equity securities of issuers in which the Fund intends to invest and, in the context of the Fund's overall portfolio, will provide investors with additional diversification.

32. As the aggregate investments in silver, platinum and palladium (or the equivalent in certificates or specified derivatives of which the underlying interest is silver, platinum or palladium) would be 20% or less of the net assets of the Fund, taken at the market value thereof at the time of investment, the Manager submits that there would be no significant change in the risk profile of the Fund. The Final Prospectus will state that the Fund will invest in precious metals and the risks associated with such investments.

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:

(a) no more than 10% of the Fund's net assets, taken at the market value thereof at the time of investment, will be invested in any one of silver, platinum or palladium (including specified derivatives and certificates);

(b) the Manager, on behalf of the Fund, ensures that any silver, platinum and palladium certificates purchased by the Fund are certificates representing such metal if the metal is:

(i) available for delivery in Canada, free of charge, to or to the order of the holder of the certificate,

(ii) of a minimum fineness of 999 parts per 1,000,

(iii) held in Canada,

(iv) in the form of either bars or wafers, and

(v) if not purchased from a bank listed in Schedule I, II or III of the Bank Act (Canada), fully insured against loss and bankruptcy by an insurance company licensed under the laws of Canada or a jurisdiction;

(b) in respect of the relief granted from sections 6.1(2)(b), 6.1(3)(b), 6.2 and 6.3, the Fund, the Manager, the Custodian and the Bullion Custodian are limited to using Brinks and Via Mat as sub-custodians for the gold, silver, platinum and palladium bullion of the Fund which will be held only in Canada, London and New York;

(c) in respect of the compliance reports to be prepared by the Custodian pursuant to section 6.7 of NI 81-102, in lieu of including the information required by paragraphs 6.7(1)(a), 6.7(1)(b), 6.7(1)(c) and 6.7(2)(b) and (c) in respect of the Custodian's review of the sub-custodian arrangements involving Brinks and Via Mat, the Custodian shall instead by entitled to rely on a certificate of the Bullion Custodian prepared in respect of the Bullion Custodian's annual review process for Brinks and Via Mat referred to in paragraph 17 above, and whether the Bullion Custodian remains of the view that Brinks and Via Mat continue to be appropriate sub-sub-custodians to hold the Fund's physical gold, silver, platinum and palladium bullion; and

(d) the Manager, on behalf of the Fund, ensures that the Final Prospectus of the Fund contains disclosure regarding the unique risks associated with an investment in the Fund, including the risk that direct purchases of gold, silver, platinum and palladium by the Fund may generate higher transaction and custody costs than other types of investments, which may impact the performance of the Fund.

Contrans Income Fund -- s. 1(10)

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- application for an order that the issuer is not a reporting issuer.

Ontario Statutes

Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10).

December 22, 2009

Dear Sir or Madam:

The Applicant has applied to the local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions for a decision under the securities legislation (the "Legislation") of the Jurisdictions that the Applicant is not a reporting issuer.

As the Applicant has represented to the Decision Makers that:

(a) the outstanding securities of the Applicant, including debt securities, are beneficially owned, directly or indirectly, by fewer than 15 security holders in each of the Jurisdictions and fewer than 51 security holders in total in Canada;

(b) no securities of the Applicant are traded on a marketplace as defined in National Instrument 21-101 Marketplace Operation;

(c) the Applicant is applying for a decision that it is not a reporting issuer in all of the Jurisdictions in which it is currently a reporting issuer; and

(d) the Applicant is not in default of any of its obligations under the Legislation as a reporting issuer,

each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met and orders that the Applicant is not a reporting issuer.

Gildan Activewear Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 51-102 Continuous Disclosure Obligations -- Issuer requires relief from the requirement in section 3.3 of Form 51-102F6 Statement of Executive Compensation (in respect of financial years ending on or after December 31, 2008) that amounts reported in its management information circular be reported using the same currency as that used in its financial statements -- Issuer uses the US dollar as its reporting currency in its annual and interim financial statements and MD&A -- Four out of five of the Issuer's most highly compensated executive officers are currently paid in Canadian dollars -- The Canadian dollar is a convenient and relevant reporting currency for amounts disclosed pursuant to Form 51-102F6 for a Canadian issuer whose securities are listed on the TSX.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, s. 13.1.

Form 51-102F6 Statement of Executive Compensation (in respect of financial years ending on or after December 31, 2008), s. 3.3.

December 23, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUEBEC AND ONTARIO

(the "Jurisdictions")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

GILDAN ACTIVEWEAR INC.

(the "Filer")

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the "Decision Maker") has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") exempting the Filer from the requirement in section 3.3 of Form 51-102F6 Statement of Executive Compensation ("Form 51-102F6") of Regulation 51-102 respecting Continuous Disclosure Obligations ("Regulation 51-102"), pursuant to which amounts reported in Form 51-102F6 must use the same currency that the Filer uses in its financial statements (the "Requested Relief").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

1. the Autorité des marchés financiers is the principal regulator for this application;

2. the Filer has provided notice that section 4.7(1) of Regulation 11-102 respecting Passport System ("Regulation 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador and Prince Edward Island; and

3. the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in Regulation 14-101 respecting Definitions, Regulation 11-102 and Regulation 51-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

1. the Filer is incorporated under the Canada Business Corporations Act ("CBCA"), with its head office located in Montréal, Quebec;

2. the Filer is a reporting issuer in each of the provinces of Canada and is not in default of its reporting issuer obligations in any jurisdiction;

3. the Filer's common shares are listed on both the Toronto Stock Exchange and the New York Stock Exchange under the symbol "GIL";

4. the Filer's financial year end is the first Sunday following September 28 of each year;

5. the Filer uses the United States dollar as its reporting currency in its annual and interim financial statements and corresponding management's discussion and analysis;

6. four out of five of the Filer's most highly compensated executive officers, whose compensation must be disclosed in detail in the Filer's information circular, are currently paid by the Filer in Canadian dollars;

7. section 3.3 of the current Form 51-102F6 came into force on December 31, 2008, and it applies to issuers in respect of financial years ending on or after December 31, 2008;

8. given its financial year end, the Filer's first completed financial year since the coming into force of Section 3.3 of Form 51-102F6 is the financial year ended October 4, 2009;

9. pursuant to section 3.3 of Form 51-102F6, the Filer is required to report amounts using the same currency that it uses in its financial statements;

10. the Filer disclosed the executive compensation amounts in Canadian dollars in its previous circular;

11. the Canadian dollar is a convenient and relevant reporting currency for amounts disclosed pursuant to Form 51-102F6 for a Canadian corporation whose securities are listed on the Toronto Stock Exchange; and

12. the Filer will provide executive compensation information for the last two years in Canadian dollars for comparative purposes in the information circular to be sent to its shareholders in connection with its annual meeting of shareholders to be held on February 10, 2010.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted.

PowersShares India Class

Headnote

NP 11-203 -- Process for Exemptive Relief Applications in Multiple Jurisdictions -- fund on fund structure -- mutual fund granted exemption from the three-tiered prohibition to invest in another mutual fund that invests substantially all of its assets in a bottom fund to gain exposure to a specific country's capital markets.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 2.5(2)(b), 19.1.

December 23, 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

POWERSHARES INDIA CLASS

(the "Top Fund" or "Filer")

DECISION

Background

The principal regulator in the jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption from the restriction in subclause 2.5(2)(b) of National Instrument 81-102 Mutual Funds (NI 81-102) that would prevent the Top Fund from investing in the PowerShares India Portfolio (PowerShares ETF) (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

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

(b) The Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in the following non-principal passport jurisdictions: British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories, the Yukon Territories and Nunavut (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 herein. The following additional terms shall have the following meanings:

Mauritius means the Republic of Mauritius; and

Mauritius Underlying Fund means a wholly-owned subsidiary of the PowerShares ETF in the Republic of Mauritius.

Representations

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

The Top Fund

1. The Top Fund will be an open-end mutual fund established under the laws of Canada as a class of shares of Invesco Trimark Corporate Class Inc. and be qualified for distribution in the Jurisdictions by way of a simplified prospectus and annual information form that are prepared in accordance with NI 81-102 and will be subject to NI 81-102. It is anticipated that the Top Fund will file in order to qualify the shares of the Top Fund for distribution in all of the Jurisdictions a preliminary simplified prospectus and annual information form in late November 2009.

2. Invesco Trimark Ltd. will be the manager of the Top Fund (the Manager). The head office of the Manager is located in Toronto, Ontario.

3. The Top Fund will be a reporting issuer in each of the Jurisdictions.

4. The investment objective of the Top Fund will be to seek to gain exposure to India's capital markets through investments in the PowerShares ETF and is expected to be expressed as follows:

"PowerShares India Class seeks to provide a return that is similar to the return of one or more Invesco PowerShares ETFs that invest primarily in India."

5. Other than the Exemption Sought herein, the Top Fund will comply with NI 81-102 and relevant securities legislation.

6. There will be no duplication of management fees or incentive fees in the proposed structure, and the Manager of the Top Fund will ensure that there will be no sales fees other than nominal brokerage commissions and no redemption charges payable by the Top Fund in relation to its purchases or sales of securities of the PowerShares ETF.

7. The Top Fund will provide all disclosure mandated for mutual funds investing in other mutual funds.

The PowerShares ETF and the Mauritius Underlying Fund

8. The PowerShares ETF is a United States exchange-traded fund and is a security of PowerShares India Exchange-Traded Fund Trust (the Trust), a registered investment company in the U.S. Invesco PowerShares Capital Management LLC is the investment adviser of the Trust.

9. Securities of the PowerShares ETF are redeemable on demand, qualified for distribution in the United States by way of a prospectus dated February 27, 2009 and are traded on the NYSE Arca in the United States. The securities of the PowerShares ETF are index participation units as defined in NI 81-102.

10. The PowerShares ETF is not a reporting issuer in any of the Jurisdictions and, accordingly, is not governed by NI 81-102.

11. The investment objective of the PowerShares ETF is to seek investment results that correspond generally to the price and yield of the Indus India Index (the India Index).

12. The India Index is comprised of Indian equity securities traded on regulated stock exchanges in India and is designed to represent the Indian equity markets as a whole. The India Index has 50 constituents, spread among the following sectors: Information Technology, Health Sciences, Financial Services, Heavy Industry, Consumer Products and Other.

13. There are significant taxes and investment restrictions imposed by Indian regulatory authorities that are applicable to non-resident investors, such as the PowerShares ETF. These restrictions include withholding taxes and a per issuer aggregate investment restriction. In addition, there is a cumbersome registration regime for non-resident investors.

14. In order to permit investors in the PowerShares ETF to obtain broad exposure to India's capital markets in a tax-efficient manner, the Mauritius Underlying Fund has been created to serve exclusively as an investment vehicle for the PowerShares ETF.

15. The Mauritius Underlying Fund qualifies as an expert fund, established under the laws of Mauritius, holds a Category 1 Global Business licence issued by the Financial Services Commission of Mauritius (FSC) and is registered with the Securities and Exchange Board of India (SEBI). The securities of the Mauritius Underlying Fund are redeemable on demand.

16. The principal investment strategy of the PowerShares ETF is to invest at least 90% of its assets in the Mauritius Underlying Fund which, in turn, invests at least 90% of its total assets in securities that comprise the India Index and American Depository Receipts (ADRs) based on the securities in the India Index. The PowerShares ETF anticipates that the majority of its investments will be in securities that comprise the India Index rather than ADRs.

17. As part of its investment strategy, the Mauritius Underlying Fund may invest its remaining assets in money market instruments, including repurchase agreements or other funds which invest exclusively in money market instruments, convertible securities, structured notes (notes on which the amount of principal repayment and interest payments are based on the movement of one or more specified factors, such as the movement of a particular security or securities index), and in swaps, options and futures contracts. Swaps, options and futures contracts (and convertible securities and structured notes) may be used by the Mauritius Underlying Fund in seeking performance that corresponds to the India Index and in managing cash flows.

18. The rules governing the investments of the Mauritius Underlying Fund address the same concerns as the investment restrictions on mutual funds in NI 81-102 by providing, among other things, the following restrictions:

(a) on the ability of the Mauritius Underlying Fund to borrow;

(b) on purchasing or selling physical commodities and real estate;

(c) on selling securities short;

(d) on purchasing securities on margin except in connection with the use of derivatives consistent with NI 81-102; and

(e) on investing in illiquid securities if, as a result of such investment, more than 15% of the Mauritius Underlying Fund's net assets would be invested in illiquid securities.

19. The custodian of the Mauritius Underlying Fund is an arm's length third party, Brown Brothers Harriman & Co. (BBH). BBH has hired Hong Kong and Shanghai Banking Corporation China (HSBC), an arm's length third party entity, to act as sub-custodian in Mauritius and Citibank of India, Mumbai, also an arm's length third party entity, to act as sub-custodian in India.

20. The Manager will ensure that there is no duplication of management fees in the proposed structure, and that no sales fees, redemption charges or other fees will be payable by the PowerShares ETF in relation to its purchases or sales of securities of the Mauritius Underlying Fund.

21. By investing primarily in securities of the Mauritius Underlying Fund, the PowerShares ETF can gain broad exposure to India's capital markets in an efficient way, as withholding tax that would otherwise be applicable to the PowerShares ETF were it to invest directly in India is effectively eliminated due to a tax agreement between India and Mauritius. In addition, the PowerShares ETF will not be subject to a cumbersome registration regime.

22. As outlined above, the Top Fund may consistent with its investment objective, seek to gain exposure to India's capital markets through investments in the PowerShares ETF. Through the proposed structure, the PowerShares ETF will offer Canadian investors the opportunity to gain broad exposure to India's capital markets in a tax-efficient manner. Investing directly in securities in India is a less desirable option for the PowerShares ETF because of the adverse tax treatment and the investment restrictions and registration requirements that are associated with such direct investing.

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 decision shall only apply if, at the time the Top Fund makes or holds an investment in the PowerShares ETF, the following conditions are satisfied:

(a) the securities of the PowerShares ETF are index participation units as defined in NI 81-102;

(b) the PowerShares ETF invests substantially all of its assets in the Mauritius Underlying Fund;

(c) no duplication of management fees or incentive fees are payable by the Top Fund in relation to its purchases or sales of securities of the PowerShares ETF;

(d) no sales fees other than nominal brokerage commissions and no redemption charges are payable by the Top Fund in relation to its purchases or sales of securities of the PowerShares ETF;

(e) no sales fees, redemption charges or other fees are payable by the PowerShares ETF in relation to its purchases or sales of securities of the Mauritius Underlying Fund;

(f) no duplication of management fees are payable by the PowerShares ETF in relation to its purchases or sales of securities of the Mauritius Underlying Fund; and

(g) the Mauritius Underlying Fund is subject to daily net asset value pricing substantially similar to that imposed under NI 81-106.

Suncor Energy Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Impracticable for Filer to prepare 51-101 reports for predecessor entity assets which were subject to exemptive relief permitting modified disclosure based on US oil and gas disclosure requirements -- Modified annual oil and gas forms and reliance on US oil and gas disclosure requirements.

Applicable Legislative Provisions

National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

Citation: Suncor Energy Inc., Re, 2009 ABASC 571

November 16, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

SUNCOR ENERGY INC.

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filer be exempted from the requirements contained in the Legislation to disclose information concerning oil and gas activities in accordance with the following sections of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101):

(a) section 2.1;

(b)

(i) sections 5.2(a)(iii) and (iv),

(ii) sections 5.2(b) and (c), and

(iii) section 5.3,

but only in respect of reserves as disclosed in accordance with US Disclosure Requirements defined below; and

(c) sections 5.8, 5.15(a), 5.15(b)(i) and 5.15(b)(iv);

including as those requirements pertain to prospectuses, annual information forms and other disclosure documents (collectively, the Specified Canadian Disclosure Requirements).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application,

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the provinces and territories of Canada other than Ontario, and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Unless otherwise defined, the terms herein have the meaning set out in National Instrument 14-101 Definitions, MI 11-102 and CSA Staff Notice 51-324 Glossary to NI 51-101 Standards of Disclosure for Oil and Gas Activities.

Representations

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

1. The Filer's head and registered office is located in Calgary, Alberta.

2. The Filer is a reporting issuer or equivalent in each of the provinces and territories of Canada and is not in default of securities legislation in any such jurisdiction.

3. On August 1, 2009 predecessor Suncor Energy Inc. (Suncor) and Petro-Canada merged to form the Filer by way of plan of arrangement under the Canada Business Corporations Act (the Merger).

4. The Filer's plan to coordinate all major change initiatives and personnel and to ensure the organization is aligned, engaged and supported on a go-forward basis is expected to take an additional 12 months.

5. Prior to the Merger, Suncor and Petro-Canada received exemptions from certain requirements of NI 51-101 subject to certain conditions including, but not limited to, a condition that disclosure be provided that is consistent with the disclosure requirements relating to reserves and oil and gas activities under United States securities legislation (including disclosure requirements or guidelines issued or referenced by the SEC) as interpreted and applied by the SEC (the US Disclosure Requirements) pursuant to decision documents dated December 22, 2003 (the Suncor Order) and January 16, 2004 and November 11, 2008 (the Petro-Canada Orders).

6. Petro-Canada had approximately 4300 reserves entities, which are located in multiple jurisdictions including the United States, Canada, East Coast Canada, North Sea, North Latin America and North Africa (Petro-Canada Reserves Entities) compared to Suncor's 600 reserve entities, which are primarily Western Canada conventional, oilsands mining and oilsands in situ assets (Suncor Reserves Entities).

7. The Filer is currently engrossed in integration efforts including organization design, co-location of personnel and transitioning of information systems. Internal reserves evaluators assigned to Petro-Canada Reserves Entities may no longer be associated with the assets they evaluated for year-end 2008. As a result certain Petro-Canada Reserves Entities may have new internal evaluators, which would extend the time needed to evaluate the Petro-Canada Reserves Entities in accordance with NI 51-101.

8. Petro-Canada provided annual disclosure in accordance with the US Disclosure Requirements from year-end 2004 to year-end 2008 pursuant to the Petro-Canada Orders.

9. Given the extent of the integration efforts and the quantity of reserves data and other oil and gas information in respect of the Petro-Canada Reserves Entities, it is not practicable for the Filer to provide annual disclosure in accordance with NI 51-101 for the Petro-Canada Reserves Entities for the year-end December 31, 2009.

10. From year-end 2003 to year-end 2007, Suncor provided annual disclosure in accordance with the US Disclosure Requirements pursuant to the Suncor Order. The Filer will fully disclose and discuss in its annual disclosure documents any effect from the transition from NI 51-101 to the US Disclosure Requirements for the Suncor Reserves Entities for year-end 2009.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that:

1. the Filer is exempt from the Specified Canadian Disclosure Requirements provided that:

(a) Annual Filings -- the Filer files with the securities regulatory authorities the following not later than the date on which it is required by the Legislation to file audited financial statements for its most recent financial year:

(i) a modified statement of reserves data and other oil and gas information relating to its oil and gas activities containing the information contemplated by, and consistent with, US Disclosure Requirements;

(ii) a modified report of qualified reserves evaluators in a form acceptable to the principal regulator; and

(iii) a modified report of management and directors on reserves data and other information in a form acceptable to the principal regulator;

(b) Use of COGE Handbook -- the Filer's estimates of reserves and related future net revenue (or, where applicable, related standardized measure of discounted future net cash flows (the standardized measure)) are prepared or audited in accordance with the standards of the COGE Handbook modified to the extent necessary to reflect the terminology and standards of the US Disclosure Requirements;

(c) Consistent Disclosure -- subject to changes in the US Disclosure Requirements and NI 51-101 and related policies, the Filer is consistent in its application of standards relating to oil and gas information and its disclosure of such information, within and between reporting periods, and without limiting the generality of the foregoing, in any disclosure made to the public, the Filer's estimates of reserves and related future net revenue (or, where applicable, related standardized measure) must be consistent with the reserves and related future net revenue (or, where applicable, related standardized measure) reported in its most recent filing with the Decision Maker;

(d) Disclosure of this Decision and Effect -- the Filer

(i) files on SEDAR (either as a separate document or in its annual information form) a statement:

A. of the Filer's reliance on this decision,

B. that explains generally the nature of the information that the Filer has disclosed or intends to disclose in the year in reliance on this decision and that identifies the standards and the source of the standards being applied (if not otherwise readily apparent), and

C. to the effect that the information that the Filer has disclosed or intends to disclose in the year in reliance on this decision may differ from the corresponding information prepared in accordance with NI 51-101 standards (if that is the case), and briefly describes the principal differences between the standards applied and the requirements of NI 51-101; and

(ii) includes, reasonably proximate to all other written disclosure that the Filer makes in reliance on this decision, a statement:

A. of the Filer's reliance on this decision,

B. that explains generally the nature of the information being disclosed and identifies the standards and the source of the standards being applied (if it is not otherwise readily apparent),

C. that the information disclosed may differ from the corresponding information prepared in accordance with NI 51-101 standards, and

D. that reiterates or incorporates by reference the disclosure referred to in paragraph 1(d)(i)(C)); and

(e) Disclosure of Conflicting Independent Reports -- the Filer discloses and updates its public disclosure if, despite this decision, it obtains a final report on reserves data from an independent qualified reserves evaluator or auditor that contains information that is materially different from the Filer's public disclosure record in respect of such reserves data; and

2. this decision will come into effect on December 28, 2009 and will terminate one year after the effective date.

Canwel Building Materials Income Fund and Canwel Holding Partnership

Headnote

MI 11-102 and NP 11-203 -- business combination -- conversion of publicly traded income fund into corporate entity -- MI 61-101 requires minority approval if conversion is a business combination -- conversion is not a business combination for publicly traded fund, but is technically a business combination for a holding company in the fund's structure -- relief granted to holding company from complying with the minority approval requirement, provided certain conditions met.

Applicable Legislative Provisions

Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, ss. 4.5, 9.1.

December 17, 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

CANWEL BUILDING MATERIALS INCOME FUND

AND

CANWEL HOLDING PARTNERSHIP

(the Fund and the Partnership, respectively,

and, together, 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 (the Legislation) that the requirement set out in section 4.5 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (MI 61-101) that an issuer obtain minority approval for a business combination shall not apply to the Partnership with respect to the CanWel Conversion Transaction (as defined below) (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 11-102 Passport System (MI 11-102) is intended to be relied upon in Quebec.

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. The Fund is an unincorporated, open-ended limited purpose trust governed by the laws of the Province of Ontario. The Fund's head office is located at 302 -- 369 Terminal Avenue, Vancouver, British Columbia V6A 4C4. The Fund was established pursuant to a declaration of trust dated April 5, 2005, as amended and restated on May 18, 2005 and May 8, 2008 in connection with the conversion of the former CanWel Building Materials Ltd. from a corporation to an income trust under a plan of arrangement effective May 18, 2005 (the 2005 Conversion).

2. The beneficial interests in the Fund are divided into interests of two classes, designated as "Trust Units" and "Special Voting Units". The Trust Units carry a right to receive any distributions from the Fund and an interest in any net assets of the Fund in the event of termination or winding-up of the Fund, while the Special Voting Units only entitle the holder thereof to one vote at all meetings of unitholders for each Special Voting Unit held. The holders of Trust Units and the holders of Special Voting Units are referred to collectively as "Voting Unitholders". The Trust Units are listed on the Toronto Stock Exchange under the trading symbol "CWX.UN".

3. The Partnership is a limited partnership established under the laws of the Province of Manitoba. The Partnership's head office is located at 302 -- 369 Terminal Avenue, Vancouver, British Columbia V6A 4C4. The general partner of the Partnership is a corporation existing under the laws of the Province of Ontario named CanWel General Partner Inc. (CanWel GP), which is wholly-owned by the Fund. Most of the operating subsidiaries of the Fund are owned directly by the Partnership.

4. The Partnership has two classes of limited partnership interests: "Class A Partnership Units", all of which are held by CanWel Operating Trust (which is wholly owned by the Fund), and "Exchangeable Partnership Units". The Exchangeable Partnership Units are indirectly exchangeable into Trust Units and each Exchangeable Partnership Unit is accompanied by a Special Voting Unit that entitles the holder to receive notice of, attend and to vote together with the holders of Trust Units at all meetings of Voting Unitholders. The Exchangeable Partnership Units were offered to the former CanWel Building Materials Ltd. shareholders as an alternative to receiving Trust Units in the 2005 Conversion, in order to permit such holders to achieve a "rollover"' for Canadian federal income tax purposes.

5. Pursuant to section 3.6(7) of National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions, the Filers have identified the Ontario Securities Commission as their principal regulator for this application. While the head office of each of the Filers is located in the Province of British Columbia, the Filers are not seeking exemptive relief in British Columbia, as MI 61-101 has been adopted only in Ontario and Quebec. The Filers have determined that their most significant connection is to Ontario because there is a greater number of unitholders of the Fund located in Ontario as compared to Quebec.

6. Both the Fund and the Partnership are reporting issuers under applicable securities laws in Ontario and Quebec (and each of the other provinces of Canada). As an exchangeable security issuer, the Partnership is entitled, under Part 13 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) and related provisions of securities laws, to an exemption from the financial statement and other continuous disclosure requirements of NI 51-102 and certain related requirements of securities laws.

7. The Filers are not in default of applicable securities legislation in any of the jurisdictions of Canada.

8. As at November 30, 2009, there were 24,031,538 Trust Units and 11,144,279 Exchangeable Partnership Units outstanding. All of the outstanding Exchangeable Partnership Units are owned, directly or indirectly, by Amar Doman who serves as Chairman and as a Trustee of the Fund, and as Chairman and as a Director of CanWel GP.

9. The Exchangeable Partnership Units are not listed on any exchange and, by their terms, are not transferable except upon their exchange for Trust Units and in certain other very limited circumstances.

10. The Exchangeable Partnership Units are intended to be, to the greatest extent practicable, the economic equivalent of Trust Units. Holders of Exchangeable Partnership Units are entitled to receive distributions paid by the Partnership, which distributions will be equal, to the greatest extent practicable, to distributions paid by the Fund to holders of Trust Units. Each accompanying Special Voting Unit entitles the holder to one vote at all meetings of unitholders of the Fund. Pursuant to the limited partnership agreement of the Partnership, the holders of Exchangeable Partnership Units do not have voting rights in respect of matters to be decided by the limited partners of the Partnership.

11. The Fund is now proposing to undertake a transaction that would result in the conversion of the Fund and the Partnership to a corporate structure (the CanWel Conversion Transaction). Under the CanWel Conversion Transaction, the holders of Trust Units and Exchangeable Partnership Units will, if the transaction is approved by Voting Unitholders and certain other conditions are satisfied or waived, exchange their respective units for common shares of a new corporation (New CanWel) established by the Fund. Upon completion of the CanWel Conversion Transaction, New CanWel will become the successor reporting issuer to the Fund, and it is intended that the New CanWel common shares will be listed on the Toronto Stock Exchange.

12. The CanWel Conversion Transaction will be effected by a plan of arrangement under the Business Corporations Act (British Columbia), subject to approval at a meeting of Voting Unitholders by a special resolution approved by no less than two-thirds of the votes cast by holders of Trust Units and Special Voting Units, voting together as a single class as provided in the Fund's declaration of trust. The CanWel Conversion Transaction is also subject to approval by the British Columbia Supreme Court.

13. Under the CanWel Conversion Transaction, all holders of Trust Units and holders of Exchangeable Partnership Units will receive the same consideration in return for their respective units, namely one common share of New CanWel for each Trust Unit or Exchangeable Partnership Unit held.

14. In addition to the CanWel Conversion Transaction, the Fund also announced in its press release dated December 7, 2009 (i) a proposed acquisition (the Proposed Acquisition) by New CanWel of all of the issued and outstanding shares in the capital of Broadleaf Logistics Company; and (ii) a "bought deal" private placement of subscription receipts by the Fund (the Proposed Private Placement and, collectively with the CanWel Conversion Transaction and the Proposed Acquisition, the Proposed Transactions). The Proposed Transactions constitute "connected transactions" under MI 61-101.

15. The CanWel Conversion Transaction will not be a business combination, as defined in MI 61-101, for the Fund because it is a downstream transaction (as defined in MI 61-101) for the Fund and, as such, there is no requirement for the Fund to obtain a formal valuation or minority approval under MI 61-101 for the CanWel Conversion Transaction.

16. The Proposed Acquisition is not a "related party transaction" under MI 61-101. One of the subscriptions for subscription receipts of the Fund under the Proposed Private Placement will constitute a "related party transaction" under MI 61-101 for the Fund because the subscriber is an independent trustee of the Fund. There is no requirement for the Fund to obtain a formal valuation or minority approval under Part 5 of MI 61-101 for this subscription under the Proposed Private Placement because neither the fair market value of the subscription receipts to be issued in connection with, nor the fair market value of the consideration for, such subscription, insofar as it involves the independent trustee, exceeds 25% of the Fund's market capitalization.

17. The CanWel Conversion Transaction would be considered a business combination, as defined in MI 61-101, for the Partnership because (i) the CanWel Conversion Transaction would not be a downstream transaction (as defined in MI 61-101) for the Partnership and would result in a related party of the Partnership (New CanWel), directly or indirectly, acquiring the issuer (the Partnership); and (ii) certain related parties of the Partnership (including the Fund and New CanWel) are party to the Proposed Acquisition and the Proposed Private Placement which are connected transactions to the CanWel Conversion Transaction.

18. For the Partnership, the CanWel Conversion Transaction would be exempt from the formal valuation requirements of Part 4 of MI 61-101, pursuant to section 4.4(a), since no securities of the Partnership are listed on the specified markets. However, the CanWel Conversion Transaction would subject the Partnership to the requirement to obtain minority approval for the CanWel Conversion Transaction from the holders of "affected securities" of the Partnership; that is, the holders of Exchangeable Partnership Units, although no minority approval requirement would apply at the Fund level.

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 condition in subsection (e)(iii) of the definition of business combination in section 1.1 of MI 61-101 is met.

Furthermore, the decision of the principal regulator is that the application of the Filers and this decision be kept confidential and not be made public until the earlier of: (a) the date on which the Fund mails the management information circular to unitholders of the Fund in connection with unitholder approval of the CanWel Conversion Transaction; (b) the date the Fund advises the principal regulator that there is no longer any need for the application and this decision to remain confidential; and (c) the date that is 90 days after the date of this decision.

Toromont Industries Ltd.

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Take-over Bids -- Identical consideration -- Issuer needs relief from the requirement in subsection 97(1) of the Securities Act (Ontario) and section 2.23 of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids that all holders of the same class of securities must be offered identical consideration -- Under the bid, Canadian resident security holders will receive shares of the offeror; security holders who are residents of the U.S. will receive substantially the same value as Canadian security holders in the form of cash paid to such security holders based on the proceeds from the sale of their shares.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 97(1), 104(2)(c).

November 12, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

TOROMONT INDUSTRIES LTD.

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Filer from subsection 2.23(1) of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids (MI 62-104) and subsection 97(1) of the Securities Act (Ontario) (the Identical Consideration Requirement), which require the Filer to offer identical consideration to all of the holders of the same classes of securities that are subject to a take-over bid in connection with the Filer's offer (the Offer) to acquire all of the issued and outstanding trust units (Trust Units) of Enerflex Systems Income Fund (Enerflex) and all of the issued and outstanding class B limited partnership units (Exchangeable LP Units and, together with the Trust Units, the Units) of Enerflex Holdings Limited Partnership (Enerflex LP) (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, the Northwest Territories, Nunavut and Yukon; and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

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

The decision is based on the following facts represented by the Filer:

1. The Filer is a corporation existing under the Canada Business Corporations Act and its registered and head office is located in Concord, Ontario.

2. The Filer is a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia and Prince Edward Island and is not in default of any of the requirements of securities legislation applicable to it.

3. The authorized share capital of the Filer consists of an unlimited number of common shares (the Filer Shares) and an unlimited number of preferred shares. As at October 26, 2009, there were 64,731,937 Filer Shares issued and outstanding and no preferred shares were issued and outstanding.

4. The Filer Shares are listed and posted for trading on the Toronto Stock Exchange (the TSX).

5. Enerflex is an open-ended mutual fund trust governed by the laws of the Province of Alberta pursuant to a Deed of Trust dated August 22, 2006 and its head office is located in Calgary, Alberta.

6. Enerflex is a reporting issuer in each of the provinces and territories of Canada.

7. The authorized capital of Enerflex consists of an unlimited number of Trust Units and an unlimited number of special voting units. As at November 1, 2009, there were 44,281,622 Trust Units issued and outstanding and one special voting unit issued and outstanding.

8. The Trust Units are listed and posted for trading on the TSX.

9. Enerflex LP, an indirect subsidiary of Enerflex, is a limited partnership formed under the laws of the Province of Alberta pursuant to a limited partnership agreement dated August 23, 2006. Enerflex LP's head office is located in Calgary, Alberta.

10. Enerflex LP is a reporting issuer in British Columbia, Alberta, Saskatchewan, Québec and Nova Scotia.

11. The authorized capital of Enerflex LP consists of an unlimited number of class A limited partnership units, all of which are held indirectly by Enerflex, and an unlimited number of Exchangeable LP Units. The Exchangeable LP Units are exchangeable for Trust Units on a one-for-one basis. As at November 1, 2009, there were 2,663,422 Exchangeable LP Units issued and outstanding.

12. On October 16, 2009, the Filer publicly announced that it had made a proposal to Enerflex to enter into a business combination transaction whereby the holders of Units would receive cash and Filer Shares representing total consideration of $13.50 per Unit, with at least 50% of the consideration comprised of cash and the balance in Filer Shares.

13. The Filer and Enerflex were not able to successfully negotiate a business combination transaction, and on November 12, 2009, the Filer announced its intention to proceed with the Offer.

14. As consideration for each Unit, the Filer will offer pursuant to the Offer, at the option of the holders of Units, either (i) $13.50 cash or (ii) $0.05 cash plus 0.5098 Filer Shares, subject in each case to pro ration. The maximum amount of cash payable by the Filer pursuant to the Offer will be 50% of the total consideration, and the balance will be payable in Filer Shares.

15. Rule 802 (Rule 802) under the United States (US) Securities Act of 1933 (the 1933 Act), provides an exemption from the registration requirements of the 1933 Act for offers and sales in any exchange offer for a class of securities of a "foreign private issuer" (as defined for purposes of the 1933 Act and the rules and regulations issued by the US Securities and Exchange Commission thereunder) or in any exchange of securities for the securities of a foreign private issuer in any business combination if the holders of the foreign subject company resident in the US hold no more than 10% of the securities that are the subject of the exchange offer or business combination and the other conditions of Rule 802 are satisfied. Rule 802 and the related rules provide that, for the purposes of this calculation, securities held by the offeror are to be excluded. Rule 802 and the related rules also provide that, in the context of a non-consensual exchange offer or proposed business combination transaction, the subject company will be presumed to be a "foreign private issuer" and US holders will be presumed to hold 10% or less of its outstanding subject securities unless (a) the average daily trading volume of the subject securities in the US exceeds 10% of the average daily trading volume of the subject securities on a worldwide basis for the period specified in the rules, (b) the most recent annual report filed by the subject company indicates that US holders hold more than 10% of the outstanding subject securities, or (c) the offeror knows or has reason to know, before the public announcement of the offer, that the level of US ownership exceeds 10% of such securities.

16. The average daily trading volume of the Trust Units in the US for the specified period did not exceed 10% of the average daily trading volume for the Trust Units on a worldwide basis for the specified period. Furthermore, Enerflex has not disclosed in its most recent annual information form that holders of Units in the US (US Unitholders) collectively hold more than 10% of the Trust Units or the Exchangeable LP Units, and the Filer did not know or have reason to know, before the public announcement of its proposal on October 16, 2009, that the level of US ownership of the Trust Units or the Exchangeable LP Units exceeds 10% of such securities. Accordingly, the Filer is entitled to rely on the presumption under Rule 802 and the related rules that Enerflex and Enerflex LP are "foreign private issuers" and that holders of Units in the US do not hold more than 10% of the Trust Units or Exchangeable LP Units. The Filer will satisfy the other requirements of Rule 802. Accordingly, the offer and sale of the Filer Shares in the Offer will be exempt from the registration requirements of the 1933 Act.

17. Because: (a) the Trust Units are not listed on a US stock exchange; (b) the Trust Units are not a registered class of securities under applicable US federal securities laws; and (c) Enerflex is structured as a Canadian "income trust", the Filer has reason to believe that the level of US ownership of Units is low.

18. In order for the exemption provided in Rule 802 to apply, holders resident in the US must be permitted to participate in the exchange offer or business combination on terms at least as favourable to those offered to the other holders of the subject securities, subject to an exception which allows the offeror to offer cash consideration (in lieu of the offered securities) to securityholders resident in states of the US that require registration or qualification of the offered securities under applicable state or local securities laws.

19. There is no general exemption from US state "blue sky" securities laws that corresponds with Rule 802. As a result, the securities laws of a significant number of US states would prohibit delivery of the Filer Shares to US Unitholders without registration of the Filer Shares to be issued to US Unitholders resident in such states unless such holders are otherwise exempt investors under the laws of such states.

20. Registration under applicable state securities laws of the Filer Shares deliverable to US Unitholders would be costly and burdensome to the Filer.

21. The Exemption Sought relates to those US Unitholders that do not qualify as exempt "institutional investors" within the meaning of the securities laws and regulations of such US Unitholders' US jurisdiction (the Ineligible US Unitholders).

22. The Filer Shares issuable under the Offer have not been and will not be registered under the 1933 Act or qualified under any US state "blue sky" securities laws. The offer or sale of Filer Shares under the Offer to Ineligible US Unitholders would violate certain US state securities laws.

23. The Filer proposes, with respect to Ineligible US Unitholders that would otherwise receive Filer Shares in exchange for their Units under the Offer, to, at the sole discretion of the Filer, have such Filer Shares issued on their behalf to a selling agent, which shall, as agent for such Ineligible US Unitholders, as expeditiously as is commercially reasonable thereafter, sell such Filer Shares on their behalf through the facilities of the TSX and have the net proceeds of such sale, less any applicable brokerage commissions, other expenses and withholding taxes, delivered to such Ineligible US Unitholders. Each Ineligible US Unitholder for whom Filer Shares are sold by the selling agent will receive an amount equal to such Unitholder's pro rata interest in the net proceeds of sales of all Filer Shares so sold by the selling agent.

24. Any sale of the Filer Shares described above will be completed as expeditiously as commercially reasonable after the date on which the Filer takes up and pays for the Units tendered by the Ineligible US Unitholders under the Offer and will be done in a manner intended to maximize the consideration to be received from the sale and minimize any adverse impact of the sale on the market for the Filer Shares.

25. The Offer to Ineligible US Unitholders and the sale of the Filer Shares for the benefit of Ineligible US Unitholders in accordance with the procedure set out in paragraphs 23 and 24 (the Vendor Placement) will not violate any applicable US federal or state securities laws.

26. The take-over bid circular to be prepared by the Filer and mailed to all holders of Units in connection with the Offer will disclose the Vendor Placement.

27. There is currently a "liquid market", as that term is defined in Section 1.2 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, for the Filer Shares and the Filer's financial advisor has advised that in its view there will continue to be such a "liquid market" for the Filer Shares following completion of the Offer, any related second-step transaction, and the Vendor Placement.

28. If the Filer increases the consideration offered to holders of Units resident in Canada, the increase in consideration will also be offered to holders of Units resident outside of Canada, including Ineligible US Unitholders, at the same time and on the same basis.

29. Except to the extent that discretionary exemptive relief from applicable securities legislation is granted by securities regulatory authorities or securities regulators, the Offer will be made in compliance with the requirements under the Legislation governing take-over bids.

Decision

Each of the Decision Makers is satisfied that the decision meets the tests set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted so that the Filer is exempt from the Identical Consideration Requirement, provided that Ineligible US Unitholders that would otherwise receive Filer Shares under the Offer instead receive cash proceeds from the sale of those Filer Shares in accordance with the Vendor Placement.

Western Canadian Coal Corp.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- An issuer wants relief from the requirement to audit acquisition statements in accordance with Canadian or U.S. GAAS -- The issuer acquired a business whose historical financial statements have not been audited in accordance with Canadian or U.S. GAAS -- The acquired business' financial statements have been audited in accordance with International Standards on Auditing -- For various reasons, it would be practically impossible to re-audit the business' financial statements in accordance with Canadian or U.S. GAAS -- The audit report will be accompanied by a statement by the auditor that describes any material differences in the form of report as compared to a Canadian GAAS audit report, and indicates that its report would not contain a reservation if it were prepared in accordance with Canadian GAAS.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency, ss. 6.2, 9.1.

September 24, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

WESTERN CANADIAN COAL CORP.

(the Filer)

DECISION

Background

1 The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filer be exempted from complying with section 6.2 of National Instrument 52-107, Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107), pursuant to which the financial statements of an acquired company that are included in a business acquisition report filed under section 8.2 of National Instrument 51-102, Continuous Disclosure Obligations must be audited in accordance with Canadian or United States generally accepted auditing standards (the Requested Relief).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the British Columbia Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador and Prince Edward Island; and

(c) the decision is the decision of the principal regulator and evidences the decision of the other securities regulatory authority or regulator in Ontario.

Interpretation

2 Terms defined in National Instrument 14-101 Definitions have the same meaning as is used in this decision, unless otherwise defined.

Representations

3 This decision is based on the following facts represented by the Filer:

1. the Filer is a company incorporated under the laws of British Columbia;

2. the Filer's registered office is located at 1600 -- 925 West Georgia Street, Vancouver, British Columbia V6C 3L2 and its head office is located at 900-580 Hornby Street, Vancouver, British Columbia, V6C 3B6;

3. the Filer's primary business is acquiring, exploring and developing coal mining properties for the international metallurgical coal markets, with a current focus on coal mining in northeastern British Columbia, West Virginia and Wales;

4. the Filer is a reporting issuer each of the provinces of Canada, except Québec, and is not in default of its reporting issuer obligations in any jurisdiction;

5. the Filer's common shares are listed on the Toronto Stock Exchange (TSX) and the Alternative Investment Market of the London Stock Exchange (AIM) under the symbol "WTN"; certain share purchase warrants and convertible debentures of the Filer are also listed on the TSX under the symbol "WTN.WT" and "WTN.DB", respectively;

6. as disclosed in a press release dated May 20, 2009 and a material change report dated May 26, 2009, the Filer and Cambrian Mining plc (Cambrian) entered into a combination agreement, pursuant to which the Filer agreed to acquire all of the issued and outstanding ordinary shares of Cambrian (the Combination);

7. as disclosed in a press release dated July 13, 2009 and a material change report dated July 23, 2009, the Combination was completed on July 13, 2009 and the Filer became the sole beneficial holder of all of the ordinary shares of Cambrian; in connection with the Combination, the name of Cambrian was changed from Cambrian Mining plc to Cambrian Mining Limited;

8. Cambrian is a corporation incorporated under the laws of the United Kingdom. Cambrian's registered office is located at 27 Albemarle Street, London W1S 4DW United Kingdom;

9. prior to the Combination, Cambrian was a public company in the United Kingdom whose shares were admitted to trading on AIM under the symbol "CBM";

10. the financial statements of Cambrian have been prepared in accordance with International Financial Reporting Standards and audited in accordance with International Standards on Accounting (ISA);

11. the Combination was a "significant acquisition" for the Filer, within the meaning of section 8.3 of National Instrument 51-102, Continuous Disclosure Obligations (NI 51-102), for which the Filer is required to file a business acquisition report (BAR) in accordance with section 8.2 of NI 51-102;

12. pursuant to section 8.4 of NI 51-102, audited financial statements of Cambrian for the financial year ended June 30, 2009 (the Audited Financial Statements) are required to be included in the BAR; the Audited Financial Statements will include a reconciliation note prepared in accordance with the requirements of section 6.1 of NI 52-107;

13. section 6.2 of NI 52-107 does not permit the Filer to file the Audited Financial Statements audited in accordance with ISA as the Filer is not a "foreign issuer" within the meaning of NI 52-107;

14. as announced by the Canadian Institute of Chartered Accountants, the Canadian Auditing and Assurance Standards Board is adopting ISA as Canadian Auditing Standards (CAS) for the audits of financial statements; once effective, the CAS will constitute Canadian generally accepted auditing standards for financial statement audits; the CAS will come into effect for audits of financial statements for periods ending on or after December 14, 2010;

15. the Audited Financial Statements have been prepared in accordance with International Financial Reporting Standards and audited in accordance with ISA pursuant to requirements governing publicly-traded companies in the United Kingdom, including the requirements of AIM;

16. having the Audited Financial Statements audited a second time in accordance with Canadian GAAS would cause the Filer to incur substantial additional costs and management time and potentially cause a material delay in the filing of its BAR in respect of the Combination.

Decision

4 Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted provided that the Audited Financial Statements:

(a) are audited in accordance with ISA; and

(b) are accompanied by an auditor's report from the auditor of Cambrian that contains, or is accompanied by, a statement by the auditor that:

(i) describes any material differences in the form and content of the auditor's report as compared to an auditor's report prepared in accordance with Canadian GAAS; and

(ii) indicates that an auditor's report prepared in accordance with Canadian GAAS would not contain a reservation.

EPCOR Power Equity Ltd. and EPCOR Power L.P.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- exemption granted from the continuous disclosure, certification, insider reporting, audit committee and corporate governance requirements. Issuer meets the conditions of section 13.4 of NI 51-102, except the issuer proposes to issue convertible preferred shares that are convertible into other preferred shares of the issuer.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Requirements.

National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings.

National Instrument 52-110 Audit Committees.

National Instrument 58-101 Disclosure of Corporate Governance Practices.

National Instrument 55-102 System for Electronic Disclosure by Insiders.

National Instrument 44-101 Short Form Prospectus Distributions

Citation: EPCOR Power Equity Ltd., EPCOR Power Equity L.P., Re, 2009 ABASC 492

October 9, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

EPCOR POWER EQUITY LTD. (the Issuer) AND

EPCOR POWER L.P.

(the Partnership and together with the Issuer,

the Filers)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) granting the Issuer or its insiders, as the case may be, relief from the following:

(a) the continuous disclosure requirements contained in the Legislation, including requirements under National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), as amended from time to time (the Continuous Disclosure Requirements);

(b) the certification requirements contained in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), as amended from time to time (the Certification Requirements);

(c) the insider reporting requirements contained in the Legislation and the requirement to file an insider profile and insider reports under National Instrument 55-102 System for Electronic Disclosure by Insiders (NI 55-102), as amended from time to time, in respect of insiders of the Issuer (the Insider Reporting Requirements);

(d) the requirements of the Legislation relating to audit committees, including, without limitation, National Instrument 52-110 Audit Committees (NI 52-110), as amended from time to time (the Audit Committee Requirements);

(e) the corporate governance disclosure requirements contained in National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101), as amended from time to time (the Corporate Governance Requirements); and

(f) the requirement in Section 2.4 of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101), as amended from time to time, that preferred shares be non-convertible in order for the Issuer to be qualified to file a short form prospectus in respect of a distribution of such shares (the Short Form Prospectus Eligibility Requirement).

The Decision Maker has received an application from the Filers for a decision under the Legislation that the application for this decision and this decision (collectively, the Confidential Material) be kept confidential pursuant to Section 5.4 of National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (NP 11-203), as amended from time to time until the earlier of: (i) the date on which the Issuer is issued a receipt for the preliminary short form prospectus in respect of the distribution of the Series 2 Shares; (ii) the date that the Issuer advises the Decision Makers that there is no longer any need for the Confidential Material to remain confidential; and (iii) the date that is 90 days after the date of this decision (the Request for Confidentiality).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application,

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Newfoundland & Labrador, Prince Edward Island, Yukon Territory, Northwest Territories and Nunavut, and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

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

Representations

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

The Issuer

1. The Issuer was incorporated under the laws of the Province of Alberta on June 26, 1998.

2. The head office and principal place of business of the Issuer is located in Edmonton, Alberta.

3. The Issuer is a reporting issuer, or the equivalent, in each of the Jurisdictions, and to its knowledge is not in default of any requirements under the Legislation.

4. The Issuer operates as a holding company and indirectly holds all of the Partnership's business and power generation and other assets in the United States.

5. The authorized share capital of the Issuer currently consists of an unlimited number of Class A common shares (the Common Shares) and an unlimited number of cumulative redeemable preferred shares (the Preferred Shares), issuable in series, of which up to 5,750,000 Cumulative Redeemable Preferred Shares, Series 1 (the Series 1 Shares) have been authorized for issuance. As of September 18, 2009, there were a number of Common Shares outstanding and 5,000,000 Series 1 Shares outstanding.

6. The only voting securities of the Issuer are the Common Shares, all of which are beneficially owned by the Partnership.

7. The Preferred Shares may at any time and from time to time be issued in one or more series having such rights, restrictions and privileges determined by the directors of the Issuer. Subject to any rights which may be attached to a series of Preferred Shares and applicable law, the holders of Preferred Shares shall not be entitled to vote at any meeting of shareholders of the Issuer.

8. The Partnership has provided a full and unconditional guarantee of the payments to be made by the Issuer, as stipulated in the terms of the Series 1 Shares, which results in the holders of such securities being entitled to receive payment from the Partnership within 15 days of any failure by the Issuer to make a payment, as contemplated by paragraph (d) of the definition of "designated credit support security" in NI 51-102.

9. The Issuer has not issued any securities, and does not have any securities outstanding, other than the Series 1 Shares, which are "designated credit support securities" (as defined in NI 51-102), the Common Shares, which were issued to and are held by the Partnership as "parent credit supporter" (as defined in NI 51-102), and other securities described in Section 13.4(2)(c)(ii), (iii) and (iv) of NI 51-102.

10. The Issuer is a "credit support issuer" (as defined in NI 51-102) and currently satisfies the requirements of NI 51-102 by relying on Section 13.4(2) of NI 51-102, and subject to that Section has filed all documents it is required to file under NI 51-102.

11. The Issuer has relied on Section 13.4(2) to satisfy the requirements of NI 51-102 and as such, has also relied on Section 8.5 of NI 52-109 in respect of the Certification Requirements, Section 1.2(g) of NI 52-110 in respect of the Audit Committee Requirements and Section 1.3(d) of NI 58-101 in respect of the Corporate Governance Requirements, insiders of the Issuer have relied on Section 13.4(3) of NI 51-102 in respect of the Insider Reporting Requirements, and, in connection with the issuance of the Series 1 Shares, the Issuer relied on Section 2.4 of NI 44-101 in respect of the Short Form Prospectus Eligibility Requirement.

12. The Issuer is proposing to amend its articles to create two new series of Preferred Shares, being Cumulative Rate Reset Preferred Shares, Series 2 (the Series 2 Shares) and Cumulative Floating Rate Preferred Shares, Series 3 (the Series 3 Shares).

13. The Partnership will provide a full and unconditional guarantee of the payments to be made by the Issuer, as stipulated in the terms of the Series 2 Shares and the Series 3 Shares, which will result in the holders of such securities being entitled to receive payment from the Partnership within 15 days of any failure by the Issuer to make a payment, as contemplated by paragraph (d) of the definition of "designated credit support security" in NI 51-102.

14. The Series 2 Shares will be convertible, in certain circumstances at the option of the holder or the Issuer, into an equal number of Series 3 Shares, therefore, the Series 2 Shares will not be "designated credit support securities" (as defined in NI 51-102).

15. The Series 3 Shares will be convertible, in certain circumstances at the option of the holder or the Issuer, into an equal number of Series 2 Shares, therefore, the Series 3 Shares will not be "designated credit support securities" (as defined in NI 51-102).

16. The Issuer is proposing to distribute the Series 2 Shares to the public pursuant to a short form prospectus filed in each of the Jurisdictions. The short form prospectus will be prepared pursuant to the short form procedures contained in NI 44-101 and will comply with the requirements set out in Form 44-101F1, including Item 12 of Form 44-101F1.

17. An application will be made to list the Series 2 Shares and the Series 3 Shares on the TSX.

18. The Issuer may also, subject to market conditions, desire to issue other series of Preferred Shares that, but for the fact they would be convertible to other series of Preferred Shares, would satisfy the definition of "designated credit support securities" in NI 51-102.

The Partnership

19. The Partnership is a limited partnership organized under the laws of the Province of Ontario pursuant to a limited partnership agreement (the Partnership Agreement) made as of March 27, 1997 as amended and restated June 6, 1997 and as amended September 29, 1998, March 26, 2004 and April 29, 2004 and as amended and restated August 31, 2005 and July 1, 2009, among EPCOR Power Services Ltd., as general partner, the initial limited partner and each person who is admitted to the Partnership as a limited partner.

20. The head office and principal place of business of the Partnership is located in Edmonton, Alberta.

21. The Partnership is a reporting issuer, or the equivalent, in each of the Jurisdictions, and to its knowledge is not in default of any requirements under the Legislation.

22. The Partnership carries on activities that are directly or indirectly related to the energy supply industry and holds investments in other entities which are primarily engaged in such industry.

23. The Partnership is a "parent credit supporter" (as defined in NI 51-102) of the Issuer and has filed all documents it is required to file under NI 51-102.

24. The Partnership is qualified to file a prospectus in the form of a short form prospectus pursuant to Section 2.2 of NI 44-101, as it satisfies paragraphs (a), (b), (c), (d) and (e) of that Section.

25. The limited partnership units of the Partnership (the Units) trade on the TSX under the symbol "EP.UN". As at September 18, 2009, the Partnership had 53,897,279 Units outstanding.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.

Relief from the Continuous Disclosure Requirements

The decision of the Decision Makers under the Legislation is that relief from the Continuous Disclosure Requirements is granted, provided that:

(a) the Issuer continues to satisfy all the conditions set forth in subsection 13.4(2) of NI 51-102, other than paragraph 13.4(2)(c); and

(b) the Issuer does not issue any securities, and does not have any securities outstanding, other than:

(i) designated credit support securities (as such term is defined in NI 51-102);

(ii) securities issued to and held by the Partnership or an affiliate of the Partnership;

(iii) debt securities issued to and held by banks, loan corporations, loan and investment corporations, savings companies, trust corporations, treasury branches or credit unions, financial services cooperatives, insurance companies or other financial institutions;

(iv) securities issued under the exemptions from the registration requirement and prospectus requirement in Section 2.35 of National Instrument 45-106 Prospectus and Registration Exemptions;

(v) Series 2 Shares and Series 3 Shares; and

(vi) other series of Preferred Shares that, but for the fact they are convertible to other series of Preferred Shares (the Resulting Preferred Shares), are designated credit support securities (as such term is defined in NI 51-102) provided that the Resulting Preferred Shares are securities in respect of which the Partnership will provide a full and unconditional guarantee of the payments to be made by the Issuer, as stipulated in the terms of such shares, which will result in the holders of such securities being entitled to receive payment from the Partnership within 15 days of any failure by the Issuer to make a payment.

Relief from the Certification Requirements

The further decision of the Decision Makers under the Legislation is that relief from the Certification Requirements is granted, provided that the Issuer continues to satisfy the conditions of the relief from the Continuous Disclosure Requirements, above.

Relief from the Audit Committee Requirements

The further decision of the Decision Makers under the Legislation is that relief from the Audit Committee Requirements is granted, provided that the Issuer continues to satisfy the conditions of the relief from the Continuous Disclosure Requirements, above.

Relief from the Corporate Governance Requirements

The further decision of the Decision Makers under the Legislation is that relief from the Corporate Governance Requirements is granted, provided that:

(a) the Issuer continues to satisfy the conditions of Section 1.3(d)(ii) of NI 58-101; and

(b) the Issuer does not have equity securities trading on a marketplace (as defined in NI 58-101), other than (i) non-convertible, non-participating preferred securities, (ii) Series 2 Shares, (iii) Series 3 Shares, or (iv) other series of Preferred Shares that, but for the fact they are convertible to other series of Preferred Shares, are designated credit support securities (as defined in NI 51-102).

Relief from the Insider Reporting Requirements

The further decision of the Decision Makers under the Legislation is that relief from the Insider Reporting Requirements is granted, provided that:

(a) the Issuer continues to satisfy all the conditions set forth in subsection 13.4(2)(a) and (b) of NI 51-102;

(b) the Issuer does not issue any securities, and does not have any securities outstanding, other than:

(i) designated credit support securities (as such term is defined in NI 51-102);

(ii) securities issued to and held by the Partnership or an affiliate of the Partnership;

(iii) debt securities issued to and held by banks, loan corporations, loan and investment corporations, savings companies, trust corporations, treasury branches or credit unions, financial services cooperatives, insurance companies or other financial institutions;

(iv) securities issued under the exemptions from the registration requirement and prospectus requirement in Section 2.35 of National Instrument 45-106 Prospectus and Registration Exemptions;

(v) Series 2 Shares and Series 3 Shares; and

(vi) other series of Preferred Shares that, but for the fact they are convertible to other series of Preferred Shares, are designated credit support securities (as such term is defined in NI 51-102);

(c) if the insider is not the Partnership, the insider does not receive, in the ordinary course, information as to material facts or material changes concerning the Issuer before the material facts or material changes are generally disclosed, and (ii) the insider is not an insider of the Partnership in any capacity other than by virtue of being an insider of the Issuer; and

(d) if the insider is the Partnership, the Partnership does not beneficially own any designated credit support securities of the Issuer.

Relief from the Short Form Prospectus Eligibility Requirement

The further decision of the Decision Makers under the Legislation is that relief from the Short Form Prospectus Eligibility Requirement in respect of the distribution of the Series 2 Shares, and other series of Preferred Shares that, but for the fact they are convertible to other series of Preferred Shares, are designated credit support securities (as such term is defined in NI 51-102), is granted, provided that the Issuer satisfies all of the conditions in section 2.4 of NI 44-101, except for the requirement that the Series 2 Shares, or other series of Preferred Shares that, but for the fact they are convertible to other series of Preferred Shares, are designated credit support securities (as such term is defined in NI 51-102), as the case may be, be non-convertible.

Request for Confidentiality

The further decision of the Decision Makers under the Legislation is that the Request for Confidentiality is granted until the earlier of: (i) the date on which the Issuer is issued a receipt for the preliminary short form prospectus in respect of the distribution of the Series 2 Shares; (ii) the date that the Issuer advises the Decision Makers that there is no longer any need for the Confidential Material to remain confidential; and (iii) the date that is 90 days after the date of this decision.

Great-West Lifeco Inc. et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictionsand Multilateral Instrument 11-102 Passport System -- Take-over Bids -- Identical Consideration -- Issuer needs relief from the requirement in subsection 97(1) of the Securities Act (Ontario) that all holders of the same class of securities must be offered identical consideration. Exemption granted from the requirement to offer identical consideration to all of the holders of the same class of securities that are subject to an issuer bid. Exemption granted because the applicant satisfies the decision maker that the value given to all shareholders is substantially the same.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 97(1), 104(2)(c).

December 13, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

MANITOBA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

GREAT-WEST LIFECO INC.,

GREAT-WEST LIFE CAPITAL TRUST AND

CANADA LIFE CAPITAL TRUST

(collectively, the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Filer from subsection 2.23(1) of Multilateral Instrument 62-104 Take-Over Bids and Issuer Bids and subsection 97(1) of the Securities Act (Ontario) (the Identical Consideration Requirement), which require the Filer to offer identical consideration to all of the holders of the same class of securities that are subject to an issuer bid in connection with Great-West Lifeco Inc.'s offer to acquire up to 170,000 of the outstanding Great-West Life Trust Securities -- Series A (GREATS) of Great-West Life Capital Trust and up to 180,000 of the outstanding Canada Life Capital Securities -- Series A (CLiCS -- Series A) of Canada Life Capital Trust (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Manitoba Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Quebec, New Brunswick, Nova Scotia, Newfoundland, Prince Edward Island, Nunavut, Yukon Territory and the Northwest Territories; and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

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

Representations

The decision is based on the following facts represented by the Filer:

The Filers

1. On November 11, 2009, Great-West Lifeco made an offer (the Offer) to the holders of GREATs and CLiCS -- Series A to tender their GREATS and CLiCS -- Series A to its offer to purchase up to 170,000 of the outstanding GREATs and up to 180,000 of the outstanding CLiCS -- Series A.

2. Great-West Lifeco was incorporated under the Canada Business Corporations Act and its head office is located in Winnipeg, Manitoba.

3. Each of Great-West Life Capital Trust and Canada Life Capital Trust is an open-end trust established under the laws of Ontario. The head office of Great-West Life Capital Trust is located in London, Ontario and the head office of Canada Life Capital Trust is located in Toronto, Ontario.

4. Each of the Filers is a reporting issuer in each province and territory of Canada and is not in default of any of the requirements of the applicable securities legislation of such jurisdictions.

5. Great-West Life Capital Trust is authorized to issue an unlimited number of units and currently has two classes of units: special trust securities and GREATs. All of the special trust securities are indirectly held by Great-West Lifeco and there are 350,000 GREATs outstanding.

6. Canada Life Capital Trust is authorized to issue an unlimited number of units and currently has two classes of units outstanding: special trust securities and CLiCS (Series A and Series B). All of the special trust securities are indirectly held by Great-West Lifeco and there are 300,000 CLiCS -- Series A and 150,000 CLiCS -- Series B, outstanding.

7. The GREATs and CLiCS are not listed on any exchange.

The Bid

8. Pursuant to the Offer, holders of GREATs and CLiCS -- Series A will receive consideration payable at the election of the holder in (a) cash; or (b) debentures of Great-West Lifeco due November 16, 2039 (the Debentures) plus cash.

9. The Debentures to be issued under the Offer will be either up to an additional $350 million of debentures of Great-West Lifeco due November 16, 2039 to be issued pursuant to a trust indenture dated November 16, 2009 (the Prospectus Debentures), or up to $350 million aggregate principal amount of a new issue of debentures with the same maturity date as the Prospectus Debentures (the New Issue Debentures). The determination of whether Prospectus Debentures or New Issue Debentures will be issued pursuant to the Offer will be determined based upon the amount by which interest rates change between November 11, 2009, the date that the Offer commenced and the date that Debentures are to be issued pursuant to the Offer.

10. The Debentures are not convertible into any other security.

11. Rule 802 (Rule 802) under the United States Securities Act of 1933, as amended (the 1933 Act) provides an exemption from the registration requirements of the 1933 Act for offers and sales in any exchange offer for a class of securities of a "foreign private issuer" (as defined for purposes of the 1933 Act and the rules and regulations issued by the U.S. Securities and Exchange Commission thereunder) if the holders of the foreign subject company resident in the United States hold no more than 10% of the securities that are the subject of the exchange offer (the 10% Condition). Rule 800(h) provides that for the purposes of the calculation of the 10% Condition, securities held by the offeror are to be excluded. In order for Rule 802 to apply, holders resident in the United States must participate in the exchange offer on terms at least as favourable to those offered to the other holders of the subject securities, subject to an exception which allows the offeror to offer cash consideration to securityholders resident in states of the United States that do not have an applicable state "blue sky" exemption from the registration or qualification requirements of state securities laws.

12. To the knowledge of the Filer, Great-West Life Capital Trust and Canada Life Capital Trust are "foreign private issuers" within the meaning of Rule 405 of Regulation C under the 1933 Act.

13. To the knowledge of the Filer, the 10% Condition has not been met and, accordingly, the offer and sale of the Debentures would not be exempt from the registration requirements of the 1933 Act by virtue of Rule 802. Furthermore, there is no general exemption from state "blue sky" laws that coordinates with Rule 802; as a result, the securities laws of some states may prohibit delivery of the Debentures to holders of GREATs or CLiCS -- Series A resident in such states without registration of the Debentures unless such holders are otherwise exempt investors under the laws of such states.

14. A geographic analysis report for the GREATs as of November 11, 2009, with respect to approximately 98.4% of the outstanding GREATs disclosed that: (i) residents in Canada comprise 2,358 holders, collectively holding approximately 82.07% of all GREATs reported; (ii) residents in the United States comprise 54 holders, collectively holding approximately 8.68% of all GREATS reported; and (iii) residents outside of Canada and the United States comprise 34 holders, collectively holding approximately 9.25% of all GREATs reported.

15. A geographic analysis report for the CLiCS -- Series A as of November 11, 2009, with respect to approximately 91.5% of the outstanding CLiCS -- Series A disclosed that: (i) residents in Canada comprise 810 holders of CLiCS -- Series A, collectively holding approximately 75.36% of all CLiCS -- Series A reported; (ii) residents in the United States comprise 27 holders, collectively holding approximately 11.11% of all CLiCS -- Series A reported; and (iii) residents outside of Canada and the United States comprise 23 holders, collectively holding approximately 13.53% of all CLECS -- Series A reported.

16. As noted above, holders of GREATs and CLiCS -- Series A may elect to receive Debentures pursuant to the Offer. The Debentures have not been and will not be registered or otherwise qualified for distribution pursuant to the securities legislation of any jurisdiction outside of Canada, including the 1933 Act.

17. In lieu of delivering Debentures to U.S. holders of GREATs and/or CLiCS -- Series A, GreatWest Lifeco intends to use a vendor placement mechanism, the details and procedures of which are described below and in the Offer for any U.S. holder that requests to receive Debentures pursuant to the Offer. As a result of the vendor placement, the registration requirements of the 1933 Act will not apply as the Debentures will not be delivered in the United States or to U.S. holders.

18. In accordance with the vendor placement mechanism and the Offer, Great-West Lifeco proposes to deliver to Computershare Investor Services Inc. (the Depositary), the Debentures that the non-residents of Canada would otherwise be entitled to receive pursuant to the Offer. The Depositary will cause to be sold those Debentures after the payment date for the GREATs and CLiCS -- Series A tendered by non-residents pursuant to the Offer. After completion of the sale, the Depositary will distribute the aggregate net proceeds of sale, pro rata, among the non-residents who tendered their GREATs or CLiCS -- Series A pursuant to the Offer and who elected to receive Debentures.

19. Any sale of the Debentures described above will be completed as soon as practicable after the date on which Great-West Lifeco takes up and pays for the GREATs and/or CLiCS -- Series A tendered by non-residents pursuant to the Offer and will be done in a manner intended to maximize consideration to be received from the sale of Debentures and to minimize any adverse impact of the sale on the market for the Debentures.

20. To the extent there are any holders of GREATs and/or CLiCS -- Series A in jurisdictions outside of Canada and the United States to whom the Debentures may not be delivered without registration or qualification under the laws of their own jurisdiction, Great-West Lifeco proposes using the vendor placement mechanism described above, modified as necessary to comply with the laws of such foreign jurisdiction.

21. The Debentures, GREATs and CLiCS-Series A are not listed but have a market for trading and that market will not be materially less liquid upon successful completion of the Offer.

22. On the market on which the Debentures trade, based on one month of trading since November 9, 2009, the aggregate traded volume of the Debentures has been at least $17,000,000 of the $200,000,000 issue currently outstanding, and the aggregate value of the trades has been at least $15,000,000 and the market value of the Debentures was at least $75,000,000.

23. If Great-West Lifeco increases the consideration offered pursuant to the Offer to holders of GREATs and/or CLiCS -- Series A resident in Canada. the increase in consideration will also be offered to any non-residents of Canada at the same time and on the same basis.

24. Great-West Lifeco has sufficient cash available to satisfy the consideration offered pursuant to the Offer in the event all holders of GREATs and/or CLiCS -- Series A who deposit to the Offer elect to receive cash.

25. Except to the extent that relief from the Identical Consideration Requirement is granted, the Offer will comply with the requirements under the legislation concerning issuer bids.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that, in connection with the Offer, the Exemption Sought is granted so that the Filer is exempt from the Identical Consideration Requirement, provided that non-Canadian holders of GREATs or CLiCS -- Series A who would otherwise receive Debentures pursuant to the Offer, instead receive cash proceeds from the sale of the Debentures in accordance with the procedures set out in paragraphs 18 and 19 above.

Southern Pacific Resource Corp.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- s. 13.1 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) -- exemption from the requirement under Part 8 of NI 51-102 to provide the financial statement disclosure in a business acquisition report (BAR) -- Filer would have been able to use exemption in s. 8.10(3) to file alternative disclosure except that the transaction was structured for tax reasons as an acquisition of securities of a company incorporated for the specific purpose of acquiring the oil and gas properties and related assets from the vendor. Filer will provide alternative disclosure on the basis that the acquisition was in substance an acquisition by the Filer of an interest in oil and gas properties.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations.

Citation: Southern Pacific Resource Corp., Re, 2009 ABASC 641

December 31, 2009

IN THE MATTER OF

SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS OF EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

SOUTHERN PACIFIC RESOURCE CORP.

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Filer from the requirement to include in a business acquisition report (BAR) certain financial information as required under National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) in respect of a significant acquisition made by the Filer, on the condition that the Filer include in the BAR certain alternative financial information as more particularly described below (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application,

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Manitoba, and Saskatchewan, and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

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 Filer:

1. The Filer is a corporation amalgamated under the Business Corporations Act (Alberta). Its head office is located in Calgary, Alberta.

2. The Filer is an independent oil and gas company engaged in the business of exploring for, developing, and producing petroleum and natural gas reserves in the Western Canadian sedimentary basin.

3. The Filer is a reporting issuer in the provinces of Alberta, British Columbia, Saskatchewan, Manitoba and Ontario and is not, to its knowledge, in default of its obligations as a reporting issuer under the securities legislation of the Jurisdictions.

4. On October 9, 2009, the Filer entered into a share purchase and sale agreement (the Acquisition Agreement) with a major oil and gas company (the Vendor) providing for the indirect acquisition (the Acquisition) by the Filer of certain oil and gas properties, facilities, and related assets (the Assets). The Acquisition completed on November 3, 2009.

5. Pursuant to the Acquisition Agreement, the Filer acquired 100% of the issued and outstanding shares of Senlac Oil Ltd. (Senlac), a wholly-owned subsidiary of the Vendor incorporated on September 29, 2009 for the purpose of facilitating the Acquisition.

6. Subsequent to the entering into of the Acquisition Agreement and prior to the closing of the Acquisition, the Vendor transferred the Assets to Senlac. Accordingly, at the time of closing of the Acquisition, the Assets were held by Senlac.

7. The transfer of the Assets from the Vendor to Senlac was made for the purpose of facilitating the Acquisition in a manner that achieved certain tax efficiencies for the Vendor.

8. The Acquisition constitutes a "significant acquisition" for the Filer within the meaning of Part 8 of NI 51-102. Accordingly, the Filer is required to file a BAR in respect of the Acquisition.

9. The financial year end of the Filer is June 30 and the financial year end of the Vendor was December 31.

10. Pursuant to item 3 of Form 51-102F4 and Part 8 of NI 51-102, the Filer would, absent the Exemption Sought, be required to include in its BAR for the Acquisition, subject to the exemptions provided therein:

(a) an income statement, a statement of retained earnings and a cash flow statement for each of the two most recently completed financial years in respect of the Assets; a balance sheet as at the end of each such financial year, and notes to the financial statements;

(b) an auditors' report on the income statement, statement of retained earnings and cash flow statement for the most recently completed financial year in respect of the Assets and the balance sheet as at the end of such financial year;

(c) a pro forma balance sheet of the Filer as at September 30, 2009 that gives effect to the Acquisition as if it had taken place as at such date; and

(d) a pro forma income statement of the Filer for the financial year ended June 30, 2009 and for the three month interim period ended September 30, 2009, in each case giving effect to the Acquisition as if it had taken place at June 30, 2009, together with pro forma earnings per share.

11. Section 8.10(3) of NI 51-102 provides an exemption from the financial statement disclosure requirements that would otherwise apply under Part 8 of NI 51-102 if the significant acquisition is of a business that is an interest in an oil and gas property, provided that, among other things: (i) the acquisition is not an acquisition of securities of another issuer; and (ii) the Filer includes in the BAR for the Acquisition historical operating statements in respect of the Assets and pro forma operating statements of the Filer as required under section 8.10(3)(e) of NI 51-102.

12. All of the conditions set forth in section 8.10(3) of NI 51-102 are satisfied, except for the fact that the Acquisition is an acquisition of securities of another issuer.

13. The Filer proposes to include in the BAR to be filed in respect of the Acquisition:

(a) an audited statement of revenues, royalties and operating expenses in respect of the Assets for the year ended December 31, 2008;

(b) an unaudited statement of revenues, royalties and operating expenses in respect of the Assets for the year ended December 31, 2007;

(c) unaudited statements of revenues, royalties and operating expenses in respect of the Assets for the nine month period ended September 30, 2009 and September 30, 2008, respectively;

(d) an unaudited pro forma consolidated statement of revenues, royalties and operating expenses of the Filer for the year ended June 30, 2009 giving effect to the Acquisition as if it had taken place at July 1, 2008;

(e) an unaudited pro forma consolidated statement of revenues, royalties and operating expenses of the Filer for the three months period ended September 30, 2009 giving effect to the Acquisition as if it had taken place at July 1, 2008;

(f) a description of the Assets and disclosure regarding the annual oil and gas production volumes from the Assets, as contemplated in subparagraphs 8.10(3)(e)(iii) and (iv) of NI 51-102; and

(g) information regarding estimated reserves and related future net revenue attributable to the Assets and estimated oil and gas production volumes therefrom, as contemplated in section 8.10(3)(g) of NI 51-102.

(collectively, the Alternative Financial Disclosure)

14. The Acquisition was, in substance, an acquisition by the Filer of an interest in oil and gas properties constituting a business. For certain tax efficiencies, the transaction was structured as a purchase by the Filer of all of the issued and outstanding shares of Senlac with the Vendor transferring the Assets to Senlac prior to closing. Otherwise, the Filer would have acquired the Assets directly from the Vendor and availed itself of the exemption provided in section 8.10(3) of NI 51-102 with respect to the kind of financial disclosure to be included in the BAR.

15. The Filer seeks a decision of the Decision Makers under section 13.1 of NI 51-102 exempting the Filer from the requirement to include in the BAR to be filed in respect of the Acquisition the financial statements and other information required pursuant to item 3 of Form 51-102F4, provided that the BAR includes the Alternative Financial Disclosure.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that the Filer includes the Alternative Financial Disclosure in the BAR to be filed in respect of the Acquisition.

The Fédération des Caisses Desjardins du Québec and the Funds Listed in Schedule "A"

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Hybrid Review -- Extension of the lapse date of the simplified prospectus for 52 days until completion of the Funds Reorganization.

Applicable Legislative Provisions

National Instrument 81-101 Mutual Fund Prospectus Disclosure, s. 2.5(7).

Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).

December 16, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUÉBEC AND ONTARIO

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

THE FÉDÉRATION DES CAISSES DESJARDINS

DU QUÉBEC

(the "Filer")

AND

IN THE MATTER OF

THE FUNDS LISTED IN SCHEDULE "A"

(each a "Fund", together the "Funds")

DECISION

Background

The securities regulatory authority in Quebec has received an application from the Filer, on behalf of the Funds, for a decision under the securities legislation of the jurisdiction of the principal regulator (the "Legislation") for relief under section 2.5(7) of National Instrument 81-101 that the time limits be extended to enable the Funds to continue the distribution of their securities to the time limits that would apply if the lapse date of the simplified prospectus and annual information form of the Funds was March 8, 2010 (the "Passport Exemption").

The securities regulatory authority or regulator in Ontario (the "Coordinated Exemptive Relief Decision Maker") has received an application from the Filer, on behalf of the Funds, for a decision under the securities legislation of Ontario for relief under section 62(5) of the Securities Act (Ontario) (the "Act") that the time limits be extended to enable the Funds to continue the distribution of their securities to the time limits that would apply if the lapse date of the simplified prospectus and annual information form of the Funds was March 8, 2010 (the "Coordinated Exemptive Relief").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for hybrid applications):

a) the Autorité des marchés financiers du Québec is the principal regulator for this application;

b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in each of the other provinces and territories of Canada except Ontario;

c) the decision is the decision of the principal regulator; and the decision evidences the decision of the Coordinated Exemptive Relief Decision Maker.

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.

"NI 81-101" means National Instrument 81-101 Mutual Fund Prospectus Disclosure

"NI 81-102" means National Instrument 81-102 Mutual Funds

"NI 81-106" means National Instrument 81-106 Investment Fund Continuous Disclosure

Representations

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

1. The Filer is the manager and trustee of the Funds.

2. The Funds are open-ended mutual fund trusts established under the laws of Québec pursuant to a declaration of trust.

3. The Funds have been authorized to distribute their securities in each of the provinces and territories of Canada under a simplified prospectus and annual information form dated January 15, 2009 as amended by amendments dated June 2, 2009.

4. The Funds are reporting issuers under the laws of each of the provinces and territories of Canada. None of the Funds is in default of any of the requirements of the Legislation.

5. Pursuant to the Legislation and the Act, the lapse date for the distribution of securities of the Funds is currently January 15, 2010. In each jurisdiction, provided a pro forma simplified prospectus is filed 30 days prior to January 15, 2010 (by December 16, 2009), a final version of the simplified prospectus is filed by January 25, 2010, and a receipt for the simplified prospectus is issued by the securities regulatory authorities by February 4, 2010, securities of the Funds may be distributed without interruption throughout this prospectus renewal period.

6. The Filer is contemplating mergers of funds and mandate changes that will affect the Funds (the "Reorganization"), and which, should they occur, will be considered by the directors of the Filer at a meeting to be held on or about January 12, 2010 and, when approved by the directors of the Filer, by securityholders of the applicable Funds at meetings to be called for such purposes on or about March 8, 2010 and would take effect no later than March 18, 2010.

7. Any Fund mergers and mandate changes that occur will be effected in accordance with the requirements of NI 81-102 and NI 81-106 including, without limitation, filing appropriate amendments to the simplified prospectus and annual information form of the Funds and seeking Independent Review Committee, securityholders and regulatory approval where necessary.

8. The Filer wishes to extend the lapse date for the Funds to March 8, 2010 in order to provide time for the Reorganization to be considered, planned and implemented such that the renewed simplified prospectus and annual information can be filed on or about March 18, 2010 and will include appropriate post-Reorganization disclosure.

9. The Filer proposes to file a pro forma simplified prospectus and annual information form in respect of all the Funds by February 6, 2010 and the final simplified prospectus and annual information form in respect of all the Funds on or about March 18, 2010, with the final receipt to issue on or about that date.

10. In the absence of this decision, NI 81-101 and section 62(2) of the Act require that the Funds would have to file a final simplified prospectus and annual information form by January 25, 2010 and receive a final receipt by February 4, 2010.

11. Since June 2, 2009, the date of the most recently filed amendments to the simplified prospectus and annual information form for the Funds, no undisclosed material change has occurred in respect of the Funds. Accordingly, such prospectus and annual information form, as amended, represent the current information regarding each of the Funds. The extension requested will not affect the currency or accuracy of the information contained in the simplified prospectus and annual information form. Up to date financial information about the Funds will be available to investors within the audited annual financial statements and management report of fund performance for the period ended September 30, 2009, which will be filed by December 29, 2009. As a result, the extension of the lapse date will not be prejudicial to the public interest.

Decision

Each of the principal regulator and the Coordinated Review Decision Maker is satisfied that the decision meets the test set out in the Legislation and the Act, respectively, for the relevant regulator or securities regulatory authority to make the decision.

The decision of the principal regulator under the Legislation is that the Passport Exemption is granted.

The decision of the Coordinated Review Decision Maker under the Act is that the Coordinated Exemptive Relief is granted.

SCHEDULE "A"

The Funds

Investia Financial Services Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- NI 81-105 Mutual Fund Sales Practices, s. 9.1 -- exemption from subsection 7.1(3) of NI 81-105 to participating dealers to pay a commission rebate for clients to switch to related funds -- the relief will not be prejudicial to clients.

Applicable Legislative Provisions

National Instrument 81-105 Mutual Funds Sales Practices, ss. 7.1(1)(b), 7.1(3), 9.1.

December 15, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUEBEC AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

INVESTIA FINANCIAL SERVICES INC.

(Investia or the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption under Section 9.1 of National Instrument 81-105 Mutual Fund Sales Practices (NI 81-105) exempting the Filer and its present and future representatives (the "Representatives") from the prohibitions contained in paragraph 7.1(1)(b) and subsection 7.1(3) of NI 81-105 prohibiting the Filer and its Representatives from paying to a securityholder all or any part of a fee or commission payable by the securityholder on the redemption of securities of a mutual fund that occurs in connection with the purchase by the securityholder of securities of another mutual fund that is not in the same mutual fund family (a commission rebate) where the Filer is a member of the organization of the mutual fund the securities of which are being acquired (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Autorité des marchés financiers is the principal regulator for this application,

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories and Yukon Territories, and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

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 Filer:

1. Investia is registered in each of the provinces and territories of Canada except Nunavut as a dealer in the category of mutual fund dealer. Investia is also registered as an exempt market dealer in Ontario and Newfoundland and Labrador. Investia is a member of the Mutual Fund Dealers Association of Canada. The head office of Investia is located in Québec City, Québec.

2. The Filer is a "member of the organization" (within the meaning of NI 81-105) of the mutual funds managed by IA Clarington Investments Inc. (IA Clarington), known as the "IA Clarington Funds". The Filer may become in the future, a "member of the organization" of other mutual funds, since the parent company or an affiliate of the Filer may establish or acquire interests in corporations that are managers of mutual funds (Future Affiliated Funds).

3. The Filer is a direct wholly-owned subsidiary of Industrial Alliance Insurance and Financial Services Inc. (Industrial Alliance). IA Clarington is also a direct wholly-owned subsidiary of Industrial Alliance.

4. The Filer is not in default of securities legislation in any jurisdiction of Canada.

5. The Filer acts as a participating dealer (within the meaning of NI 81-105) in respect of the IA Clarington Funds as well as for third party managed mutual funds.

6. The Filer acts independently from IA Clarington and has no connection with IA Clarington, other than through its common parent company. The Filer and its Representatives are free to choose which mutual funds to recommend to their clients and consider recommending the IA Clarington Funds to their clients in the same way as they consider recommending other third party mutual funds. The Filer and its Representatives comply with their obligation at law and only recommend mutual funds that they believe would be suitable for their clients and in accordance with their clients' investment objectives. IA Clarington provides the Filer with the compensation described in the prospectus of the IA Clarington Funds in the same manner as IA Clarington does for any participating dealer selling securities of the IA Clarington Funds to their clients. All compensation and sales incentives paid to the Filer by any member of the organization of the IA Clarington Funds or of any Future Affiliated Funds will comply with NI 81-105.

7. Neither the Filer, nor any of its Representatives, is or will be subject to quotas (whether express or implied) in respect of selling the IA Clarington Funds. Neither the Filer nor IA Clarington or any other member of their organization, provide any incentive (whether express or implied) to the Filer's Representatives or to the Filer to encourage those Representatives or the Filer to recommend the IA Clarington Funds over third-party managed mutual funds.

8. The Filer complies with NI 81-105, in particular, Part 4 of NI 81-105 in its compensation practices with the Representatives.

9. No Representative of the Filer has an equity interest in the Filer (within the meaning of NI 81-105) or in any other member of the organization of the IA Clarington Funds.

10. The prohibitions in Section 7.1 of NI 81-105 mean that neither the Filer nor its Representatives can reimburse their client for any fees or commissions incurred by those clients when they decide to switch into an IA Clarington Fund from another mutual fund. Section 7.1 allows the Filer and its Representatives to pay commission rebates when the client decides to switch from one third party fund to another third party fund, provided the disclosure and consent procedure established in section 7.1 is followed.

11. Payment of commission rebates by the Filer and its Representatives benefit the client so that the client does not incur costs in switching from one fund to another.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:

(a) The Representatives and the Filer will comply with the provisions of paragraph 7.1(1)(a) of NI 81-105.

(b) The Representatives and the Filer will comply with the disclosure and consent provisions of Part 8 of NI 81-105.

(c) The clients of the Filer will be advised by the Filer and its Representatives, in writing and in advance of finalizing the switch, that any commission rebate proposed to be made available in connection with the purchase of securities of IA Clarington Funds or Future Affiliated Funds:

(i) will be available to the client regardless of whether the redemption proceeds are invested in an IA Clarington Fund, a Future Affiliated Fund or a third party fund (to the maximum of the commission earned by the Representative on the purchase);

(ii) will not be conditional upon the purchase of securities of an IA Clarington Fund or a Future Affiliated Fund; and

(iii) in all cases, be not more than the amount of the gross sales commission earned by the Filer on the client's purchase of an IA Clarington Fund or a Future Affiliated Fund.

(d) The actual amount of the commission rebate paid in respect of the switch will be not more than the amount referred to in paragraph (c)(iii) above.

(e) The Filer or its Representatives that provide commission rebates will not be reimbursed directly or indirectly in respect of the commission rebate in connection with a switch to an IA Clarington Fund or a Future Affiliated Fund by any member of the organization of that fund.

(f) The Filer's compliance policies and procedures that relate to this decision will emphasize that any commission rebate agreed to be paid to a client by a Representative cannot be conditional on the client acquiring an IA Clarington Fund or a Future Affiliated Fund and will be made available to the client if the client wishes to switch to an unrelated third-party fund.

(g) This decision shall cease to be operative with respect to a Decision Maker following the entry into force of a rule of that Decision Maker which replaces or amends section 7.1 of NI 81-105.

Blackmont Capital Inc. and Broadridge Investor Communications Corporation -- MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- exemption granted to permit dealers to satisfy the requirement under securities legislation to deliver or send a prospectus of a mutual fund using the Smart Prospectus® Service, provided by Broadridge Investor Communications Corporation, bound together with additional documents -- additional documents are restricted to documents that are either required or permitted by the Legislation to be delivered to investors, for mutual funds and non-mutual funds, and do not include marketing material -- investors to receive consolidated reporting of all of the trades placed by the investor in an account through a particular Dealer on a given day, along with the additional documents

Applicable Legislative Provisions

National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 3.2(2), 5.1(3), 5.2, 6.1(2).

December 30, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,

MANITOBA, ONTARIO, QUÉBEC,

NEW BRUNSWICK, NOVA SCOTIA,

PRINCE EDWARD ISLAND,

NEWFOUNDLAND AND LABRADOR, YUKON

TERRITORY, NORTHWEST TERRITORIES AND

NUNAVUT TERRITORY

(the Jurisdictions)

AND

IN THE MATTER OF

NATIONAL INSTRUMENT 81-101

MUTUAL FUND PROSPECTUS DISCLOSURE

(NI 81-101)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

BLACKMONT CAPITAL INC.

(Blackmont)

AND

IN THE MATTER OF

BROADRIDGE INVESTOR COMMUNICATIONS CORPORATION

(Broadridge, and together with Blackmont, the Filers)

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) for:

• an exemption from the provision that the requirement under the Legislation to deliver or send a simplified prospectus of a mutual fund to a person or company is only satisfied by delivering or sending such document prepared in a particular form stipulated in the Legislation that restricts the documents that may be attached to, or bound with, the simplified prospectus;

• an exemption from the restriction that a simplified prospectus may only be attached to, or bound with, certain documents permitted under the Legislation; and

• an exemption from the requirement to attach permitted documents to a simplified prospectus only in the order stipulated in the Legislation;

when Blackmont or other Dealers (as defined below) use the Smart Prospectus® Service (as defined below) to deliver a simplified prospectus to recipients in order to satisfy the requirement under the Legislation on Dealers to deliver a prospectus of a mutual fund to a person or a company (the Requested Relief) as described herein.

Under the Mutual Reliance Review System for Exemptive Relief Applications:

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

(b) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.

Representations

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

General

1. Blackmont is a corporation incorporated under the laws of Ontario with its head office located in Toronto, Ontario and is registered as a dealer in the category of investment dealer in the Province of Ontario and has equivalent registration in each of the other Participating Jurisdictions.

2. Broadridge is a corporation incorporated under the laws of Nova Scotia with its head office located in Mississauga, Ontario.

3. Broadridge is in the business of investor communications including mailing or delivering on behalf of registered dealers to their clients preliminary prospectuses or simplified prospectuses, final prospectuses, trade confirmations, offering memoranda, continuous disclosure documentation and other documentation required or permitted under the Legislation to be so delivered or mailed in connection with trades and holdings of securities.

4. Registered dealers who sell securities issued by mutual funds are, pursuant to the Legislation, required to send or deliver confirmations of the trades in securities to the purchaser of such securities within specified time periods, and unless the registered dealer has previously done so, the registered dealer must send or deliver to the purchaser of such securities the latest prospectus and any amendments thereto (the Dealer Delivery Requirement).

5. Section 3.2(2) of National Instrument 81-101 (NI 81-101) provides that the requirement under the Legislation to deliver or send a simplified prospectus of a mutual fund to a person or company is satisfied by delivering or sending such document filed under NI 81-101 and prepared in accordance with Form 81-101F1 (the Form Requirement).

6. Subsection 5.1(3) of NI 81-101 lists those documents that may be attached to or bound with a simplified prospectus (the Attachment Requirement).

7. Section 5.2 of NI 81-101 specifies the order in which documents permitted to be attached to or bound with a simplified prospectus must be so attached or bound (the Order Requirement).

8. Using Broadridge's Smart Prospectus® service (Smart Prospectus® Service), a proprietary technology of Broadridge, Broadridge, with respect to all trades in mutual funds made by an investor in a day, prints and delivers by mail, or delivers electronically, trade confirmations, the required portions of one or more simplified prospectuses for securities issued by mutual funds together with any amendments thereto and a cover letter on behalf of registered dealers who have entered or will enter into contracts with Broadridge (the Dealers). The documents so delivered are in a format described in and are in compliance with the provisions of the MRRS Decision Document dated April 21, 2003 granted on the application of ADP Investor Communications Corporation, the predecessor corporation of Broadridge, on behalf of the Dealers with respect to the Smart Prospectus® Service (the First Decision).

9. Pursuant to the First Decision, the Dealers are exempt from the Form Requirement, the Attachment Requirement and the Order Requirement, provided that they satisfy the Dealer Delivery Requirement by using the Smart Prospectus® Service provided by Broadridge under contract subject to certain conditions.

10. In response to the demands of Blackmont and other Dealers and their clients, Broadridge's technology has been adapted subsequent to the First Decision to permit various and broader uses of the Smart Prospectus® Service by Dealers in the sending or delivery of documents that may include a simplified prospectus that would not comply with one or more of the Form Requirement, the Attachment Requirement or the Order Requirement.

Additional Documents

11. Blackmont and other Dealers wish to enter into contracts with Broadridge to use the Smart Prospectus® Service with respect to the delivery of Additional Documents (as defined below) together with a simplified prospectus for securities issued by a mutual fund, in connection with the Dealer Delivery Requirement.

12. The technology underlying the Smart Prospectus® Service has been enhanced to permit the consolidation of trade confirmations for all trades by an investor in an account through a particular Dealer processed on the same day in one trade confirmation document. Such trades may be mutual fund trades and trades of non-mutual fund securities. Prior to such technological capability, each trade was confirmed by a separate paper trade confirmation. The clients of Blackmont prefer consolidated trade confirmations for trades processed on the same day. In Broadridge's experience, their Dealer clients prefer consolidated trade confirmations. Also, recent changes in the exemptions from prospectus and registration requirements have encouraged qualifying individuals to purchase securities in the exempt market as well as mutual funds resulting in an increased demand to consolidate confirmations for exempt trades and mutual fund trades.

13. The Smart Prospectus® Service also now permits the inclusion of documents in support of the delivery of consolidated trade confirmations in the same bound package as a simplified prospectus. Blackmont wishes to permit Broadridge to attach to and bind with the simplified prospectus such additional documents (Additional Documents, as further defined below) in using the Smart Prospectus® Service to permit it and other Dealers to satisfy the Dealer Delivery Requirement and provide other documents to support the consolidated trade confirmation.

14. The Additional Documents would be restricted to documents that are either required or permitted by the Legislation to be delivered to investors. The inclusion of Additional Documents reflects the ability of the new technology underlying the Smart Prospectus® Service to identify and produce an investor communication that includes, in a convenient format, material required by a consolidated trade confirmation, new and changing regulatory requirements and the changing investment practices of the public. Additional Documents include disclosure documents that are or may be from time to time required or permitted to be delivered to investors in respect of trades in a consolidated trade confirmation, such as long form or short form prospectuses with respect to securities, information folders, information memoranda, information statements, offering memoranda, information pages and term sheets with respect to securities or financial instruments distributed by a Dealer. Additional Documents may also include, but are not limited to, documents with respect to account opening, management or maintenance or other information that are or may be required or permitted to be delivered to investors in connection with a trade. Additional Documents will not include marketing material with respect to a mutual fund or other securities or financial instruments or a Dealer.

15. A simplified prospectus delivered or sent using the Smart Prospectus® Service including Additional Documents on behalf of a Dealer may not comply with the Attachment Requirement and the provisions of the First Decision in that one or more Additional Documents may be attached to the prospectus.

16. A simplified prospectus delivered or sent using the Smart Prospectus® Service including Additional Documents on behalf of a Dealer may also not comply with the Order Requirement and the provisions of the First Decision in that the portions of the prospectus may be preceded by one or more Additional Documents.

17. A simplified prospectus delivered or sent using the Smart Prospectus® Service including Additional Documents on behalf of a Dealer may also not comply with the Form Requirement and the provisions of the First Decision in that each page of each prospectus and Additional Document so delivered will have two page numbers: one relating to the page number in the prospectus or Additional Document and the second identifying a consecutive page number in the Smart Prospectus® Service document, which pagination system will be explained to the reader on the front of the Smart Prospectus® Service document.

18. The Filers submit that the Requested Relief would not be prejudicial to the public interest and will provide investors with concise and better organized documentation. The face page explanation of the documents, including the Additional Documents, included in a package, the index of documents, separation pages between documents and dual page numbering (as described in paragraph 17) all ensure that investors will not be confused about what documentation they are receiving.

19. Granting the Requested Relief will enable Blackmont and other Dealers to provide their investor clients with consolidated reporting on all of the trades placed by the investor on a given day that is being requested by the investors. In their meetings with, and in periodic feedback to, Broadridge, Blackmont and other Dealers have advised Broadridge that their clients have expressed a strong desire to receive customized, relevant and consolidated reporting of this nature.

20. Broadridge will keep records of the Dealers that use the Smart Prospectus® Service with respect to Additional Documents and will forward, on a confidential basis, a list of the Dealers relying on this Decision to the Principal Regulator on a quarterly basis within 10 business days of the end of each calendar quarter.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted provided that:

(a) A Dealer relying on this relief uses the Smart Prospectus® Service pursuant to a contract with Broadridge the terms of which are consistent with the terms of this decision;

(b) with respect to the documents delivered by the Smart Prospectus® Service on behalf of a Dealer:

(i) if the pages of a document delivered under the Smart Prospectus® Service have two page numbers, one will relate to the page number in the filed prospectus or Additional Document, as applicable, and the second will identify a consecutive page number in the Smart Prospectus® Service document, which pagination system is explained to the reader on the front of the Smart Prospectus® Service document;

(ii) Additional Documents, when bound or attached together with a simplified prospectus relating to the purchase of a mutual fund security, shall be in the order of the documents listed in the related cover letter;

(iii) the simplified prospectus delivered or sent to an investor otherwise complies with the terms of the First Decision; and

(c) this decision shall cease to be of effect with the coming into force of any legislation or rule of the Decision Makers relating to the preparation, delivery, binding or ordering of disclosure documents of mutual funds subject to this decision.

HSBC Bank Canada

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

HSBC BANK CANADA

ORDER

WHEREAS on December 18, 2009, the Ontario Securities Commission (the "Commission") issued a Notice of Hearing pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act") in relation to HSBC Bank Canada ("HSBC");

AND WHEREAS HSBC entered into a settlement agreement with Staff of the Commission ("Staff") dated December 16, 2009 attached hereto as Appendix "A" (the "Settlement Agreement") in which it agreed to a settlement of the proceeding commenced by the Notice of Hearing dated December 18, 2009, subject to the approval of the Commission;

AND UPON reviewing the Settlement Agreement, and upon hearing submissions from counsel for Staff and HSBC;

AND WHEREAS the Commission is of the opinion that it is in the public interest to make this Order;

IT IS ORDERED THAT:

1. The Settlement Agreement is approved;

2. HSBC shall submit to a review of its compliance practices and procedures in accordance with the Terms of Reference attached at Schedule "B" to the Settlement Agreement;

3. HSBC pay to the Commission the sum of $5,925,000, to be allocated under section 3.4(2)(b) of the Act to or for the benefit of third parties; and

4. HSBC pay the costs of the Commission's investigation in the amount of $75,000.

DATED at Toronto this 21st day of December, 2009.

"James E.A. Turner"

"Mary G. Condon"

APPENDIX "A"

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

HSBC BANK CANADA

SETTLEMENT AGREEMENT

PART I -- INTRODUCTION

1. The Ontario Securities Commission (the "Commission") will issue a Notice of Hearing to announce that it will hold a hearing to consider whether, pursuant to section 127 and section 127.1 of the Securities Act, R.S.O. 1990, c. S-5, as amended (the "Act"), it is in the public interest for the Commission to make certain orders in respect of HSBC Bank Canada ("HSBC").

PART II -- JOINT SETTLEMENT RECOMMENDATION

2. Staff of the Commission ("Staff") agree to recommend settlement of the proceeding commenced by Notice of Hearing dated December 18, 2009 (the "Proceeding") against HSBC according to the terms and conditions set out in Part IV of this Settlement Agreement. HSBC agrees to the making of an order in the form attached as Schedule "A", based on the facts set out below.

PART III -- AGREED FACTS

3. HSBC admits the facts set out in this Settlement Agreement solely for the purposes of this Settlement Agreement. This Settlement Agreement and the facts and admissions set out herein are without prejudice to HSBC in any proceeding including, without limitation, any civil, administrative, quasi-criminal or criminal actions or proceedings that may be brought by any person or agency, whether or not this Settlement Agreement is approved by the Commission.

OVERVIEW

4. HSBC is a bank listed on Schedule II of the Bank Act (Canada). Its head office is located in Vancouver, British Columbia and its money market treasury function is located in Toronto, Ontario. HSBC is not a registrant under the Act.

5. On August 13, 2007, the Canadian non-bank sponsored asset-backed commercial paper ("ABCP" or "third-party ABCP") market froze, leaving Canadian investors holding illiquid investments that they could neither sell nor redeem.

6. HSBC was an agent for issuers in the third-party ABCP market. In that capacity, HSBC bought and sold third party ABCP.

ASSET-BACKED COMMERCIAL PAPER

7. ABCP is a short-term debt instrument with typical maturities of 30 to 180 days. ABCP is backed by a pool of underlying assets and offers a yield slightly better than the yield offered on short-term government debt.

8. ABCP is issued by a special purpose vehicle (also referred to as a conduit). In Canada, the conduits are trusts established by sponsors. Sponsors generally select underlying assets, administer the assets and arrange for the sale of the ABCP notes. The Canadian ABCP market included two categories: bank-sponsored and non-bank-sponsored (or third party) ABCP.

9. As the underlying assets held by conduits were long-term and the ABCP notes were short-term, there was a timing mismatch between the cash flowing from the assets and the cash needed to repay maturing ABCP. For many years, conduits met their maturity obligations by selling newly issued ABCP, the proceeds of which were used to pay maturing ABCP. The liquidity of ABCP was an important characteristic for investors along with credit ratings and yields.

10. To safeguard against difficulty meeting maturity obligations, conduits entered into agreements with liquidity providers which provided credit lines under certain conditions. In general, there were two types of liquidity facilities: (1) general market disruption ("GMD") and (2) global-style. GMD liquidity was also called "Canadian-style" since it was only available in the Canadian ABCP market. Unlike global-style liquidity facilities, Canadian-style liquidity facilities required specified "general market disruption" events and a credit rating affirmation before liquidity was provided.

11. Liquidity agreements were subject to confidentiality provisions. Many details of the pre-conditions required for liquidity support, including the definition of a "general market disruption event", were not known to the public, investors or to the distributors of ABCP who were not also liquidity providers. Conduits generally disclosed the existence of their liquidity arrangements and disclosed that there were pre-conditions to draws.

12. As of September 2005, ABCP distributed in Canada was prospectus-exempt under the short-term debt exemption in section 2.35 of National Instrument 45-106 -- Prospectus and Registration Exemptions, which provided an exemption for commercial paper with an approved credit rating from an approved credit rating organization. The conduits issuing the ABCP were not reporting issuers under applicable securities laws.

13. Dominion Bond Rating Services Limited ("DBRS"), an approved credit rating organization, was the sole credit rating organization which rated third-party ABCP in Canada.

14. On January 19, 2007, DBRS announced changes to its rating methodology for certain new transactions entered into by ABCP issuers. The DBRS press release set out specific new rating criteria, including a requirement for global-style liquidity, to be applied prospectively in the marketplace.

THIRD-PARTY ABCP

15. ABCP has been in the Canadian marketplace for over a decade, and non-bank sponsors entered the marketplace in approximately 2000.

16. Historically, the assets underlying ABCP consisted of traditional assets such as consumer loans, credit card receivables and residential mortgages. Non-traditional complex synthetic assets, such as collateralized debt obligations, came into these structures over time.

17. Third-party ABCP was typically issued by a series of notes, the most common being Series "A" Notes and Series "E" Notes. The "A" Notes were supported by the Canadian-style liquidity facilities. "E" Notes were not, but could be extended up to 364 days after the original maturity date if certain conditions were met, including that market conditions did not allow for "E" Notes to be sold at a specified spread.

18. The sponsors provided limited information regarding the underlying pool of assets in conduits issuing ABCP. Sponsors typically provided an information memorandum describing the basic elements of ABCP. In most cases, the general asset classes were the only information publicly disclosed; there was no disclosure of the specific assets held in the conduits or the terms of the liquidity agreements supporting the ABCP.

COVENTREE INC.

19. At all material times, Coventree Inc. was the largest sponsor of third-party ABCP in Canada. Coventree Inc. also issued third-party ABCP through a subsidiary, Nereus Financial Inc. ("Nereus").

20. At all material times, Coventree Inc. and Nereus (collectively, "Coventree") sponsored the following third-party ABCP conduits: Apollo Trust, Aurora Trust, Comet Trust, Gemini Trust, Planet Trust, Rocket Trust, Slate Trust, Venus Trust, Structured Investment Trust III and Structured Asset Trust.

21. All Coventree conduits but one received an R1-(high) rating (the highest credit rating available, equivalent to a "AAA" for long term debt) by DBRS, as did other Canadian third-party ABCP. This rating remained in place at all material times up to and including August 13, 2007. Coventree ABCP was rated by DBRS above the minimum "approved credit rating" required by NI 45-106 at all material times.

DISTRIBUTION OF THIRD-PARTY ABCP

22. In general, third-party ABCP was distributed to investors through a dealer group (the "dealer syndicate"). Typically, one member of the dealer syndicate would be appointed as lead dealer. Some of the lead dealer's daily duties included the allocation of ABCP notes to dealer syndicate members and setting the yield in consultation with the conduit sponsor.

23. The dealer syndicate members maintained trading lines, up to a credit limit, for third-party ABCP mainly to provide a market-making function. Dealer syndicate members would typically purchase third-party ABCP that was not sold at the end of a trading day. These positions were to be held on a short-term basis, typically overnight, until the notes could be sold to investors. Dealer syndicate members also purchased third-party ABCP from clients in the secondary market. While the dealer syndicate was under no obligation to purchase any third-party ABCP, they did so to provide a secondary market, maintain liquidity in the market and/or as a service to their clients. Dealer syndicate members other than the lead dealer also had the option to turn back ABCP to the lead dealer if they were unable to sell their daily allocation, but this was not their ordinary practice.

24. Third-party ABCP traded in a dealer market, also known as an over-the-counter ("OTC") market. Unlike an auction market or exchange, the OTC market did not have a centralized quotation system and/or a centralized repository containing disclosure information that investors could access independently.

25. The primary information that dealers disclosed to investors was the name, yield, term and credit rating of third-party ABCP.

THE MARKET FREEZE

26. On August 13, 2007, a number of Canadian third-party ABCP conduits including the Coventree conduits were unable to sell new ABCP to fund the repayment of maturing ABCP. Many of the conduits' liquidity providers did not agree that the conditions for liquidity funding had occurred and refused to provide liquidity to the affected conduits.

27. As of August 13, 2007, the third-party ABCP market totalled approximately $35 billion, with Coventree conduits representing approximately 46 percent of the value of the third-party ABCP market.

28. On August 16, 2007, a consortium representing banks, asset providers and major ABCP holders agreed to take steps to establish normal operations in the ABCP market. This agreement was known as the Montreal Proposal.

29. A Pan-Canadian Investors Committee, including investors who were signatories to the Montreal Proposal plus other significant holders, was established to oversee the restructuring of third-party ABCP. It put forward the Plan of Compromise and Arrangement (the "Plan"), which was implemented on January 21, 2009.

30. Pursuant to the Plan, holders of the eligible third-party ABCP had their short-term notes exchanged for longer term notes to match more closely the maturity dates of the underlying assets. These new notes were issued by Master Asset Vehicles ("MAVs"). It is not currently possible to determine if any or all of the notes of the MAVs will mature at par value.

HSBC'S ROLE IN SELLING THIRD PARTY ABCP

31. HSBC first started selling third-party ABCP around 2002. HSBC sold ABCP to investors pursuant to a registration exemption found in section 4.1 of OSC Rule 45-501 -- Ontario Prospectus and Registration Exemptions, which is available to HSBC as a financial intermediary.

32. Over time, HSBC took on various roles in the third-party ABCP market. When the market froze on August 13, 2007, HSBC's activities in respect of third-party ABCP included acting as:

(a) a financial market intermediary, dealing in third-party ABCP conduits available in the market; and

(b) a liquidity provider for reference assets in two Coventree conduits, namely Rocket Trust and Gemini Trust.

33. HSBC sold third-party ABCP primarily to institutional investors.

EMERGING ISSUES

(a) US Subprime Exposure

34. During the period from March to June, 2007, increasing defaults in US subprime mortgages started to place strains on credit markets in the United States.

35. Prior to July 24, 2007, HSBC received information from Coventree about third-party ABCP on the following occasions:

(a) HSBC and some of its clients were among the ABCP investors and other market participants who attended a Coventree investor presentation in late April 2007. At that presentation, Coventree covered a number of topics, including disclosing that the overall US subprime exposure in its conduits was 7.4 percent and that all assets remained enhanced to AAA and were performing as expected.

(b) In early July 2007, one of HSBC's clients who had investments in ABCP made an enquiry with HSBC about a media article concerning the US subprime situation. HSBC approached Coventree for further information in response to this client enquiry. On July 6, 2007, Coventree sent an email to HSBC with an attachment detailing Coventree's US subprime exposure by conduit as at February 28, 2007. Although the attachment showed that the aggregate US subprime exposure in Coventree conduits was 7.39 percent, the Comet, Planet and Slate conduits were revealed to have elevated exposure to US subprime at 15.8, 19.1 and 21.3 percent respectively. Coventree also indicated that all deals remained enhanced to AAA level, and that all of the subprime deals were done prior to 2006. A Coventree representative stated in the email that the attached information could be forwarded to ABCP investors by HSBC.

(c) On July 9, 2007, Coventree sent a subsequent email to HSBC as an update to its July 6, 2007 email detailing Coventree's US subprime exposure by conduit and note series as of June 29, 2007. Although the email showed that the aggregate US subprime exposure was at 7 percent, the Comet E, Planet A and Slate E note series were shown to have higher levels of exposure at 41, 30 and 22 percent respectively.

36. On July 24, 2007, Coventree sent an email (the "July 24th email") to all of Coventree's syndicate members, including HSBC, setting out information regarding US subprime exposure in Coventree conduits as of June 28, 2007 and indicating the following:

(a) low loss levels;

(b) that subprime deal vintages were focused in pre-2006 vintages; and

(c) that all assets were performing as expected and remained at AAA level.

37. The July 24th email stated that "[a]t Coventree we are committed to furnishing our investors and dealer partners with the information they need to continue to support us through market cycles."

38. The July 24th email listed the US subprime exposure in each of the conduits as follows:

Conduits	Series A	Series E	Total ABCP
Aurora Trust	0%	8%	3%
Comet Trust	0%	42%	16%
Planet Trust	26%	3%	17%
Slate Trust	0%	16%	13%
Apollo Trust	0%	0%	0%
Gemini Trust
Rocket Trust
Venus Trust
SAT	0%	0%	0%
SIT III	1%	0%	1%
TOTAL	3%	6%	5%

39. Coventree did not put any limitations on disclosure of the information contained in the July 24th email.

40. The information communicated by Coventree to HSBC on the occasions noted above was not verifiable by HSBC through publicly available sources. The publicly available DBRS rating remained unchanged throughout the period that HSBC received the communications from Coventree. HSBC did not disclose the information it received from Coventree to its Coventree-sponsored ABCP investor clients.

(b) Liquidity Issues

41. Beginning on July 30, 2007, HSBC became aware of certain factors that, in the aggregate, suggested there were liquidity issues affecting the third-party ABCP market:

(a) from July 30, 2007, spreads began to widen on third-party ABCP and continued to widen until August 13, 2007;

(b) on July 30, 2007, HSBC learned that other dealers were turning back unsold third-party ABCP to the lead dealer;

(c) on August 1, 2007, one client declined to roll $53 million of Coventree Planet "A" ABCP (although that client subsequently rolled $19.3 million of Aurora "E" and $15.4 million of Rocket "E" ABCP on August 3, 2007);

(d) on August 2, 2007, HSBC first learned that another dealer was no longer bidding on third-party ABCP;

(e) on August 7, 2007, HSBC learned that one of the Coventree dealer syndicate members had recently resigned from the dealer syndicate;

(f) on August 7, 2007, HSBC learned that the third-party ABCP market was experiencing pressure because of an issuance of new bank-sponsored ABCP into the market on August 3, 2007; and

(g) on August 8, 2007, HSBC learned that another dealer was no longer bidding on third party ABCP.

42. In addition to the foregoing factors HSBC:

(a) declined to provide bids for third-party ABCP in the secondary market beginning on August 8, 2007;

(b) returned unsold third-party ABCP to the lead dealer; and

(c) examined the provisions of its liquidity agreements with Coventree, and the pre-conditions to payment, and began to monitor daily movement within the ABCP market.

43. By August 8, 2007, HSBC was aware that liquidity issues were affecting the entire third-party ABCP market.

HSBC'S RESPONSE TO EMERGING ISSUES

44. HSBC did not inform Compliance of the emerging issues in the third-party ABCP market prior to the market freeze. As a result, there was a delay in engaging appropriate processes for assessing the impact of emerging issues in the third-party ABCP market.

45. More generally, prior to the market freeze HSBC did not conduct new product review with respect to third-party ABCP, nor changes to ABCP. Furthermore, HSBC did not provide formal training to its sales representatives concerning the ABCP product.

46. HSBC continued to sell third-party ABCP:

(a) with exposure to US subprime, from July 25 to August 10, 2007; and

(b) despite the liquidity issues described above, after August 8, 2007.

47. During those periods, HSBC sold $172 million to clients who may not have been aware of those issues, $2.6 million of which came from HSBC's inventory (excluding sales of ABCP that matured prior to August 13, 2007).

48. Prior to July 2007, HSBC's inventory fluctuated with the demand for third-party ABCP between $8.8 million and $89.4 million.

49. As at August 13, 2007, HSBC held for its own account $52 million in frozen third-party ABCP.

HSBC'S ADMISSION

50. Between July 25 and August 13, 2007, HSBC engaged in conduct contrary to the public interest by failing to adequately respond to emerging issues in the third-party ABCP market insofar as it continued to sell third-party ABCP without engaging compliance and other appropriate processes for the assessment of such information and concerns.

HSBC'S POSITION

51. Throughout the crisis, HSBC supported the preservation and then the restructuring of the non-bank ABCP market through actions such as the following:

(a) its participation in the Montreal Proposal;

(b) upon being advised that the liquidity draw requests for Coventree Rocket and Gemini liquidity agreements had been pre-empted by the Montreal Accord, HSBC began negotiations to purchase assets from the relevant Coventree conduits in exchange for cash, and those transactions closed in due course.

52. HSBC fully cooperated with the joint regulatory investigation of Coventree at its own significant expense.

PART IV -- TERMS OF SETTLEMENT

53. HSBC agrees to the terms of settlement listed below.

54. The Commission will make an order pursuant to section 127(1) and section 127.1 of the Act that:

(a) the Settlement Agreement is approved;

(b) HSBC shall submit to a review of its compliance practices and procedures in accordance with the Terms of Reference attached at Schedule "B";

(c) HSBC pay to the Commission the sum of $5,925,000, to be allocated under s. 3.4(2)(b) of the Act to or for the benefit of third parties; and

(d) HSBC pay the costs of the Commission's investigation in the amount of $75,000.

55. HSBC agrees to personally make any payments ordered above by immediately available funds when the Commission approves this Settlement Agreement. HSBC will not be reimbursed for, or receive a contribution toward, this payment from any other person or company.

PART V -- STAFF COMMITMENT

56. If the Commission approves this Settlement Agreement, Staff, the Investment Industry Regulatory Organization of Canada and Autorité des marchés financiers will not commence any proceeding against the Respondent or any of its affiliates or their respective present or former directors, officers, employees or agents in relation to the facts set out in Part III of this Settlement Agreement, subject to the provisions of paragraph 57 below.

57. If the Commission approves this Settlement Agreement and HSBC fails to comply with any of the terms of the Settlement Agreement, Staff may bring proceedings under Ontario securities law against HSBC. These proceedings may be based on, but are not limited to, the facts set out in Part III of this Settlement Agreement as well as the breach of the Settlement Agreement.

PART VI -- PROCEDURE FOR APPROVAL OF SETTLEMENT

58. The parties will seek approval of this Settlement Agreement at a public hearing before the Commission scheduled for December 21, 2009, or on another date agreed to by Staff and HSBC, according to the procedures set out in this Settlement Agreement and the Commission's Rules of Practice.

59. Staff and HSBC agree that this Settlement Agreement will form all of the agreed facts that will be submitted at the settlement hearing on HSBC's conduct, unless the parties agree that additional facts should be submitted at the settlement hearing.

60. If the Commission approves this Settlement Agreement, HSBC agrees to waive all rights to a full hearing, judicial review or appeal of this matter under the Act.

61. If the Commission approves this Settlement Agreement, neither party will make any public statement that is inconsistent with this Settlement Agreement or with any additional agreed facts submitted at the settlement hearing.

62. Whether or not the Commission approves this Settlement Agreement, HSBC will not use, in any proceeding, this Settlement Agreement or the negotiation or process of approval of this agreement as the basis for any attack on the Commission's jurisdiction, alleged bias, alleged unfairness, or any other remedies or challenges that may otherwise be available.

PART VII -- DISCLOSURE OF SETTLEMENT AGREEMENT

63. If the Commission does not approve this Settlement Agreement or does not make the order attached as Schedule "A" to this Settlement Agreement:

i. this Settlement Agreement and all discussions and negotiations between Staff and HSBC before the settlement hearing takes place will be without prejudice to Staff and HSBC; and

ii. Staff and HSBC will each be entitled to all available proceedings, remedies and challenges. Any proceedings, remedies and challenges will not be affected by this Settlement Agreement, or by any discussions or negotiations relating to this agreement.

64. Both parties will keep the terms of the Settlement Agreement confidential until the Commission approves the Settlement Agreement. At that time, the parties will no longer have to maintain confidentiality. If the Commission does not approve the Settlement Agreement, both parties must continue to keep the terms of the Settlement Agreement confidential, unless they agree in writing not to do so or if required by law.

PART VIII -- EXECUTION OF SETTLEMENT AGREEMENT

65. The parties may sign separate copies of this agreement. Together, these signed copies will form a binding agreement.

66. A fax copy of any signature will be treated as an original signature.

Dated this 16th day of December, 2009

HSBC BANK CANADA

SCHEDULE "A"

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

HSBC BANK CANADA

ORDER

WHEREAS on December ?, 2009, the Ontario Securities Commission (the "Commission") issued a Notice of Hearing pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act") in relation to HSBC Bank Canada ("HSBC");

AND WHEREAS HSBC entered into a settlement agreement with Staff of the Commission ("Staff") dated December 16, 2009 (the "Settlement Agreement") in which it agreed to a settlement of the proceeding commenced by the Notice of Hearing dated December •, 2009, subject to the approval of the Commission;

AND UPON reviewing the Settlement Agreement, and upon hearing submissions from counsel for Staff and HSBC;

AND WHEREAS the Commission is of the opinion that it is in the public interest to make this Order;

IT IS ORDERED THAT:

1. The Settlement Agreement is approved;

2. HSBC shall submit to a review of its compliance practices and procedures in accordance with the Terms of Reference attached at Schedule "B" to the Settlement Agreement;

3. HSBC pay to the Commission the sum of $5,925,000, to be allocated under section 3.4(2)(b) of the Act to or for the benefit of third parties; and

4. HSBC pay the costs of the Commission's investigation in the amount of $75,000.

DATED at Toronto this day of December, 2009.

_________________________	_________________________
_________________________

SCHEDULE "B"

TERMS OF REFERENCE FOR

COMPLIANCE REVIEW

A. Retention of the Consultant

1. The Consultant's reasonable compensation and expenses shall be borne exclusively by HSBC Bank Canada (the "Respondent").

2. The agreement with the Consultant ("Agreement") shall provide that the Consultant examine the policies, procedures and effectiveness of:

a. the Respondent's compliance and oversight functions concerning its trading and sales within the fixed income department;

b. any committees or other mechanisms established to review and approve new fixed income securities products and changes to those products;

c. the Respondent's training of its staff concerning new fixed income securities products and changes to those products;

d. the Respondent's training of its staff concerning the escalation of issues to compliance and engaging other appropriate processes;

(collectively, the "Review").

B. The Consultant's Reporting Obligations

1. The Consultant shall issue a draft report to the Respondent within 3 months of appointment and in that regard will be provided the opportunity to present its report to the Board of Directors of the Respondent.

2. The Consultant shall engage with the Respondent in discussions regarding the draft report with a view to reaching consensus and finalizing the report within 1 month of the delivery of the draft report. If requested by the Consultant, the Consultant will be provided with an opportunity to present its final report to the Board of Directors of the Respondent, and may explain any areas of disagreement with management of the Respondent.

3. The Consultant will deliver the final report to the Respondent.

4. Staff with prior notice may attend at the premises of the Respondent and review the draft and final versions of the Consultant's report.

5. The Consultant's draft and final reports shall include a description of the review performed, the conclusions reached, and the Consultant's recommendations for any changes or improvements to the Respondent's policies and procedures as the Consultant reasonably deems necessary to conform to regulatory requirements.

6. The Respondent will, within 60 days after receipt of the Consultant's report, advise Staff of the OSC ("OSC Staff") of a timetable to implement the recommendations contained in the report; however, in the event the Respondent disagrees with any of the recommendations, the Respondent shall so advise OSC Staff and provide to the Consultant reasons for such position and, if applicable, any alternative actions, policies or procedures the Respondent intends to adopt.

7. Staff may attend at the premises of the Respondent and may review the Consultant's report with respect to the implementation of the Consultant's recommendations.

8. The Respondent shall certify to the OSC, by certificate executed on its behalf by each of the CEO, the CCO and the Chair of the Board of Directors of the Respondent, that the Respondent has implemented those recommendations of the Consultant which it had agreed upon, and will do so promptly following such implementation.

9. For greater certainty, the terms of this compliance review do not limit in any respect the authority of the OSC to undertake, as part of their normal course audit activities, a review of all matters within the scope of the Review or any other aspect of the business of the Respondent.

C. Terms of the Consultant's Retention

1. The appointment of the Consultant shall be made promptly following the approval of the Settlement Agreement, but in any event by no later than January 31, 2010, by mutual agreement between the Respondent and OSC Staff.

2. The Consultant shall have reasonable access to all of the Respondent's books and records and the ability to meet privately with the Respondent's personnel. The Respondent shall instruct and otherwise encourage its officers, directors, and employees to cooperate fully with the review conducted by the Consultant, and inform its officers, directors, and employees that failure to cooperate with the Review may be grounds for disciplinary action.

3. The Consultant shall have the right, as reasonable and necessary in his or her judgment, to retain, at the Respondent's expense, lawyers, accountants, and other persons or firms, other than officers, directors, or employees of the Respondent, to assist in the discharge of the Consultant's obligations. The Respondent shall pay all reasonable fees and expenses (as reasonably documented) of any persons or firms retained by the Consultant.

4. The Consultant shall make and keep notes of interviews conducted, and keep a copy of documents gathered, in connection with the performance of his or her responsibilities.

Canadian Imperial Bank of Commerce and CIBC World Markets Inc.

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

CANADIAN IMPERIAL BANK OF COMMERCE

AND CIBC WORLD MARKETS INC.

ORDER

WHEREAS on December 18, 2009, the Ontario Securities Commission (the "Commission") issued a Notice of Hearing pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act") in relation to Canadian Imperial Bank of Commerce and CIBC World Markets Inc. (together, "CIBC");

AND WHEREAS CIBC and Staff of the Commission ("Staff") entered into a settlement agreement dated December 16, 2009 attached hereto as Appendix "A" (the "Settlement Agreement") in which they agreed to a settlement of the proceeding commenced by the Notice of Hearing dated December 18, 2009, subject to the approval of the Commission;

AND UPON reviewing the Settlement Agreement, and upon hearing submissions from counsel for Staff and CIBC;

AND WHEREAS the Commission is of the opinion that it is in the public interest to make this Order;

IT IS ORDERED THAT:

1. The Settlement Agreement is approved;

2. CIBC shall submit to a review of its compliance practices and procedures in accordance with the Terms of Reference attached at Schedule "B" to the Settlement Agreement;

3. CIBC pay to the Commission the sum of $21.7 million, to be allocated under section 3.4(2)(b) of the Act to or for the benefit of third parties; and

4. CIBC pay the costs of the Commission's investigation in the amount of $300,000.

DATED at Toronto this 21st day of December, 2009.

"James E.A. Turner"

"Mary G. Condon"

APPENDIX "A"

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

CANADIAN IMPERIAL BANK OF COMMERCE

AND CIBC WORLD MARKETS INC.

SETTLEMENT AGREEMENT

PART I -- INTRODUCTION

1. The Ontario Securities Commission (the "Commission") will issue a Notice of Hearing to announce that it will hold a hearing to consider whether, pursuant to section 127 and section 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act"), it is in the public interest for the Commission to make certain orders in respect of Canadian Imperial Bank of Commerce and CIBC World Markets Inc. (together, "CIBC").

PART II -- JOINT SETTLEMENT RECOMMENDATION

2. Staff of the Commission ("Staff") agree to recommend settlement of the proceeding commenced by Notice of Hearing dated December 18, 2009 (the "Proceeding") against CIBC according to the terms and conditions set out in Part IV of this Settlement Agreement. CIBC agrees to the making of an order in the form attached as Schedule "A", based on the facts set out below.

PART III -- AGREED FACTS

3. CIBC admits the facts set out in this Settlement Agreement solely for the purposes of this Settlement Agreement. This Settlement Agreement and the facts and admissions set out herein are without prejudice to CIBC in any proceeding including, without limitation, any civil, administrative, quasi-criminal or criminal actions or proceedings that may be brought by any person or agency, whether or not this Settlement Agreement is approved by the Commission.

OVERVIEW

4. Canadian Imperial Bank of Commerce is a bank listed on Schedule I of the Bank Act (Canada). Its head office is located in Toronto, Ontario. CIBC World Markets Inc. is a corporation incorporated under the laws of the Province of Ontario. It is a wholly owned subsidiary of CIBC. Its head office is also located in Toronto, Ontario.

5. On August 13, 2007, the Canadian non-bank sponsored asset-backed commercial paper ("ABCP" or "third-party ABCP") market froze, leaving Canadian investors holding illiquid investments that they could neither sell nor redeem.

6. CIBC was an agent for issuers in the third-party ABCP market. In that capacity, CIBC bought and sold third-party ABCP.

ASSET-BACKED COMMERCIAL PAPER

7. ABCP is a short-term debt instrument with typical maturities of 30 to 180 days. ABCP is backed by a pool of underlying assets and offers a yield slightly better than the yield offered on short-term government debt.

8. ABCP is issued by a special purpose vehicle (also referred to as a conduit). In Canada, ABCP is issued by trusts established by sponsors. Sponsors generally select underlying assets, administer the assets and arrange for the sale of the ABCP notes. The Canadian ABCP market included two categories: bank-sponsored and non-bank-sponsored (or third party) ABCP.

9. As the underlying assets held by conduits were long-term and the ABCP notes were short-term, there was a timing mismatch between the cash flowing from the assets and the cash needed to repay maturing ABCP. For many years, conduits met their maturity obligations by selling newly issued ABCP, the proceeds of which were used to pay maturing ABCP. The liquidity of ABCP was an important characteristic for investors along with credit ratings and yields.

10. To safeguard against difficulty meeting maturity obligations, conduits entered into agreements with liquidity providers which provided credit lines under certain conditions. In general, there were two types of liquidity facilities: (1) general market disruption ("GMD") and (2) global-style. GMD liquidity was also called "Canadian-style" since it was only available in the Canadian ABCP market. Unlike global-style liquidity facilities, Canadian-style liquidity facilities required specified "general market disruption" events and a credit rating affirmation before liquidity was provided.

11. Liquidity agreements were subject to confidentiality provisions. Many details of the pre-conditions required for liquidity support, including the definition of a "general market disruption event", were not known to the public, investors or to the distributors of ABCP who were not also liquidity providers. Conduits generally disclosed the existence of their liquidity arrangements and disclosed that there were pre-conditions to draws.

12. In Ontario, as of September 14, 2005, pursuant to National Instrument 45-106 -- Prospectus and Registration Exemptions, the issuance and sale of commercial paper, including ABCP, was exempt from the requirements to deliver a prospectus, provided that such commercial paper matured not more than one year from the date of issue and had an "approved credit rating" from an "approved credit rating organization".

13. The conduits issuing the ABCP were not reporting issuers under applicable securities laws and were not required to engage in continuous disclosure under Canadian securities laws.

14. Dominion Bond Rating Services Limited ("DBRS"), an approved credit rating organization, was the sole credit rating organization which rated third-party ABCP in Canada. To this end, DBRS had access to the following information regarding third-party ABCP: the details of the structure, the underlying assets and the liquidity agreements.

15. On January 19, 2007, DBRS announced changes to its rating methodology for certain new transactions entered into by ABCP issuers. The DBRS press release set out specific new rating criteria, including a requirement for global-style liquidity, to be applied prospectively in the marketplace.

THIRD-PARTY ABCP

16. ABCP has been in the Canadian marketplace for over a decade, and non-bank sponsors entered the marketplace in approximately 2000.

17. Historically, the assets underlying ABCP consisted of traditional assets such as consumer loans, credit card receivables and residential mortgages. Non-traditional complex synthetic assets, such as collateralized debt obligations, came into these structures over time.

18. Third-party ABCP was typically issued by a series of notes, the most common being Series "A" Notes and Series "E" Notes. The "A" Notes were supported by the Canadian-style liquidity facilities. "E" Notes were not supported by liquidity facilities, but could be extended up to 364 days after the original maturity date if certain conditions were met, including that market conditions did not allow for "E" Notes to be sold at a specified spread.

19. The sponsors provided limited information regarding the underlying pool of assets in conduits issuing ABCP. Sponsors typically provided an information memorandum describing the basic elements of ABCP. In most cases, the general asset classes were the only information publicly disclosed; there was no disclosure of the specific assets held in the conduits or the terms of the liquidity agreements supporting the ABCP.

COVENTREE INC.

20. At all material times, Coventree Inc. was the largest sponsor of third-party ABCP in Canada. Coventree Inc. also issued third-party ABCP through a subsidiary, Nereus Financial Inc. ("Nereus").

21. At all material times, Coventree Inc. and Nereus (collectively, "Coventree") sponsored the following third-party ABCP conduits: Apollo Trust, Aurora Trust, Comet Trust, Gemini Trust, Planet Trust, Rocket Trust, Slate Trust, Venus Trust, Structured Investment Trust III and Structured Asset Trust.

22. All Coventree conduits but one received an R1-(high) rating (the highest credit rating available, equivalent to a "AAA" for long term debt) by DBRS, as did other Canadian third-party ABCP. This rating remained in place at all material times up to and including August 13, 2007. Coventree ABCP was rated by DBRS above the minimum "approved credit rating" required by NI 45-106 at all material times.

DISTRIBUTION OF THIRD-PARTY ABCP

23. In general, third-party ABCP was distributed to investors through a dealer group (the "dealer syndicate"). Typically, one member of the dealer syndicate would be appointed as lead dealer. Some of the lead dealer's daily duties included the allocation of ABCP notes to dealer syndicate members and setting the yield in consultation with the conduit sponsor.

24. The dealer syndicate members maintained trading lines, up to a credit limit, for third-party ABCP mainly to provide a market-making function. Dealer syndicate members would typically purchase third-party ABCP that was not sold at the end of a trading day. These positions were to be held on a short-term basis, typically overnight, until the notes could be sold to investors. Dealer syndicate members also purchased third-party ABCP from investors in the secondary market. While the dealer syndicate was under no obligation to purchase any third-party ABCP, they did so to provide a secondary market, maintain liquidity in the market and/or as a service to investors. Dealer syndicate members other than the lead dealer also had the option to turn back ABCP to the lead dealer if they were unable to sell their daily allocation, but this was not their ordinary practice.

25. Third-party ABCP traded in a dealer market, also known as an over-the-counter ("OTC") market. Unlike an auction market or exchange, the OTC market did not have a centralized quotation system and/or a centralized repository containing disclosure information that investors could access independently.

26. The primary information that dealers disclosed to investors was the name, yield, term and credit rating of third-party ABCP.

THE MARKET FREEZE

27. On August 13, 2007, a number of Canadian third-party ABCP conduits including the Coventree conduits were unable to sell new ABCP to fund the repayment of maturing ABCP. Many of the conduits' liquidity providers did not agree that the conditions for liquidity funding had occurred and refused to provide liquidity to the affected conduits.

28. As of August 13, 2007, the third-party ABCP market totalled approximately $35 billion, with Coventree conduits representing approximately 46 percent of the value of the third-party ABCP market.

29. On August 16, 2007, a consortium representing banks, asset providers and major ABCP holders agreed to take steps to establish normal operations in the ABCP market. This agreement was known as the Montreal Proposal.

30. A Pan-Canadian Investors Committee, including investors who were signatories to the Montreal Proposal plus other significant holders, was established to oversee the restructuring of third-party ABCP. It put forward the Plan of Compromise and Arrangement (the "Plan"), which was implemented on January 21, 2009.

31. Pursuant to the Plan, holders of the eligible third-party ABCP had their short-term notes exchanged for longer term notes to match more closely the maturity dates of the underlying assets. These new notes were issued by Master Asset Vehicles ("MAVs"). It is not currently possible to determine if any or all of the notes of the MAVs will mature at par value.

CIBC'S ROLE IN SELLING THIRD PARTY ABCP

32. CIBC first started selling third-party ABCP around 2000. CIBC sold ABCP to investors pursuant to a registration exemption found in section 4.1 of OSC Rule 45-501 -- Ontario Prospectus and Registration Exemptions, which is available to CIBC as a financial intermediary, and pursuant to an exemption order made in favour of CIBC by the Ontario Securities Commission on October 23, 2006.

33. CIBC sold third-party ABCP to corporations and institutional investors through its Money Market Desk.

EMERGING ISSUES

(a) US Subprime Exposure

34. During the period from March to June, 2007, increasing defaults in US subprime mortgages started to place strains on credit markets in the United States.

35. Prior to July 24, 2007, CIBC had obtained some subprime information about third-party ABCP on the following occasions:

(a) Two representatives of CIBC, some ABCP investors that purchased through CIBC and other market participants attended a Coventree investor presentation in late April 2007. At that presentation, Coventree covered a number of topics, including disclosing that the overall US subprime exposure in its conduits was 7.4 percent and that all assets remained enhanced to AAA and were performing as expected.

(b) In mid-March 2007, CIBC obtained some information respecting US subprime exposure for third-party ABCP conduits from the lead dealer on behalf of a third party ABCP investor.

36. On July 24, 2007, a third-party ABCP investor sold $100 million of its non-Coventree third-party ABCP prior to maturity to CIBC.

37. Later on July 24, 2007, Coventree sent an email (the "July 24th email") to all of Coventree's syndicate members, including CIBC, setting out information regarding US subprime exposure in Coventree conduits as of June 28, 2007 and indicating the following:

(a) low loss levels;

(b) that subprime deal vintages were focused in pre-2006 vintages; and

(c) that all assets were performing as expected and remained at AAA level.

38. The July 24th email stated that "[a]t Coventree we are committed to furnishing our investors and dealer partners with the information they need to continue to support us through market cycles."

39. The July 24th email listed the US subprime exposure in each of the conduits as follows:

Conduits	Series A	Series E	Total ABCP
Aurora Trust	0%	8%	3%
Comet Trust	0%	42%	16%
Planet Trust	26%	3%	17%
Slate Trust	0%	16%	13%
Apollo Trust
Gemini Trust
Rocket Trust	0%	0%	0%
Venus Trust
SAT	0%	0%	0%
SIT III	1%	0%	1%
TOTAL	3%	6%	5%

40. The information communicated in the July 24th email by Coventree was not verifiable by CIBC through publicly available sources. In order to understand the information and its context, CIBC contacted Coventree to seek further information, and was advised by Coventree that all of the information contained in the July 24th email was known to DBRS.

41. Coventree advised that it was not going to generally disclose the July 24th email to investors but did not prohibit the disclosure of the information contained in the July 24th email and advised that CIBC could use its judgment in disclosing the information.

42. The July 24th email was disseminated to certain staff at both the bank and dealer.

43. On July 24, 2007, CIBC Risk Management initiated a review of all credit limits for commercial paper. While this review was in progress, CIBC Risk Management instructed the Money Market Desk to temporarily refrain from buying Coventree-sponsored ABCP until the Risk Management review was complete. When CIBC Risk Management's review was complete on July 26, 2007, credit limits were adjusted downward from prior limits. Historically, those credit limits were not fully utilized.

44. Between July 25 and August 1, 2007, CIBC-sponsored conduits allowed Coventree-sponsored ABCP to mature without rolling into new ABCP.

45. CIBC disclosed the information contained in the July 24th email to at least two investors. It did not generally disclose the information to Coventree-sponsored ABCP investors that purchased through CIBC.

(b) Liquidity Issues

46. CIBC became aware, starting on July 30, 2007, that spreads were beginning to widen on third-party ABCP and those spreads continued to widen until August 13, 2007.

47. CIBC was also aware that two investors were reducing their exposure to third-party ABCP by declining to roll third-party ABCP. In addition, CIBC declined to provide bids for all "E" Notes as of July 30, 2007. Further, CIBC began to return unsold third-party ABCP to the lead dealer.

48. By August 3, 2007, CIBC was concerned that liquidity issues may affect the third-party ABCP market more generally.

CIBC'S RESPONSE TO EMERGING ISSUES

49. CIBC continued to sell Coventree and certain other third-party ABCP from July 25 to August 3, 2007. During that period, CIBC sold $245 million to investors who may not have been aware of those issues, $22 million of which came from CIBC's inventory (excluding sales of ABCP that matured prior to August 13, 2007).

50. On Friday, August 3, 2007, the Money Market Desk learned from Coventree's lead dealer that Coventree would likely be unable to fund its maturing ABCP upon the resumption of the market on Tuesday, August 7, 2007 (after a long weekend). This was the first time that CIBC received information indicating a likelihood of default by a third-party ABCP sponsor.

51. Given the new information received on Friday, August 3, 2007, CIBC became concerned about the possibility of a market disruption in Coventree ABCP occurring during the following week. Over the long weekend that followed, appropriate senior management of CIBC were advised of the emerging issues and assessed the risks to holders and prospective purchasers of Coventree ABCP. CIBC notified the Bank of Canada of its concerns on two occasions that weekend. During the long weekend, CIBC decided that it would no longer offer Coventree-sponsored ABCP for sale when the market reopened on Tuesday, August 7, 2007.

52. In the period from August 7, 2007 to August 13, 2007, while the third-party ABCP market continued functioning, CIBC did not sell, or offer to sell, any Coventree ABCP.

53. On August 13, 2007, ten days after CIBC stopped selling third-party ABCP, the third-party ABCP market froze.

54. As at August 13, 2007, CIBC held for its own account $358 million in frozen third-party ABCP.

55. CIBC did not inform senior management or compliance of the emerging issues in the third-party ABCP market prior to Saturday, August 4, 2007. As a result, there was a delay in engaging appropriate processes for assessing the impact of emerging issues in the third-party ABCP market.

56. More generally, CIBC did not conduct new product review with respect to third-party ABCP, nor changes to ABCP. In addition, CIBC did not provide formal training to its sales representatives concerning the third-party ABCP product.

CIBC'S ADMISSION

57. Between July 25 and August 3, 2007, CIBC engaged in conduct contrary to the public interest by failing to adequately respond to emerging issues in the third-party ABCP market insofar as it continued to sell third-party ABCP without engaging compliance and other appropriate processes for the assessment of such information and concerns.

CIBC'S POSITION

58. CIBC participated in the Montreal Proposal, an agreement among market participants to protect investor value in the third-party ABCP market, which was an essential first step in the restructuring process approved by the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act (Canada). CIBC contributed approximately $300 million in liquidity lines to help make the Plan financially viable.

59. CIBC fully cooperated with the joint regulatory investigation at its own expense.

PART IV -- TERMS OF SETTLEMENT

60. CIBC agrees to the terms of settlement listed below.

61. The Commission will make an order pursuant to section 127(1) and section 127.1 of the Act that:

(a) The Settlement Agreement is approved;

(b) CIBC shall submit to a review of its compliance practices and procedures in accordance with the Terms of Reference attached at Schedule "B";

(c) CIBC pay to the Commission the sum of $21.7 million, to be allocated under s. 3.4(2)(b) of the Act to or for the benefit of third parties; and

(d) CIBC pay the costs of the Commission's investigation in the amount of $300,000.

62. CIBC agrees to personally make any payments ordered above through immediately available funds when the Commission approves this Settlement Agreement. CIBC will not be reimbursed for, or receive a contribution toward, this payment from any other person or company.

PART V -- STAFF COMMITMENT

63. If the Commission approves this Settlement Agreement, Staff, the Investment Industry Regulatory Organization of Canada and Autorité des marchés financiers will not commence any proceeding against the Respondent or any of its affiliates or their respective present or former directors, officers, employees or agents in relation to the facts set out in Part III of this Settlement Agreement, subject to the provisions of paragraph 64 below.

64. If the Commission approves this Settlement Agreement and CIBC fails to comply with any of the terms of the Settlement Agreement, Staff may bring proceedings under Ontario securities law against CIBC. These proceedings may be based on, but are not limited to, the facts set out in Part III of this Settlement Agreement as well as the breach of the Settlement Agreement.

PART VI -- PROCEDURE FOR APPROVAL OF SETTLEMENT

65. The parties will seek approval of this Settlement Agreement at a public hearing before the Commission scheduled for December 21, 2009 or on another date agreed to by Staff and CIBC, according to the procedures set out in this Settlement Agreement and the Commission's Rules of Practice.

66. Staff and CIBC agree that this Settlement Agreement will form all of the agreed facts that will be submitted at the settlement hearing on CIBC's conduct, unless the parties agree that additional facts should be submitted at the settlement hearing.

67. If the Commission approves this Settlement Agreement, CIBC agrees to waive all rights to a full hearing, judicial review or appeal of this matter under the Act.

68. If the Commission approves this Settlement Agreement, neither party will make any public statement that is inconsistent with this Settlement Agreement or with any additional agreed facts submitted at the settlement hearing.

69. Whether or not the Commission approves this Settlement Agreement, CIBC will not use, in any proceeding, this Settlement Agreement or the negotiation or process of approval of this agreement as the basis for any attack on the Commission's jurisdiction, alleged bias, alleged unfairness, or any other remedies or challenges that may otherwise be available.

PART VII -- DISCLOSURE OF SETTLEMENT AGREEMENT

70. If the Commission does not approve this Settlement Agreement or does not make the order attached as Schedule "A" to this Settlement Agreement:

i. this Settlement Agreement and all discussions and negotiations between Staff and CIBC before the settlement hearing takes place will be without prejudice to Staff and CIBC; and

ii. Staff and CIBC will each be entitled to all available proceedings, remedies and challenges. Any proceedings, remedies and challenges will not be affected by this Settlement Agreement, or by any discussions or negotiations relating to this agreement.

71. Both parties will keep the terms of the Settlement Agreement confidential until the Commission approves the Settlement Agreement. At that time, the parties will no longer have to maintain confidentiality. If the Commission does not approve the Settlement Agreement, both parties must continue to keep the terms of the Settlement Agreement confidential, unless they agree in writing not to do so or if required by law.

PART VIII -- EXECUTION OF SETTLEMENT AGREEMENT

72. The parties may sign separate copies of this agreement. Together, these signed copies will form a binding agreement.

73. A fax copy of any signature will be treated as an original signature.

Dated this 16th day of December, 2009

SCHEDULE "A"

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

CANADIAN IMPERIAL BANK OF COMMERCE

AND CIBC WORLD MARKETS INC.

ORDER

WHEREAS on December •, 2009, the Ontario Securities Commission (the "Commission") issued a Notice of Hearing pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act") in relation to Canadian Imperial Bank of Commerce and CIBC World Markets Inc. (together, "CIBC");

AND WHEREAS CIBC and Staff of the Commission ("Staff") entered into a settlement agreement dated December 16, 2009 (the "Settlement Agreement") in which they agreed to a settlement of the proceeding commenced by the Notice of Hearing dated December ?, 2009, subject to the approval of the Commission;

AND UPON reviewing the Settlement Agreement, and upon hearing submissions from counsel for Staff and CIBC;

AND WHEREAS the Commission is of the opinion that it is in the public interest to make this Order;

IT IS ORDERED THAT:

1. The Settlement Agreement is approved;

2. CIBC shall submit to a review of its compliance practices and procedures in accordance with the Terms of Reference attached at Schedule "B" to the Settlement Agreement;

3. CIBC pay to the Commission the sum of $21.7 million, to be allocated under section 3.4(2)(b) of the Act to or for the benefit of third parties; and

4. CIBC pay the costs of the Commission's investigation in the amount of $300,000.

DATED at Toronto this _____ day of December, 2009.

_________________________	_________________________
_________________________

SCHEDULE "B"

TERMS OF REFERENCE FOR

COMPLIANCE REVIEW

A. Retention of the Consultant

1. The Consultant's reasonable compensation and expenses shall be borne exclusively by Canadian Imperial Bank of Commerce and CIBC World Markets Inc. (the "Respondent").

2. The agreement with the Consultant ("Agreement") shall provide that the Consultant examine the policies, procedures and effectiveness of:

a. the Respondent's compliance and oversight functions concerning its trading and sales within the fixed income department;

b. any committees or other mechanisms established to review and approve new fixed income securities products and changes to those products;

c. the Respondent's training of its staff concerning new fixed income securities products and changes to those products;

d. the Respondent's training of its staff concerning the escalation of issues to compliance and engaging other appropriate processes;

e. limitations on disclosure of material non-public information and confidential information as between the Respondents, and the Respondents' training of their staff regarding same.

(collectively, the "Review").

B. The Consultant's Reporting Obligations

1. The Consultant shall issue a draft report to the Respondent within 3 months of appointment and in that regard will be provided the opportunity to present its report to the Board of Directors of the Respondent.

2. The Consultant shall engage with the Respondent in discussions regarding the draft report with a view to reaching consensus and finalizing the report within 1 month of the delivery of the draft report. If requested by the Consultant, the Consultant will be provided with an opportunity to present its final report to the Board of Directors of the Respondent, and may explain any areas of disagreement with management of the Respondent.

3. The Consultant will deliver the final report to the Respondent.

4. Staff with prior notice may attend at the premises of the Respondent and review the draft and final versions of the Consultant's report.

5. The Consultant's draft and final reports shall include a description of the review performed, the conclusions reached, and the Consultant's recommendations for any changes or improvements to the Respondent's policies and procedures as the Consultant reasonably deems necessary to conform to regulatory requirements.

6. The Respondent will, within 60 days after receipt of the Consultant's report, advise the Staff of the OSC ("OSC Staff") of a timetable to implement the recommendations contained in the report; however, in the event the Respondent disagrees with any of the recommendations, the Respondent shall so advise OSC Staff and provide to the Consultant reasons for such position and, if applicable, any alternative actions, policies or procedures the Respondent intends to adopt.

7. Staff may attend at the premises of the Respondent and may review the Consultant's report with respect to the implementation of the Consultant's recommendations.

8. The Respondent shall certify to the OSC, by certificate executed on its behalf by each of the CEO, the UDP, the CCO and the Chair of the Board of Directors of the Respondent, that the Respondent has implemented those recommendations of the Consultant which it had agreed upon, and will do so promptly following such implementation.

9. For greater certainty, the terms of this compliance review do not limit in any respect the authority of the OSC to undertake, as part of its normal course audit activities, a review of all matters within the scope of the Review or any other aspect of the business of the Respondent.

C. Terms of the Consultant's Retention

1. The appointment of the Consultant shall be made promptly following the approval of the Settlement Agreement, but in any event by no later than January 31, 2010, by mutual agreement between the Respondent and OSC Staff.

2. The Consultant shall have reasonable access to all of the Respondent's books and records and the ability to meet privately with the Respondent's personnel. The Respondent shall instruct and otherwise encourage its officers, directors, and employees to cooperate fully with the review conducted by the Consultant, and inform its officers, directors, and employees that failure to cooperate with the Review may be grounds for disciplinary action.

3. The Consultant shall have the right, as reasonable and necessary in his or her judgment, to retain, at the Respondent's expense, lawyers, accountants, and other persons or firms, other than officers, directors, or employees of the Respondent, to assist in the discharge of the Consultant's obligations. The Respondent shall pay all reasonable fees and expenses (as reasonably documented) of any persons or firms retained by the Consultant.

4. The Consultant shall make and keep notes of interviews conducted, and keep a copy of documents gathered, in connection with the performance of his or her responsibilities.

Roger D. Rowan et al.

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

ROGER D. ROWAN, WATT CARMICHAEL INC.,

HARRY J. CARMICHAEL AND

G. MICHAEL McKENNEY

ORDER

WHEREAS on July 28, 2006, the Commission issued a Notice of Hearing pursuant to sections 127 and 127.1 of the Securities Act (the "Act") in relation to a Statement of Allegations issued by Staff of the Commission ("Staff") on that date against Roger D. Rowan ("Rowan"), Harry J Carmichael ("Carmichael"), G. Michael McKenney ("McKenney") and Watt Carmichael Inc. ("Watt Carmichael") (collectively, the "Respondents") and Eugene N. Melnyk ("Melnyk");

AND WHEREAS on June 5, 2007, an Amended Statement of Allegations was issued by Staff in which the allegations against Melnyk were withdrawn. The reason for the withdrawal was that, on May 18, 2007, the Commission approved a Settlement Agreement between Staff and Melnyk, who had originally been named as a respondent in this proceeding;

AND WHEREAS the Commission conducted the hearing on the merits in this matter on June 18-22, 26-28 and September 6-7, 2007;

AND WHEREAS the Commission issued its decision and reasons on the merits on June 20, 2008 (the "Merits Decision");

AND WHEREAS the Commission is satisfied that the Respondents have breached Ontario securities law and their conduct was contrary to the public interest, as outlined in the Merits Decision;

AND WHEREAS the Commission conducted a hearing with respect to sanctions and costs on April 29-30, 2009;

AND WHEREAS the Commission is of the opinion that it is in the public interest to order sanctions against the Respondents;

AND WHEREAS the Commission is of the opinion that an order for costs pursuant to section 127.1 of the Act is appropriate;

IT IS HEREBY ORDERED:

With respect to Rowan:

(a) his registration is suspended for a period of 12 months pursuant to section 127(1)1 of the Act;

(b) at the conclusion of his suspension of registration, his registration shall be subject to a condition that he not be approved to act in any supervisory role for a further period of 18 months pursuant to section 127(1)1 of the Act;

(c) he is required to resign any position that he currently holds as a director or officer of a reporting issuer or registrant pursuant to sections 127(1)7 and 127(1)8.1 of the Act;

(d) he is prohibited from becoming or acting as a director or officer of a reporting issuer or an affiliate of a reporting issuer for a period of 7 years pursuant to section 127(1)8 of the Act;

(e) he is prohibited from becoming or acting as a director or officer of a registrant for a period of 3 years pursuant to section 127(1)8.2 of the Act;

(f) he is reprimanded pursuant to section 127(1)6 of the Act;

(g) he shall pay an administrative penalty pursuant to section 127(1)9 of the Act in the amount of $520,000, to be allocated by the Commission to or for the benefit of third parties pursuant to section 3.4(2)(b) of the Act.

With respect to Carmichael:

(a) he is required to resign any position that he currently holds as a director or officer of a registrant pursuant to section 127(1)8.1 of the Act;

(b) he is prohibited from becoming or acting as a director or officer of a registrant for a period of 45 days pursuant to section 127(1)8.2 of the Act;

(c) a condition is imposed on his registration pursuant to section 127(1)1 of the Act that he not be approved to act in any supervisory role for a period of 45 days;

(d) he is reprimanded pursuant to section 127(1)6 of the Act; and

(e) he shall pay an administrative penalty pursuant to section 127(1)9 of the Act in the amount of $250,000, to be allocated by the Commission to or for the benefit of third parties pursuant to section 3.4(2)(b) of the Act.

With respect to McKenney:

(a) he is required to resign any position that he currently holds as a director or officer of a registrant pursuant to section 127(1)8.1 of the Act;

(b) he is prohibited from becoming or acting as a director or officer of a registrant for a period of 12 months pursuant to section 127(1)8.2 of the Act;

(c) a condition is imposed on his registration pursuant to section 127(1)1 of the Act that he not be approved to act in any supervisory role for a period of 12 months; and

(d) he is reprimanded pursuant to section 127(1)6 of the Act.

With respect to Watt Carmichael:

(a) it is required to undergo an independent review of its compliance structure as well as its procedures relating to the handling of confidential information and conflicts of interest pursuant to section 127(1)4 of the Act. This review should encompass the following points:

(i) it is to be conducted by an independent party approved by Staff;

(ii) it is to be conducted at the expense of Watt Carmichael;

(iii) it is required to implement any changes recommended by the expert within reasonable times frames set out by the expert after consultation with Watt Carmichael and Staff; and

(iv) Watt Carmichael is to provide Staff with a copy of the report and recommendations of the expert and with progress reports concerning the implementation of the report's recommendations;

(b) it is reprimanded pursuant to section 127(1)6 of the Act; and

(c) it shall pay an administrative penalty in the amount of $450,000 pursuant to section 127(1)9 of the Act, to be allocated by the Commission to or for the benefit of third parties pursuant to section 3.4(2)(b) of the Act.

On the issue of costs:

(a) pursuant to subsection 127.1(2) of the Act, the Respondents shall jointly and severally pay to the Commission $140,000 in costs and disbursements.

Dated at Toronto, Ontario this 21st day of December 2009.

"Patrick J. LeSage"

"Suresh Thakrar"

"David L. Knight"

McLaren Resources Inc. -- s. 144

IN THE MATTER OF

THE SECURITIES ACT,

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

(the "Act")

AND

IN THE MATTER OF

MCLAREN RESOURCES INC.

ORDER

(Section 144)

WHEREAS on February 4, 2009, McLaren Resources Inc. (the "Filer") and its transfer agent were notified that the Director of the Ontario Securities Commission (the "Commission") made an order under paragraph 2 and paragraph 2.1 of subsection 127(1) and subsection 127(5) of the Act that all trading in and all acquisitions of the securities of the Filer, whether direct or indirect, cease immediately for a period of fifteen days from the date of the order (the "Temporary Order");

AND WHEREAS the Temporary Order was made because the Filer failed to file certain disclosure materials required under Ontario securities laws and shortly thereafter on February 17, 2009, the Director made an order under paragraph 2 and paragraph 2.1 of subsection 127(1) of the Act (the "Permanent Order") that all trading in and acquisitions of the securities of Filer whether direct or indirect, cease until the Permanent Order is revoked by the Director (the Temporary Order and Permanent Order will be collectively referred to herein as the "Cease Trade Order");

AND WHEREAS the Filer has applied to the Commission for an order pursuant to section 144 of the Act revoking the Cease Trade Order;

AND WHEREAS the Filer has represented to the Commission that:

1. The Filer was incorporated under the laws of the Province of Ontario on July 13, 1999.

2. The Filer became a reporting issuer in Ontario on January 11, 2000. The Filer's head office is located in Toronto, Ontario. The Filer is not a reporting issuer or the equivalent thereof in any other jurisdiction.

3. The Filer is engaged in the business of international petroleum exploration and development primarily in the Dutch sector of the North Sea and continued operating in the normal course of business throughout the Cease Trade Order.

4. As at the date hereof, the authorized capital of the Filer consists of an unlimited number of common shares of which 18,944,281 are issued and outstanding.

5. Other than the Cease Trade Order the Filer has not previously been subject to a cease trade order.

6. The Cease Trade Order was issued as a result of the Filer's failure to file, in accordance with the requirements of Ontario securities law, annual financial statements for the year ended September 30, 2008 (the "Annual Financial Statements"); the related Management Discussion and Analysis (the "Annual MD&A") for the year ended September 30, 2008 and corresponding certificates under National Instrument 52-109 -- Certification of Disclosure in Issuer's Annual and Interim Filings for the year ended September 30, 2009 (the "NI 52-109 Certificates").

7. The Filer filed the Annual Financial Statements, the Annual MD&A and NI 52-109 Certificates on June 24, 2009 and July 31, 2009 respectively.

8. The Filer also failed to file with the Commission in accordance with the requirements of Ontario securities laws:

a. the Filer's interim financial statements for the three months ended December 31, 2008 and 2007 (the "December 2008 and 2007 Interim Financial Statements"), together with the Filer's management discussion and analysis for the three months ended December 31, 2008 and 2007 (the "December 2008 and 2007 Interim MD&A") and the corresponding NI 52-109 Certificates; and

b. the Filer's interim financial statements for the six months ended June 30, 2008 and 2007 (the "June 2008 and 2007 Interim Financial Statements"), together with the Filer's management discussion and analysis for the six months ended June 30, 2008 and 2007 (the "June 2008 and 2007 Interim MD&A") and the corresponding NI 52-109 Certificates.

9. On August 4, 2009, the Filer filed with the Commission the December 2008 and 2007 Interim Financial Statements, the December 2008 and 2007 Interim MD&A and the corresponding NI 52-109 Certificates.

10. On August 26, 2009, the Filer filed with the Commission the June 2008 and 2007 Interim Financial Statements, the June 2008 and 2007 Interim MD&A and the corresponding NI 52-109 Certificates.

11. The Filer failed to file the above noted disclosure documents in a timely matter because of an ongoing dispute among the board of directors as to the general direction of the Filer and the composition of its management team. As disclosed in a press release dated March 12, 2009, at a meeting lawfully called by dissident shareholders on March 10, 2009, a new slate of directors were elected. The Filer no longer has a divided board.

12. Other than the Cease Trade Order, the Filer is not in default of its continuous disclosure obligations under Ontario securities law, including the rules and regulations made thereunder, and has paid all outstanding fees to the Commission, including all applicable activity and participation fees and late filing fees.

13. The Filer has provided the Commission with an undertaking pursuant to section 3.1(5) of National Policy 12-202 -- Revocation of Compliance-related Cease Trade Order that it will hold its annual meeting within three months after the date in which the Cease Trade Order is revoked.

14. The Filer expects to deliver its annual financial statements for the year ended September 30, 2009; the related Management Discussion and Analysis for the year ended September 30, 2009 and corresponding certificates under NI 52-109 with a copy of its upcoming management information circular to be mailed to shareholders of the Filer in connection with its 2009 annual meeting.

15. As of the date of this Order, there exists no material facts concerning the Filer which have not been disclosed to the shareholders of the Filer and to the Commission.

16. The Filer is not considering, nor is it involved in any discussion relating to a reverse take-over, merger, amalgamation or other form of combination or transaction similar to any of the foregoing.

17. Following the revocation of the Cease Trade Order, the Filer intends to raise capital to fund a strategic arrangement with Canadian Imperial Venture Corp. and Shoal Point Energy Limited to pursue exploration and production opportunities in the Green Point Formation located in Western Newfoundland, as more particularly described in the press release filed on SEDAR on December 4, 2009 by the Filer.

18. The Filer's issuer profiles on SEDAR and SEDI are up-to-date.

19. Upon the issuance of this revocation order, the Filer will issue a news release and file a material change report on SEDAR.

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

AND UPON the Director being satisfied that the Filer has remedied its defaults in respect in respect of the filing requirements under the Act;

AND UPON the Director being satisfied that to revoke the Cease Trade Order would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to section 144 of the Act that the Cease Trade Order is revoked.

DATED at Toronto this 18th day of December, 2009.

Barry Landen -- s. 127

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

BARRY LANDEN

ORDER

(Section 127 of the Securities Act)

WHEREAS on October 7, 2009, the Commission issued a Notice of Hearing pursuant to section 127 of the Act accompanied by a Statement of Allegations dated October 6, 2009, issued by Staff of the Commission ("Staff") with respect to Barry Landen ("Landen");

AND WHEREAS on October 7, 2009, counsel for Landen was served with the Notice of Hearing and Statement of Allegations;

AND WHEREAS the Notice of Hearing set the hearing in this matter for October 29, 2009 at 10:00 a.m.;

AND WHEREAS on October 26, 2009, the Commission adjourned the hearing at the request of counsel for Staff and counsel for Landen to November 10, 2009 at 2:30 p.m. for the purpose of having a pre-hearing conference;

AND WHEREAS on November 10, 2009, the pre-hearing conference was commenced in front of the Commission and adjourned on consent of all parties until December 23, 2009;

AND WHEREAS on December 23, 2009, counsel for Staff and counsel for Landen have requested that the pre-hearing conference be adjourned from December 23, 2009 until January 8, 2010 at 2:00 p.m.;

IT IS ORDERED THAT the hearing is adjourned to January 8, 2010 at 2:00 p.m. or such other date as is agreed by the parties and determined by the Office of the Secretary for the purpose of continuing the pre-hearing conference.

DATED at Toronto this 23rd day of December, 2009.

"David L. Knight"

Rezwealth Financial Services Inc. et al. -- ss. 127(1), 127(5)

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

REZWEALTH FINANCIAL SERVICES INC.,

PAMELA RAMOUTAR, CHRIS RAMOUTAR,

JUSTIN RAMOUTAR, TIFFIN FINANCIAL

CORPORATION, DANIEL TIFFIN,

2150129 ONTARIO INC. and SYLVAN BLACKETT

TEMPORARY ORDER

Sections 127(1) & 127(5)

WHEREAS it appears to the Ontario Securities Commission (the "Commission") that:

1. Rezwealth Financial Services Inc. ("Rezwealth") is a corporation registered in the Province of Ontario;

2. Tiffin Financial Corporation ("Tiffin Financial") is a corporation registered in the Province of Ontario;

3. 2150129 Ontario Inc. ("215 Inc.") is a corporation registered in the Province of Ontario;

4. Rezwealth, Tiffin Financial and 215 Inc. (together, the "Corporate Respondents") are not registered with the Commission in any capacity;

5. Pamela Teresa Ramoutar ("Pamela") is a director and officer of Rezwealth and has been identified as the directing mind of Rezwealth;

6. Chris Ramoutar ("Chris") is a director and officer of Rezwealth;

7. Justin Ramoutar ("Justin") is a director and officer of Rezwealth;

8. Daniel E. Tiffin ("Tiffin") is the sole director of Tiffin Financial;

9. Sylvan Blackett ("Blackett") is the sole director of 215 Inc.;

10. Pamela, Chris, Justin, Tiffin and Blackett (together, the "Individual Respondents") are not registered with the Commission in any capacity;

11. Tiffin Financial, Tiffin, Pamela and Justin have been soliciting investors to provide funds to Rezwealth for investment;

12. Ontario investors have provided funds to Rezwealth for investment;

13. Chris, Blackett and 215 Inc. have received investor funds from Rezwealth, the purpose for which is unknown;

14. Staff of the Commission are conducting an investigation into the activities of the Corporate Respondents and the Individual Respondents;

15. The Commission is of the opinion that the time required to conclude a hearing could be prejudicial to the public interest; and

16. The Commission is of the opinion that it is in the public interest to make this order;

AND WHEREAS by Commission order made August 31, 2009 pursuant to section 3.5(3) of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act") any one of W. David Wilson, James E.A. Turner, David L. Knight, Carol S. Perry, Patrick J. LeSage, James D. Carnwarth and Mary G. Condon, acting alone, is authorized to make orders under section 127 of the Act;

IT IS ORDERED pursuant to clause 2 of subsection 127(1) and subsection 127(5) of the Act that all trading in any securities by Rezwealth, Tiffin Financial and 215 Inc., or their agents or employees shall cease;

IT IS FURTHER ORDERED pursuant to clause 2 of subsection 127(1) and subsection 127(5) of the Act that all trading in any securities by Pamela, Chris, Justin, Tiffin and Blackett shall cease;

IT IS FURTHER ORDERED pursuant to clause 3 of subsection 127(1) and subsection 127(5) of the Act that the exemptions contained in Ontario securities law do not apply to Rezwealth, Tiffin Financial and 215 Inc. or their agents or employees;

IT IS FURTHER ORDERED pursuant to clause 3 of subsection 127(1) and subsection 127(5) of the Act that the exemptions contained in Ontario securities law do not apply to Pamela, Chris, Justin, Tiffin and Blackett; and

IT IS FURTHER ORDERED pursuant to subsection 127(6) of the Act that this order shall take effect immediately and shall expire on the fifteenth day after its making unless extended by order of the Commission.

Dated at Toronto this 22nd day of December, 2009

"W. David Wilson"

Irwin Boock et al. -- ss. 127, 127.1

[Publisher's note: This order, which originally appeared in (2009), 32 OSCB 10487, is being republished to correct an error in the date.]

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

IRWIN BOOCK, STANTON DEFREITAS, JASON

WONG, SAUDIA ALLIE, ALENA DUBINSKY,

ALEX KHODJIAINTS, SELECT AMERICAN

TRANSFER CO., LEASESMART, INC.,

ADVANCED GROWING SYSTEMS, INC.,

INTERNATIONAL ENERGY LTD., NUTRIONE

CORPORATION, POCKETOP CORPORATION,

ASIA TELECOM LTD., PHARM CONTROL LTD.,

CAMBRIDGE RESOURCES CORPORATION,

COMPUSHARE TRANSFER CORPORATION,

FEDERATED PURCHASER, INC.,

TCC INDUSTRIES, INC., FIRST NATIONAL

ENTERTAINMENT CORPORATION,

WGI HOLDINGS, INC. AND ENERBRITE

TECHNOLOGIES GROUP

ORDER

(Section 127 and 127.1)

WHEREAS on October 16, 2008, the Commission commenced the within proceeding by issuing a Notice of Hearing pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act");

AND WHEREAS the hearing was adjourned from time to time until April 22, 2009 when the Commission ordered that the hearing of this matter on the merits was to be held on Monday, October 19, 2009 through to Friday, November 13, 2009, excluding Wednesday, November 11, 2009, commencing each day at 10:00 a.m. at the offices of the Commission on the 17th floor, 20 Queen Street West in Toronto;

AND WHEREAS on October 14, 2009 counsel for Stanton DeFreitas ("DeFreitas") attended before the Commission and requested that the hearing scheduled to commence on October 19, 2009 be adjourned for the purpose of bringing a motion to obtain further disclosure from Staff of the Commission;

AND WHEREAS on October 14, 2009 counsel for Staff of the Commission attended as did counsel for Irwin Boock ("Boock") and counsel for Jason Wong ("Wong");

AND WHEREAS on October 14, 2009 none of the other Respondents attended before the Commission nor did counsel for any of the other Respondents;

AND WHEREAS on October 14, 2009 counsel for Staff of the Commission did not oppose the adjournment request of counsel for DeFreitas, nor did counsel for Boock or counsel for Wong;

AND WHEREAS the temporary orders made by the Commission on April 22, 2009 remain in place until the completion of the hearing on the merits of this matter;

AND WHEREAS on October 15th, 2009, the Commission ordered that the hearing of this matter on the merits which was to commence on Monday, October 19, 2009 be vacated and that the hearing be adjourned until December 1, 2009, or such other date as determined by the parties and the Secretary's office, for the purpose of setting dates for the hearing on the merits;

AND WHEREAS on November 30, 2009, the Commission ordered that the hearing be adjourned until December 10, 2009 to ascertain when to set dates for the hearing on the merits;

AND WHEREAS on December 10, 2009, counsel for Boock, DeFrietas, and Wong and counsel for Staff appeared before the Commission and made submissions regarding the scheduling of the hearing on the merits;

AND WHEREAS the Commission is of the opinion that it is in the public interest to make this Order;

IT IS ORDERED THAT the dates for the hearing of this matter on the merits shall commence on February 1, 2010 at 10:00 a.m. and shall continue for four weeks excluding the dates of February 2, 15 and 16 or such other dates as may be determined by the parties and the Office of the Secretary.

DATED at Toronto this 10th day of December, 2009.

"James E. A. Turner"

Chapter 3 -- Reasons: Decisions, Orders and Rulings

Roger D. Rowan et al.

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

ROGER D. ROWAN, WATT CARMICHAEL INC.,

HARRY J. CARMICHAEL AND

G. MICHAEL McKENNEY

REASONS AND DECISION ON SANCTIONS AND COSTS

REASONS AND DECISION ON SANCTIONS AND COSTS

I. BACKGROUND

[1] This was a bifurcated hearing before the Ontario Securities Commission (the "Commission") pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act"), to consider whether it is in the public interest to make an order with respect to sanctions and costs (the "Sanctions and Costs Hearing") against Roger D. Rowan ("Rowan"), Harry J. Carmichael ("Carmichael"), G. Michael McKenney ("McKenney") and Watt Carmichael Inc. ("Watt Carmichael") (collectively, the "Respondents").

[2] The hearing on the merits was held before the hearing panel (the "Hearing Panel") on June 18-22, 26-28 and September 6-7, 2007, and a decision was rendered on June 20, 2008 (Re Rowan (2008), 31 O.S.C.B. 6515 (the "Merits Decision")). The Sanctions and Costs Hearing was held on April 29-30, 2009.

[3] The individual respondents: Rowan who was the President and Chief Operating Officer ("COO") of Watt Carmichael; Carmichael who was the Chairman, Chief Executive Officer ("CEO") and also the Ultimate Designated Person ("UDP") of Watt Carmichael; and McKenney who was the Chief Compliance Officer ("CCO") and Chief Financial Officer ("CFO") of Watt Carmichael and Watt Carmichael, the corporate respondent (a broker and investment dealer registered under the Act), were all found by the Hearing Panel to have breached Ontario securities laws. The Hearing Panel found that the conduct of the Respondents was contrary to the public interest. The majority of the Hearing Panel found that four of the eight allegations had been proven by Staff.

[4] Staff of the Commission ("Staff') seeks sanctions against the Respondents which are set out below at paragraphs 15 to 18. In addition, Staff seeks costs as set out below at paragraph 20.

[5] The Respondents vigorously dispute the sanctions sought by Staff in this case. The Respondents also seek to challenge the constitutional validity of the administrative penalty provision of the Act, section 127(1)9 of the Act, which they claim infringes their rights under section 11 of the Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.) 1982, c. 11 (the "Charter").

[6] A Notice of Constitutional Question was delivered by the Respondents to the Attorney General of Ontario (the "Attorney General"). The Attorney General intervened in the proceeding to make submissions and to adduce evidence in response to the Notice of Constitutional Question.

[7] The Respondents also assert that Staff is seeking to apply the administrative penalty to their conduct retrospectively. The Respondents submit that the findings by the Hearing Panel relate to acts that originated prior to April 7, 2003, which is the date of the coming into force of the Commission's administrative penalty provision. Accordingly, they submit that the presumption against retrospectivity applies, and that this Panel cannot order the Respondents to pay an administrative penalty.

[8] These are our Reasons and Decision as to the appropriate sanctions and costs that should be ordered against the Respondents.

II. KEY FINDINGS IN MERITS DECISION

[9] This matter arose out of a Notice of Hearing issued by the Commission on July 28, 2006 in relation to a Statement of Allegations issued by Staff on that same date with respect to the Respondents and Eugene N. Melnyk ("Melnyk").

[10] On June 5, 2007, an Amended Statement of Allegations was issued by Staff which withdrew the allegations against Melnyk. The reason for the withdrawal was that, on May 18, 2007, the Commission approved a Settlement Agreement between Staff and Melnyk, who had originally been named as a respondent in this proceeding (the "Melnyk Settlement").

[11] The Amended Statement of Allegations raised the following allegations against the Respondents with respect to their activities in relation to the trading of Biovail securities held by certain trusts in 2002, 2003 and 2004:

(a) while an insider of Biovail, Rowan executed numerous trades in Biovail in the Congor, Conset and Southridge Accounts in 2002, 2003, and 2004 and failed to file any insider reports in respect of these trades contrary to subsection 107(2) of the Act;

(b) contrary to the public interest and contrary to Ontario securities law, Rowan failed to provide complete and accurate information to Biovail concerning the number of Biovail common shares over which he exercised control or direction. As a result, the disclosure contained in Biovail's management proxy circulars in 2002, 2003 and 2004 was misleading or untrue or did not state facts that were required to be stated or that were necessary to make the statements in the circulars not misleading;

(c) contrary to the public interest, Rowan engaged in discretionary trading of Biovail securities in the Conset, Congor and Southridge Accounts in 2002 and 2003 during each of the Biovail blackout periods;

(d) Rowan traded Biovail securities held in the Congor, Conset and Southridge Accounts at times when he had knowledge of material undisclosed information contained in Biovail management reports contrary to subsection 76(1) of the Act;

(e) Rowan purported to exercise discretionary trading authority in the Southridge Account when he did not have such discretionary authority, contrary to the Know Your Client requirements set out in subsection 1.5(1) of OSC Rule 31-505 -- Conditions of Registration, (1999), 22 O.S.C.B. 731 and (2003), 26 O.S.C.B. 7170, referred to as the "Know Your Client" rule ("OSC Rule 31-505"), and contrary to the public interest;

(f) contrary to the public interest, Rowan and Watt Carmichael provided responses to the IDA's request for information as to the identity of the beneficiaries of the Congor and Conset Trusts which they knew or ought to have known were misleading or untrue or did not state facts that were required to be stated to make their statements not misleading;

(g) contrary to the public interest, Rowan made statements to Staff as to the identity of the beneficiaries of the Conset Trust which he knew or ought to have known were misleading or untrue or did not state facts that were required to be stated to make his statements not misleading; and

(h) contrary to the public interest, Watt Carmichael did not adequately supervise Rowan's trading in Biovail securities in the Congor, Conset and Southridge Accounts. Contrary to the public interest, Carmichael, in his capacity as Chairman and CEO, and McKenney, in his capacity as CCO, failed to adequately supervise trading by Rowan and to address conflicts of interest despite indications that supervision was required.

(Merits Decision, supra at para. 10)

[12] The majority of the Hearing Panel made the following findings in its Merits Decision:

(a) Rowan breached section 107 of the Act by failing to file insider reports in respect of trades in Biovail securities that he executed in the Trust Accounts;

(b) Rowan engaged in conduct contrary to the public interest by failing to disclose to Biovail the Biovail securities held in the Trust Accounts over which he exercised control or direction;

(c) Rowan engaged in conduct contrary to the public interest by trading in Biovail securities in the Trust Accounts during Biovail's Blackout Periods;

(d) Rowan did not breach section 76 of the Act;

(e) Rowan did not contravene OSC Rule 31-505 (Know Your Client) by conducting unauthorized discretionary trading in the Southridge Account;

(f) Rowan and Watt Carmichael did not mislead the IDA;

(g) Rowan did not mislead the Commission;

(h) McKenney, Carmichael and Watt Carmichael failed to adequately supervise Rowan's trading in Biovail securities in the Trust Accounts; and

(i) the conduct of the Respondents with regards to paragraphs (a), (b), (c) and (h) was contrary to the public interest.

(Merits Decision, supra at para. 354)

[13] We must consider the findings of the majority of the Hearing Panel carefully when determining the appropriate sanctions to impose on the Respondents in this case.

III. SANCTIONS REQUESTED BY STAFF

[14] In their submissions, Staff requested that the following orders be made against the Respondents.

Rowan

[15] With respect to Rowan:

(a) his registration should be suspended for a period of one to two years;

(b) at the conclusion of his suspension of registration, his registration should be subject to a condition that he not be approved or act in any supervisory role for a further period of 2 to 4 years;

(c) he should be required to resign any position that he currently holds as a director or officer of a reporting issuer or registrant;

(d) he should be prohibited from becoming or acting as a director or officer of a reporting issuer or an affiliate of a reporting issuer for a period of 8 to 10 years;

(e) he should be prohibited from becoming or acting as a director or officer of a registrant for a period of 3 to 5 years;

(f) he should receive a reprimand; and

(g) he should be required to pay an administrative penalty in the amount of $750,000 to $1,000,000.

Carmichael

[16] With respect to Carmichael:

(a) he should be required to resign any position that he currently holds as a director or officer of a registrant;

(b) he should be prohibited from becoming or acting as a director or officer of a registrant for a period of 6 to 12 months;

(c) he should have a condition imposed on his registration that he not be approved in or act in any supervisory role for a period of 6 to 12 months;

(d) he should receive a reprimand; and

(e) he should be required to pay an administrative penalty in the amount of $300,000 to $500,000.

McKenney

[17] With respect to McKenney:

(a) he should be required to resign any position that he currently holds as a director or officer of a registrant;

(b) he should be prohibited from becoming or acting as a director or officer of a registrant for a period of 6 to 12 months;

(c) he should have a condition imposed on his registration that he not be approved in or act in any supervisory role for a period of 6 to 12 months; and

(d) he should receive a reprimand.

Watt Carmichael

[18] With respect to Watt Carmichael:

(a) it should be required to undergo an independent review of its compliance structure as well as its procedures relating to the handling of confidential information and conflicts of interest. This review should encompass the following points:

(i) it should be conducted by an independent party approved by Staff;

(ii) it should be conducted at Watt Carmichael's expense;

(iii) Watt Carmichael should be required to implement any changes recommended by the expert within reasonable times frames set out by the expert after consultation with Watt Carmichael and Staff; and

(iv) Watt Carmichael should provide Staff with a copy of the report and recommendations of the expert and with progress reports concerning the implementation of the report's recommendations;

(b) it should receive a reprimand; and

(c) it should be required to pay an administrative penalty in the amount of $850,000 to $1,000,000.

[19] Staff argues that the requested sanctions are both proportionate and appropriate in light of the Respondents' serious breaches of Ontario securities law and their conduct contrary to the public interest.

[20] Staff is also requesting that the Respondents be ordered, on a joint and several basis, to pay a portion of the costs of the hearing on the merits amounting to $283,691.40.

IV. THE ISSUES

[21] The matter before us raises the following issues as we review the appropriate sanctions and costs against the Respondents:

A. Does section 11 of the Charter apply to proceedings when administrative penalties are sought under section 127(1)9 of the Act?

B. If the provision does not infringe the Charter, is Staff seeking to impose an administrative penalty retrospectively in this case?

C. What are the appropriate sanctions in this case?

D. What are the appropriate costs in this case?

V. ANALYSIS

A. Does Section 11 of the Charter Apply to Proceedings When Administrative Penalties are Sought Under Section 127(1)9 of the Act?

[22] We must consider whether the imposition of an administrative penalty pursuant to section 127(1)9 of the Act would be a violation of section 11 of the Charter.

i. Respondents' Submissions

[23] The Respondents challenge the constitutional validity of section 127(1)9 of the Act, which gives the Commission power to impose an administrative penalty of not more than $1,000,000 per breach of the Act. They argue that a penalty of such magnitude is a "true penal consequence" and brings into play section 11 of the Charter which deals with "Proceedings in Criminal and Penal Matters".

[24] The Respondents point out that the Supreme Court of Canada in R. v. Wigglesworth, [1987] 2 S.C.R. 541 (QL version) ("Wigglesworth") considered the breadth of section 11 of the Charter to those charged with an offence. At paragraph 21, Wilson J. established that there are two circumstances where "a matter could fall within s. 11 either because by its very nature it is a criminal proceeding or because a conviction in respect of the offence may lead to a true penal consequence".

[25] The Respondents submit that the administrative penalty provided for in section 127(1)9 (maximum $1 million for each failure to comply) is penal in nature, or at least a true penal consequence. Consequently, proceedings under section 127(1)9 are entitled to all the safeguards provided to an accused in a criminal or quasi-criminal proceeding, including protections under section 11 of the Charter.

[26] Professor Peter W. Hogg who made submissions regarding the constitutional validity of section 127(1)9 of the Act for the Respondents, puts it this way: that a $1 million administrative penalty for any regulatory violation, no matter what it may be called, is plainly and simply a "fine", and a very large fine at that. It is, he submits, "word play" to call it anything other than a fine. This is especially so with the legislation which not only has a $1 million maximum administrative penalty but provides for a $1 million administrative penalty for "each failure to comply". He says that this means the legislation permits Staff in this factual allegation to seek an administrative penalty of $1 million on each of the 7,410 trades found to be "offside" the regulations. Professor Hogg submits that just because Staff is treating all trades as a continuing breach would not prevent them in another such case as this from seeking an administrative penalty of over $7 billion. How could anyone conclude that a $1 million administrative penalty, let alone a $7 billion administrative penalty, be anything other than a "punitive fine"? This is the very thing Wilson J. speaks of in Wigglesworth. He also notes that in paragraph 24 Wilson J. refers to not only the size or amount of the fine, but also to the possibility of having an unlimited power to impose a fine:

... that if a body or an official has an unlimited power to fine, and if it does not afford the rights enumerated under s. 11, it cannot impose fines designed to redress the harm done to society at large. Instead, it is restricted to the power to impose fines in order to achieve the particular private purpose.

[27] In addition, Professor Hogg emphasizes that the purpose of the fine and the use of it or how the body is to dispose of the fines it collects is also relevant. Relying on paragraph 24 of Wigglesworth, Professor Hogg submits that if the fines do not form part of the Consolidated Revenue Fund, then they are less likely to attract section 11 Charter protection. He submits that in Ontario, although monies received may be specifically designated, in the absence of a specific designation, they do in fact, go to the Consolidated Revenue Fund and therefore section 11 Charter protections are triggered.

[28] The Respondents further submit that the tenor of the submissions and the enormity of the administrative penalty sought by Staff in this case, is no different than if all of this occurred in a criminal court.

ii. The Attorney General's Submissions

[29] The Attorney General intervenes in this proceeding on the constitutional question raised by the Respondents. The Attorney General filed in evidence an affidavit by Poonam Puri sworn on January 16, 2009 (the "Puri Affidavit"). The Puri Affidavit provides expert evidence on the purpose of administrative penalties in the capital markets.

[30] The Attorney General takes no position on the quantum of any administrative penalty that might be imposed on the Respondents, nor does it take any position on whether any administrative penalty should be imposed. However, the Attorney General does submit that section 127(1)9 of the Act, which allows the Commission to make an order in the public interest requiring a person to pay an administrative penalty of not more than $1 million does not attract section 11 Charter scrutiny.

[31] The criminal and quasi-criminal rights of section 11 of the Charter only apply to persons "charged with an offence." The Respondents are not persons "charged with an offence" within the meaning of section 11 of the Charter and cannot therefore rely on that section. Section 11 of the Charter does not apply to administrative proceedings such as these.

[32] However, should the Commission conclude that an administrative penalty of that magnitude would, in the circumstance of this case, constitute a true penal consequence for the Respondents, the appropriate action would be to impose a lesser administrative penalty that does not constitute a true penal consequence, and not to find that section 127(1)9 of the Act is unconstitutional. This disposition would allow the Commission to exercise its discretion in a constitutionally valid manner without any need to opine on the constitutional validity of the Act itself. Further, the Report of the Fairness Committee to the Ontario Securities Commission states:

... the level of fine to be imposed is a matter of discretion for the Commission in each case. Provided the Commission exercises that discretion in such a way that is in keeping with the notion of an administrative penalty rather than a penal sanction, there may be no problem. The possibility that it might be used for impermissible purposes should not expose the section to section 11 of the Charter.

(C. A. Osborne, Q.C., D. J. Mullan and B. Finlay, Q.C., Report of the Fairness Committee to the Ontario Securities Commission, dated March 5, 2004 at 57)

[33] The Attorney General further submits that should we find that the impugned section of the Act infringes the Charter, such infringement is demonstrably justified under section 1 of the Charter. The Attorney General submits that the enforcement of market rules and the maintenance of high standards of fitness and market conduct by market participants are clearly pressing and substantial legislative objectives. The administrative penalty is rationally connected to its purpose, and given the importance of certainty and finality in enforcing market rules, any infringement would be saved pursuant to section 1 of the Charter.

iii. Staff's Submissions

[34] Staff submits that section 11 of the Charter does not apply to proceedings before the Commission pursuant to section 127 of the Act. An administrative penalty does not amount to a "true penal consequence." The administrative penalty is a protective and preventative tool used to fashion appropriate remedies in light of the realities of the Ontario capital markets.

[35] The range of an administrative penalty provided is carefully designed taking into consideration the context of Ontario's capital markets as well as the need to allow for flexible deterrence which would not simply be viewed as a "cost of doing business." The same range of administrative penalty has also been enacted by numerous legislatures and self-regulatory organizations throughout Canada.

iv. Analysis

Commission Proceedings are Regulatory and not Criminal

[36] The Wigglesworth decision distinguished between matters which are "...of a public nature, intended to promote public order and welfare within a public sphere of activity ...", and "... private, domestic or discipline matters which are regulatory, protective or corrective ..." (Wigglesworth, supra at para. 23). As explained by the Supreme Court of Canada, the latter are "... primarily intended to maintain discipline, professional integrity and professional standards or to regulate conduct within a private sphere of activity ..." (Wigglesworth, supra at para. 23). As a result, section 11 of the Charter does not apply to private, domestic or discipline matters which are regulatory, protective or corrective.

[37] Proceedings under section 127 of the Act are "intended to regulate conduct within a private sphere of activity". In reviewing examples of such regulatory proceedings, the Wigglesworth decision itself cites two cases involving securities commissions, including the Commission. Both of these cases affirmed that securities commission proceedings are regulatory in nature and are therefore not subject to section 11 of the Charter (See: Re Malartic Hygrade Gold Mines (Canada) Ltd. and Ontario Securities Commission (1986), 54 O.R. (2d) 544, (H.C.J.); and Barry v. Alberta (Securities Commission), (1986), 25 D.L.R. (4th) 730 (Alta. C.A.)).

[38] Subsequent decisions of the Supreme Court of Canada have confirmed the broad regulatory goals of the Act. In Pezim, for example, the Court stated:

It is important to note from the outset that the Act is regulatory in nature. In fact, it is part of a much larger framework which regulates the securities industry throughout Canada. Its primary goal is the protection of the investor but other goals include capital market efficiency and ensuring public confidence in the system ...

(Pezim v. British Columbia (Superintendant of Brokers), [1994] 2 S.C.R. 557 ("Pezim"), at para. 59)

[39] Both the British Columbia Supreme Court and the British Columbia Court of Appeal have examined whether the addition of an administrative penalty power converts a regulatory proceeding into a criminal one. In both cases the Courts found that, even with this potential sanction in place, the British Columbia Securities Act "remains a regulatory statute" (Johnson v. British Columbia (Securities Commission) (2001), 206 D.L.R. (4th) 711 (B.C. C.A.) at para. 42; and British Columbia (Securities Commission) v. Simonyi-Gindele, [1992] B.C.J. No. 2893 (S.C.) at 3 (Q.L.))c.

[40] Based on the analysis above, a hearing under section 127 of the Act, including a hearing in which an administrative penalty is sought, is fundamentally regulatory. It does not meet the "criminal by nature" characterization of an offence.

The Administrative Penalty is not a Penal Consequence

[41] Having determined that section 127(1)9 of the Act does not meet the "criminal by nature" characterization of an offence, we must now determine whether an administrative penalty prescribed by section 127(1)9 of the Act may impose "true penal consequences" on the Respondents. In Wigglesworth, a true penal consequence was characterized as follows:

... a true penal consequence which would attract the application of s. 11 is imprisonment or a fine which by its magnitude would appear to be imposed for the purpose of redressing the wrong done to society at large rather than to the maintenance of internal discipline within the limited sphere of activity.

(Wigglesworth, supra at para. 24)

[42] The question is thus whether an administrative penalty of up to $1,000,000 per breach is a sanction of sufficient magnitude to be deemed "penal". That question does not always permit a simple or easy answer. As stated by Wilson J. in Wigglesworth:

... if a particular matter is of a public nature, intended to promote public order and welfare within a public sphere of activity, then that matter is the kind of matter which falls within s. 11. It falls within the section because of the kind of matter it is. This is to be distinguished from private, domestic or disciplinary matters which are regulatory, protective or corrective and which are primarily intended to maintain discipline, professional integrity and professional standards or to regulate conduct within a limited sphere of activity ...

(Wigglesworth, supra, at para. 23 [emphasis added])

[43] The underlined portion of the quote above fits squarely with section 127 of the Act including section 127(1)9. We therefore conclude that the administrative penalty in question, notwithstanding its quantum, has for its primary purpose, the protection of investors as well as specific deterrence to the Respondents to prevent them from engaging in similar conduct in the future.

[44] These goals were clearly articulated by the committee of the Ontario Legislature which recommended adding the present administrative penalty provision to the Act (the "Five Year Review Committee"):

In our view, the maximum amount for an administrative fine must be sufficient to allow the Commission to send an appropriate deterrent message, having regard to both the gravity of the conduct under consideration and the respondents that are the subject of the proceedings.

(Five Year Review Committee Draft Report -- Reviewing the Securities Act (Ontario) (2002), 25 O.S.C.B. (Supp) at 122)

[45] The protective and deterrent functions served by the administrative penalty in our capital markets have been acknowledged and emphasized by this Commission:

The purpose of an administrative penalty is to deter the particular respondents from engaging in the same or similar conduct in the future and to send a clear deterrent message to other market participants that the conduct in question will not be tolerated in Ontario capital markets.

(Re Limelight Entertainment Inc. (2008), 31 O.S.C.B. 12030 at para. 67)

[46] The Supreme Court of Canada has confirmed general deterrence is an appropriate regulatory objective for securities regulators. In Re Cartaway Resources Corp., [2004] 1 S.C.R. 672 ("Cartaway") the Court considered the British Columbia Securities Commission's administrative penalty power. In confirming that administrative penalties may be used to send a message of general deterrence, Le Bel J. wrote:

... it is reasonable to view general deterrence as an appropriate, and perhaps necessary, consideration in making orders that are both protective and preventative. ...

The Oxford English Dictionary (2nd ed. 1989), vol XII, defines "preventive" as "[t]hat anticipates in order to ward against; precautionary; that keeps from coming or taking place; that acts as a hindrance or obstacle". A penalty that is meant to deter generally is a penalty that is designed to keep an occurrence from happening; it discourages similar wrongdoing in others. In a word, a general deterrent is preventative.

(Cartaway, supra at paras. 60 and 61)

[47] Is an administrative penalty of up to $1,000,000 per failure to comply with Ontario securities law proportionate to the legislative goals of general deterrence and investor protection, particularly in the context in which the administrative penalty is sought to be applied?

[48] In order to determine whether section 127(1)9 imposes "true penal consequences" on the Respondents, we must take a contextual approach. The importance of a contextual analysis was referred to as early as 1991 when the Supreme Court in R. v. Wholesale Travel Group Inc., [1991] 2 S.C.R. 154 stated:

A contextual approach is particularly appropriate in the present case to take account of the regulatory nature of the offence and its place within a larger scheme of public welfare legislation. This approach requires that the rights asserted by the appellant be considered in light of the regulatory context in which the claim is situated, acknowledging that a Charter right may have different scope and implications in a regulatory context than in a truly criminal one.

(R. v. Wholesale Travel Group Inc., supra at para. 150)

[49] With respect to the regulatory context, this Commission regulates Ontario's capital markets which represents a significant proportion of Canada's capital markets and economic activity. For example:

(a) In 2004, of the 1,222 issuers listed on the Toronto Stock Exchange, 577 issuers were headquartered in Ontario representing 47% of the market capitalization of the TSX;

(b) Ontario is headquarters to a significant number of relatively larger issuers with relatively high market capitalizations, e.g. in 2004, of the 243 Financial Services issuers listed on the TSX, 193 issuers (almost 80%) were headquartered in Ontario. These Ontario based financial services issuers, regulated by the Commission, had a combined market capitalization of nearly $222 billion, representing 76% of the market capitalization of all financial services issuers listed on the TSX.

(c) In 2007, four of the top five most profitable public companies in Canada were headquartered in Ontario, including Royal Bank of Canada ($4.7 billion), Toronto-Dominion Bank ($4.6 billion), Manulife Financial ($3.9 billion), and Bank of Nova Scotia ($3.6 billion).

(See: Puri Affidavit at paras. 14, 16 and 17)

[50] The scale of Ontario's capital markets frequently finds its reflection in the scale of the matters that come before the Commission. For example, in a recent proceeding, certain directors and officers of a public company engaged in improper back-dating and repricing of stock options issued under the company's stock option plans. The potential shortfall to the company's treasury resulting from these practices was calculated at approximately $66 million as set out in the settlement agreement (See: Re Research in Motion Ltd. (2009), 32 O.S.C.B. 1421).

[51] The realities of Ontario's capital markets were critical to the Five Year Review Committee's recommendation that the Commission be empowered to impose an administrative penalty of up to $1,000,000 per contravention. The Committee sought to ensure that the administrative penalty would not simply be viewed as a "cost of doing business" or a "licensing fee" for market participants:

Giving the Commission the power to impose an administrative fine will enable it to tailor sanctions to suit the particular circumstances of a case. The administrative fine that the Commission is able to impose should not be viewed merely as a "cost of doing business" or a licensing fee. ... In our view, a maximum of $1,000,000 per contravention is sufficient to allow the Commission to send an appropriate deterrent message, having regard to, among other things, the gravity and impact of the conduct under consideration and the nature of the respondents that are the subject of the proceedings.

(Five Year Review Committee Final Report -- Reviewing the Securities Act (Ontario) (2003), 26 O.S.C.B. (Supp-2) at 214; for further discussion on this point see also: Alberta (Securities Commission) v. Brost, [2008] A.J. No. 1071 (Alta. C.A.) ("Brost C.A.") at para. 54; and Lavallee v. Alberta (Securities Commission), [2009] A.J. No. 21 (Alta. Q.B.) at para. 164)

[52] Legislatures throughout Canada have come to a similar view on the appropriateness of the available range of an administrative penalty. The Securities Commissions of Nova Scotia, Quebec, Alberta and British Columbia have all been granted the power to award administrative penalties. For instance, the Alberta Securities Commission and the Nova Scotia Securities Commission have the power to order a person or company to pay an administrative penalty of not more than one million dollars for each contravention or failure to comply (Securities Act, R.S.N.S. 1989, c. 418, s. 135; and Securities Act, R.S.A. 2000, c. S-4, s. 199); the British Columbia Securities Commission can order a person to pay an administrative penalty of not more than $1 million for each contravention (Securities Act, R.S.B.C. 1996, c. 418, s. 162); and in Quebec, the Bureau de décision et de révision en valeurs mobilières can order the payment of an administrative penalty not exceeding $1 million dollars (Securities Act, R.S.Q., c.V-1.1, s. 273.1).

[53] An even greater range for an administrative penalty is available to self-regulatory organizations recognized by this Commission (notwithstanding that the penalties are based on contractual agreements). The Investment Industry Regulatory Organization of Canada (formerly the Investment Dealers Association, hereinafter "IIROC"), the national self-regulatory organization for securities dealers, has the authority under the Universal Market Integrity Rules to impose a fine not to exceed the greater of $1,000,000 and an amount triple to the financial benefit which accrued to the person as a result of committing the contravention (Universal Market Integrity Rules, Rule 10.5(1)(b)). In addition, IIROC also has the authority to order its Approved Members and Dealer Members to pay a fine not exceeding the greater of $1,000,000 (in the case of Approved Persons) and $5,000,000 (in the case of Dealer Members) per contravention and an amount equal to three times the profit made or loss avoided by reason of the contravention (See: IIROC Rule Book, Dealer Member Rules, Rules 20.33 and 20.34).

[54] The Mutual Fund Dealers Association of Canada ("MFDA"), which fulfills the same role for the distributors of mutual funds, also has the authority to impose a fine not exceeding the greater of $5,000,000.00 per offence, and an amount equal to three times the profit obtained or loss avoided by such a person as a result of committing the violation (See: MFDA By-Law No. 1, ss. 24.1.1 and 24.1.2).

[55] The Respondents in this matter operate in a specific and tightly regulated segment of the Ontario capital markets, which is that of investment dealers and the approved persons employed by those dealers. Investment dealers and their employees are subject to significant capital adequacy and conduct of business requirements. Investment dealers must meet stringent capital requirements and demonstrate the ability and willingness to conduct business in a manner consistent with the securities laws of the province in which registration is held, and they must adhere to rules and regulations of IIROC. Approved persons/employees share analogous responsibilities.

[56] In pursuit of the legitimate regulatory goal of deterring others from engaging in illegal conduct, the Commission must, therefore, have proportionate sanctions at its disposal. The administrative penalty represents an appropriate legislative recognition of the need to impose sanctions that are more than "the cost of doing business". In the current securities regulation and today's capital markets context, a $1,000,000 administrative penalty is not prima facie penal.

The Indicia of a True Penal Consequence Are Not Present

[57] In Wigglesworth, Wilson J. indicated that "[o]ne indicium of the purpose of a particular fine is how the body is to dispose of the fine that it collects" (at para. 24). Regulatory fines, under this test, are less likely to be disbursed into the Consolidated Revenue Fund.

[58] In the case of the Commission's administrative penalty, subsection 3.4(2) of the Act provides that the sums collected as administrative penalties may be designated to or for the benefit of third parties. Only if there is no specific designation would the funds collected go to the Consolidated Revenue Fund.

[59] Administrative penalties that have been imposed by the Commission to date have contained a clause providing that the administrative penalty funds be distributed to or for the benefit of third parties (See for example: Re Crombie (2009), 32 O.S.C.B. 1628; Re Research in Motion Ltd., supra; Re Biovail Corp. (2009), 32 O.S.C.B. 563; Re McCaffrey (2009), 32 O.S.C.B. 827; Re Devendranauth Misir (2009), 32 O.S.C.B. 1807; Re Limelight Entertainment Inc., supra; Re First Global Ventures, S.A. (2008), 31 O.S.C.B. 10869; Re Duic (2008), 31 O.S.C.B. 8551; Re Leung (2008), 31 O.S.C.B. 6759; Re Lee (2008), 31 O.S.C.B. 8730; Re Stern (2008), 31 O.S.C.B. 4029; Re Momentas Corp. (2007), 30 O.S.C.B. 6674; Re Melnyk (2007), 30 O.S.C.B. 4695 (Order); Re Griffiths (2006), 29 O.S.C.B. 9529; Re Bennett Environmental Inc. (2006), 29 O.S.C.B. 9527; Re Mountain Inn at Ribbon Creek Limited Partnership (2005), 28 O.S.C.B. 9489; and Re Wells Fargo Financial Canada Corp. (2005), 28 O.S.C.B. 1062 (Order)).

Criminal Characteristics

[60] The conduct at issue in this matter, if prosecuted under section 122 of the Act in the Ontario Court of Justice would be subject to a penalty of imprisonment for up to five years less a day and a fine of up to $5,000,000, or to both. When looked at in that light, the administrative penalties being sought by Staff, are clearly not penalties that move them to the range of "criminal punishment".

No Imprisonment or Criminal Record Follows

[61] As earlier mentioned, the Commission cannot impose administrative penalties designed to redress the harm done to society at large. However, if the administrative penalty is restricted to achieve the particular private purposes which the Commission is empowered to govern and regulate, which is the result in this case, then section 11 of the Charter does not apply. The requested appropriate administrative penalty is not a penal consequence for these Respondents. It has none of the impermissible characteristics that have been identified by the Supreme Court of Canada in its review of financial penalties. The range of the requested administrative penalties is consistent with the Commission's responsibility for regulating Ontario's capital markets and its related mandate: to provide protection to investors from unfair, improper or fraudulent practices; and to foster fair and efficient capital markets and confidence in capital markets. We believe that the administrative penalties being sought are consistent with a measured and proportionate administrative tool response.

The Magnitude of the Misconduct

[62] The Respondents' improper conduct in this case involved significant sums of money. The quantity and value of Biovail common shares bought or sold by Rowan for the Trust Accounts during 2002, 2003 and 2004 were extremely high; as set out in paragraphs 26, 27 and 28 of the Merits Decision:

In addition, during 2002 and 2003, Rowan bought for the Trust Accounts 24,500 Biovail call options at a cost of approximately US$ 10 million.

[63] Rowan engaged in a high volume of discretionary trading of Biovail securities in the Trust Accounts during each of the Biovail Blackout Periods (See: Merits Decision, supra at paras. 156 and 157). As summarized below:

In addition, during 2003, over 11,000 Biovail call options were acquired at a cost of approximately US$ 4 million.

[64] Rowan failed to file insider reports with respect to 7,410 trades involving 37,305,278 shares of Biovail during the period between January 1, 2002 and December 31, 2004.

[65] Rowan's conduct also resulted in the failure to disclose in Biovail's Management Information Circulars large numbers of Biovail shares over which he exercised or shared control or direction, amounting to nearly 4 million Biovail shares in 2002, over 3 million shares in 2003 and over 4 million shares in 2004. Management Information Circulars consequently disclosed incomplete and misleading information regarding insiders' shareholdings over the three-year period 2002--2004 (See: Merits Decision, supra at paras. 33, 125 and 129).

[66] Watt Carmichael earned approximately $2,350,000 in commissions from trading in the Trust Accounts during the period 2002 to 2004 (See: Merits Decision, supra at paras. 29, 30 and 31).

The Role of an Administrative Penalty in Today's Capital Markets

[67] Given the Respondents' status as registrants in a highly-regulated and broadly capitalized industry, given the scope of their misconduct, and the profits they realized from the trading in question, an administrative penalty would be an essential and appropriate aspect of a protective package of responsive sanctions. It is rationally connected to the objective, "the maintenance of high standards of fitness and business conduct to ensure honest and responsible conduct by market participants," and is a proportionate response in pursuit of that objective (R. v. Oakes, [1986] 1 S.C.R. 103).

[68] Capital markets are important to Canada's economic health and competitiveness, and Ontario represents an important part of the Canadian capital markets, with headquarters for close to 50% of public company issuers listed on the TSX. Failure to follow the rules causes significant harm to investors and the entire capital markets, including other market participants (See: Puri Affidavit at paras. 11, 14 and 29).

[69] Non-compliance with regulations negatively impacts investor confidence in the capital markets which may make investors less likely to trade (resulting in lower liquidity) and/or demand a higher return for their savings (resulting in a higher cost of capital). Non-compliance can also impair the price discovery process and result in inefficiencies in capital markets pricing. Non-compliance puts Ontario at a disadvantage in light of the global competition among jurisdictions for capital. (See: Puri Affidavit at para. 38)

[70] Both regulatory theory and the experience of financial regulators support the use of administrative monetary penalties as a compliance tool. Furthermore, regulatory theory and the experience of financial regulators indicate that an administrative penalty should be of a magnitude sufficient to ensure effective deterrence. Administrative monetary penalties attach a price or a quantifiable cost to non-compliance. They occupy a natural place in the middle of the range of enforcement tools that is short of incapacitate sanctions (such as license suspensions or cease trade orders) or prosecutions, but more serious than moral suasion and warning letters (See: Puri Affidavit at paras. 50-58).

[71] In the context of the capital markets, where licensed market participants engage in regulated economic activity involving enormous sums of money, and where market participants can realize gains of millions of dollars even on a single transaction by acting contrary to market rules, significant financial penalties are necessary in order to maintain compliance with regulations (for a discussion regarding the role of fines see: Wigglesworth, supra at para. 23; and Martineau v. M.N.R., [2004] 3 S.C.R. 737 at para. 60).

[72] LeBel J. of the Supreme Court of Canada in Cartaway stated:

In my view, nothing inherent in the Commission's public interest jurisdiction, as it was considered by this Court in Asbestos, supra, prevents the Commission from considering general deterrence in making an order. To the contrary, it is reasonable to view general deterrence as an appropriate, and perhaps necessary, consideration in making orders that are both protective and preventative. Ryan J.A. recognized this in her dissent: "The notion of general deterrence is neither punitive nor remedial. A penalty that is meant to generally deter is a penalty designed to discourage or hinder like behaviour in others" (para. 125).

The Oxford English Dictionary (2nd ed. 1989), vol. XII, defines "preventive" as "[t]hat anticipates in order to ward against; precautionary; that keeps from coming or taking place; that acts as a hindrance or obstacle". A penalty that is meant to deter generally is a penalty that is designed to keep an occurrence from happening; it discourages similar wrongdoing in others. In a word, a general deterrent is preventative. It is therefore reasonable to consider general deterrence as a factor, albeit not the only one, in imposing a sanction under s. 162. The respective importance of general deterrence as a factor will vary according to the breach of the Act and the circumstances of the person charged with breaching the Act.

It may well be that the regulation of market behaviour only works effectively when securities commissions impose ex post sanctions that deter forward-looking market participants from engaging in similar wrongdoing. That is a matter that falls squarely within the expertise of securities commissions, which have a special responsibility in protecting the public from being defrauded and preserving confidence in our capital markets.

(Cartaway, supra at paras. 60-62)

[73] Although a $1 million administrative penalty "is not likely to be a trivial amount" when imposed on individuals or small businesses, an insubstantial sanction would fail to meet the important legislative objective of encouraging compliance with securities laws aimed at protecting investors from unfair, improper or fraudulent practices and at fostering fair and efficient capital markets and confidence in those markets. Financial sanctions must be significant and not trivial in order to have their intended deterrent effect in the securities context. It is to be remembered that such administrative penalty may be applied not just to individuals and small businesses but also to very large and profitable firms, for whom a lower administrative penalty may indeed be trivial.

[74] An administrative monetary penalty may not act as a sufficient deterrent if its magnitude is inadequate compared with the benefit obtained by non-compliance. In some instances, even a $1 million administrative penalty may not act as a sufficient deterrent if the benefit of non-compliance exceeded $1 million or if the probability of detection was very low. As such, there is a need for regulatory sanctions to create economic incentives to foster compliance or alternatively, remove economic incentives for non-compliance. (See: Puri Affidavit at paras. 51-56).

[75] In that regard, a report for the UK Ministry of Justice on the system of regulatory sanctions referred to in the Puri Affidavit (the "Macrory Report"), stated:

...

A sanction should aim to eliminate any financial gain or benefit from non-compliance. Firms may calculate that by not complying with a regulation, they can make or save money. They may also take a chance and hope that they are not caught for failing to comply with their regulatory obligations or for deliberately breaking the law. Some firms may even believe that if they are caught, the financial penalties handed down by the courts will usually be relatively low and they will probably still retain some level of financial gain.

If, however, firms know that making money by breaking the law will not be tolerated and sanctions can be imposed that specifically target the financial benefits gained through non-compliance, then this can reduce the financial incentive for firms to engage in this type of behaviour. For firms that persist in operating this way, removing financial benefits will ensure that, in the future, the financial gains are not enough of an incentive to break the law. ...

(Professor Richard B. Macrory, Regulatory Justice: Making Sanctions Effective, Final Report, dated November 2006 at 2.11 [emphasis in original])

[76] In contrast to criminal law, which typically prohibits conduct outright, regulatory legislation like the Act typically makes participation in regulated economic activity (which is implicitly or explicitly encouraged) conditional on acceptance of prescribed standards or rules of conduct. Anyone who chooses to engage in regulated activity is fairly presumed to accept the conditions of participation, including administrative oversight by regulators, and sanctions to induce compliance. The Respondents have voluntarily engaged in a regulated sector of the economy with the expectation of financial gain, and should properly be subject to the "high standards of fitness and business conduct to ensure honest and responsible conduct by market participants" demanded by section 2.1(2) of the Act. Administrative monetary penalties for breaches of securities law under section 127(1)9 are an important means of maintaining these high standards of compliance with the rules of market conduct.

v. Conclusion

[77] We do not accept the Respondents' challenge to the Constitutional validity of the administrative penalty provision of the Act. We conclude that section 127(1)9 does not infringe the Charter nor its principles or values.

B. If the Provision Does not Infringe the Charter, is Staff Seeking to Impose an Administrative Penalty Retrospectively in this Case?

i. Respondents' Submissions

[78] The Respondents submit that even if we were to find the $1,000,000 administrative penalty not to be "punitive", it is nevertheless designed to penalize the Respondents and as such, cannot apply retroactively. They submit the Commission's findings relate to actions that occurred prior to the coming into effect of the Commission's power to impose administrative monetary penalties on April 7, 2003. The presumption against retrospectivity should apply, precluding the Commission from ordering the payment of an administrative penalty in this matter. They point out the basic principle that retrospective laws are, absent specific and exceptional circumstances, unfair. They point out that the Merits Decision found $900,000 in commission was generated as a result of trades in 2002; $1.4 million in 2003 and approximately $50,000 in 2004, whilst the administrative penalty did not come into force until April 7, 2003.

[79] The Respondents rely on Thow v. British Columbia (Securities Commission), [2009] B.C.J. No. 211 (B.C.C.A.) ("Thow"). At the time of Thow's misconduct the maximum administrative penalty that could be imposed by the British Columbia Securities Commission was $250,000. An administrative penalty of $6 million was imposed by the Commission. The Court of Appeal struck down the retroactive component of the Commission's decision.

ii. Staff's Submissions

[80] Staff submits that the issue of retrospectivity does not arise in this case. The majority of the Respondents' conduct occurred in the period after the power to impose an administrative penalty was granted to the Commission. Even if the issue did arise, an administrative penalty is designed to protect the public and not to punish.

[81] In particular, Staff submits that the Respondents' conduct spanned over 2002, 2003 and 2004. Staff points out that Rowan failed to file insider reports relating to thousands of trades carried out in the Trust Accounts in the period between January, 2002 and June 22, 2004.

[82] Staff submits that Thow is a case of total retrospective application of the statute. In that case all of the misconduct occurred between January 2003 and May 2005 and the British Columbia Securities Commission increased its administrative penalty from $250,000 to $1 million on May 18, 2006.

[83] Staff points out that in Alberta (Securities Commission) v. Brost (2007), ABASC 482 ("Brost ASC") the Alberta Securities Commission's ("ASC") power to impose an administrative penalty was increased from $100,000 to a $1 million maximum. The ASC concluded that it can impose the increased administrative penalty retrospectively because it is not punitive in its intent. Staff refers to paragraph 33 of this decision of ASC, which they say applies to the facts of this case:

It is not, in any event, clear to us that we need consider retrospectivity. The Strategic distributions continued after 8 June 2005 when the new, higher maximum administrative penalty took effect. Alternatives and the Strategic Respondents continued in their roles after that date. In respect of Brost, it is true that the Brost Interview, which took place in August 2004, was the compelling piece of evidence that proved Brost's misconduct and, indeed, the centrality of his role in what transpired. However, the date of the Brost Interview itself was not indicative of the timing of his misconduct; nor, as noted, did the scheme that he instigated end with the Brost Interview or before the administrative penalty maximum was increased. That continued misconduct followed the scheme devised earlier by Brost. Had Staff not intervened with the freeze order when they did, we believe that the misconduct likely would have continued even longer. It follows that applying the Act as it read after 8 June 2005 to the facts of this case is not a retrospective application.

(Brost ASC, supra at para. 33)

[84] Accordingly, Staff argues the ASC decision is applicable to this case. They say this is not like Thow, where a respondent ceased its activities prior to the coming into force of a provision increasing the maximum amount for an administrative penalty that can be ordered by a securities regulator. In this case, like Brost ASC, the Respondents continued to engage in conduct well after the time of the coming into force of a provision increasing the maximum amount for an administrative penalty. On that basis, Staff argues that this is not a retrospective application of section 127(1)9 of the Act.

iii. Analysis

[85] The issue of retrospectivity of legislation is a matter about which much has been written over the years. In 1989, Justice L'Heureux-Dubé in Brosseau v. Alberta (Securities Commission), [1989] 1 S.C.R. 301 at paragraph 44 wrote:

The basic rule of statutory interpretation, that laws should not be construed so as to have retrospective effect, was reiterated in the recent decision of this Court in Angus v. Sun Alliance Insurance Co., [1988] 2 S.C.R. 256. That case, however, dealt with the question of the retrospective effect of procedural versus substantive provisions. The present case presents a different facet of the problem of retrospectivity.

[86] She continues at paragraph 47 with an excerpt of Dickson J. in Gustavson Drilling (1964) Ltd. v. Minister of National Revenue, [1977] 1 S.C.R. 271, at page 279:

The general rule is that statutes are not to be construed as having retrospective operation unless such a construction is expressly or by necessary implication required by the language of the Act.

[87] At paragraph 55, Justice L'Heureux-Dubé concludes her decision as follows:

The provisions in question are designed to disqualify from trading in securities those persons whom the Commission finds to have committed acts which call into question their business integrity. This is a measure designed to protect the public, and it is in keeping with the general regulatory role of the Commission. Since the amendment at issue here is designed to protect the public, the presumption against the retrospective effect of statutes is effectively rebutted.

[88] In 2005, the Supreme Court of Canada in B.C. v. Imperial Tobacco Canada Ltd. [2005], 2 S.C.R. 473 Major J., speaking for the Court, wrote as follows at paragraph 69:

(1) Prospectivity in the Law

Except for criminal law, the retrospectivity and retroactivity of which is limited by s. 11(g) of the Charter, there is no requirement of legislative prospectivity embodied in the rule of law or in any provision of our Constitution. Professor P.W. Hogg sets out the state of the law accurately (in Constitutional Law of Canada (loose-leaf ed.), vol. 2, at p. 48-29):

Apart from s. 11(g), Canadian constitutional law contains no prohibition of retroactive (or ex post facto) laws. There is a presumption of statutory interpretation that a statute should not be given retroactive effect, but, if the retroactive effect is clearly expressed, then there is no room for interpretation and the statute is effective according to its terms. Retroactive statutes are in fact common.

[89] At paragraph 71 he continues:

The absence of a general requirement of legislative prospectivity exists despite the fact that retrospective and retroactive legislation can overturn settled expectations and is sometimes perceived as unjust: see E. Edinger, "Retrospectivity in Law" (1995), 29 U.B.C. L. Rev. 5, at p. 13. Those who perceive it as such can perhaps take comfort in the rules of statutory interpretation that require the legislature to indicate clearly any desired retroactive or retrospective effects. Such rules ensure that the legislature has turned its mind to such effects and "determined that the benefits of retroactivity [or retrospectivity] outweigh the potential for disruption or unfairness" ...

[90] In October 2008, the Alberta Court of Appeal released its decision in Brost C.A., supra. Although retrospective application of an increase of a potential administrative penalty was not the principal issue argued in that case, there was some reference (it appeared to be almost ancillary) made to retrospectivity by the Court. The totality of the decision relating to retrospectivity is to be found beginning at paragraph 56 and concluding at paragraph 57. These paragraphs read as follows:

The Commission held that the administrative penalty amendment that took effect on June 8, 2005 could be applied in this case. Prior to June 8, 2005, the maximum administrative penalty that could be imposed under the Act was $100,000; after June 8, 2005, it was $1 million. The Commission held that, because administrative penalties are not punitive, the presumption against retrospective application did not bar it from imposing administrative penalties greater than the maximum administrative penalty that was available prior to June 8, 2005...

The Commission was correct to conclude that the presumption against retrospective application did not apply in this case because administrative penalties under the Act are not punitive but are instead designed to protect the public: Brosseau v. Alberta Securities Commission ... Moreover, contrary to what Brost and Alternatives suggest, it is well settled that "[e]xcept for criminal law, the retrospectivity and retroactivity of which is limited by s. 11(g) of the Charter, there is no requirement of legislative prospectivity embodied in ... any provision of our Constitution:" British Columbia v. Imperial Tobacco Canada Ltd. ...

(Brost C.A., supra at paras. 56 and 57)

[91] Chronologically, the last case to which we wish to make reference to is Thow, supra, which was released on February 12, 2009. The British Columbia Securities Commission imposed an administrative penalty of $6 million on Mr. Thow. His contraventions occurred at a time when the maximum administrative penalty was $250,000. Almost a year after the contraventions, in May 2006, legislation was enacted authorizing an increase in the maximum administrative penalty from $250,000 to $1 million for each contravention. In 2007, the British Columbia Securities Commission imposed the $6 million administrative penalty. The British Columbia Court of Appeal at paragraph 10 noted the quote from Elizabeth Edinger in "Retrospectivity in Law" (1995), 19 U.B.C.L.R. 5 at 12:

The common theme of judges and scholars throughout the centuries has been that retrospective laws are unfair or unjust.

[92] In Thow, the Court wrote at paragraphs 37, 38, 47 and 49, respectively:

Despite the similarity in the language used in the three decisions [Brosseau, Asbestos and Cartaway], it must be recognized that the issues in the cases were somewhat different. Brosseau, like the present case, concerned the retroactive application of statutory amendments. In contrast, Asbestos and Cartaway were concerned with the scope of considerations that a securities commission can take into account in imposing a sanction.

...

Asbestos and Cartaway establish that securities commissions, not being criminal courts, may not impose penalties that are "punitive" in the sense of being designed to punish an offender for past transgressions. They may, however, impose penalties that place burdens (even very heavy burdens) on offenders, as long as the penalties are designed to encourage compliance with regulations in the future. In essence, penalties may be directed at general or specific deterrence and at protection of the public; penalties that are purely retributive or denunciatory, however, are not appropriately imposed by administrative tribunals.

...

The concept of "punishment" is an elastic one, and its meaning must be taken in context. In Cartaway and Asbestos, the Supreme Court of Canada used the concept to describe those penalties imposed on an offender to mark moral disapprobation of his or her conduct. In Brosseau, in contrast, I believe that the Court used the word "punish" in a broader context, to describe all sanctions imposed for the purpose of penalizing an offender. On the other hand, penalties imposed solely for the purpose of protecting society from the offender in the future, were not considered "punishment", even if they had the effect of placing burdens on the offender. [emphasis in the original]

...

Here, the Commission's imposition of the fine was arguably not "punitive" in the narrow sense of the word; that is, it may not have been imposed as a punishment for Mr. Thow's moral failings, and it may not have been motivated by a desire for retribution, or to denounce his conduct. Nonetheless, it was "punitive" in the broad sense of the word; it was designed to penalize Mr. Thow and to deter others from similar conduct. It was not merely a prophylactic measure designed to limit or eliminate the risk that Mr. Thow might pose in the future.

[93] The Court found that the new increased administrative penalty did not apply and the administrative penalty was reduced to the maximum permitted at the time the infractions occurred.

[94] We agree with and prefer to follow the reasoning and rationale of the British Columbia Court of Appeal in Thow, although we would emphasize that the imposition of a fine is a penalty and would downplay the use of the word punitive even though it is used in a limited sense in that decision. The law as developed by the Supreme Court of Canada cases, and followed in Thow, is that ongoing constraints or prohibitions may be applied retrospectively but penalty provisions, particularly monetary penalties, should not to be applied retrospectively.

[95] As a result, we therefore conclude that any administrative penalty to be imposed on the Respondents in this matter must relate only to the conduct that occurred after April 7, 2003.

[96] From the information before us it appears that Rowan failed to report more than 7,410 transactions involving 37,305,278 shares of Biovail, of which 3,690 transactions involving 19.402,118 shares of Biovail (52%) occurred after April 7, 2003. Although the imposition of an administrative penalty is not a mathematical exercise, we nevertheless conclude that any administrative penalty imposed should be approximately 52% of the administrative penalty we would have imposed had all of the transgressions (shares traded) occurred subsequent to April 7, 2003. In the result, therefore, any administrative penalty imposed upon the parties will be 52% of what we would otherwise deem to be an appropriate penalty.

iv. Conclusion

[97] In the circumstances of this case, we find that it is appropriate to make a prospective order that is both protective and preventative in nature to better protect the capital markets. We believe that the sanctions imposed which are set out below, are sufficient both to respond to the specific misconduct and to send a message to other market participants about the importance of fulfilling their statutory duties.

C. What are the Appropriate Sanctions in this Case?

i. The Law

[98] The Commission's mandate as set out at section 1.1 of the Act is: (i) to provide protection to investors from unfair, improper or fraudulent practices; and (ii) to foster fair and efficient capital markets and confidence in capital markets.

[99] The primary means for achieving the purposes of the Act as set out at paragraph 2 of section 2.1 are:

i) requirements for timely, accurate and efficient disclosure of information,

ii) restrictions on fraudulent and unfair market practices and procedures, and

iii) requirements for the maintenance of high standards of fitness and business conduct to ensure honest and responsible conduct by market participants.

[100] In exercising its public interest jurisdiction, the Commission must act in a protective and preventative manner. The role of the Commission is to impose sanctions that will protect investors and the capital markets from exposure to similar conduct in the future. As stated by the Commission in Re Mithras Management Ltd.:

... [u]nder sections 26, 123 and 124 of the Act, the role of this Commission is to protect the public interest by removing from the capital markets -- wholly or partially, permanently or temporarily, as the circumstances may warrant -- those whose conduct in the past leads us to conclude that their conduct in the future may well be detrimental to the integrity of those capital markets. We are not here to punish past conduct; that is the role of the courts, particularly under section 118 [now 122] of the Act. We are here to restrain, as best we can, future conduct that is likely to be prejudicial to the public interest in having capital markets that are both fair and efficient. In so doing we must, of necessity, look to past conduct as a guide to what we believe a person's future conduct might reasonably be expected to be; we are not prescient, after all.

(Re Mithras Management Ltd. (1990), 13 O.S.C.B. 1600 at 1610-1611).

[101] The Supreme Court of Canada in Committee for the Equal Treatment of Asbestos Minority Shareholders v. Ontario (Securities Commission), [2001] 2 S.C.R. 132 ("Asbestos") commented on the Commission's public interest jurisdiction. The Court described it, in part, as follows:

... "[t]he purpose of the Commission's public interest jurisdiction is neither remedial nor punitive; it is protective and preventive, intended to be exercised to prevent likely future harm to Ontario's capital markets". ...

... The role of the OSC under s. 127 is to protect the public interest by removing from the capital markets those whose past conduct is so abusive as to warrant apprehension of future conduct detrimental to the integrity of the capital markets ...

In summary, pursuant to s. 127(1), the OSC has the jurisdiction and a broad discretion to intervene in Ontario capital markets if it is in the public interest to do so. However, the discretion to act in the public interest is not unlimited. In exercising its discretion, the OSC should consider the protection of investors and the efficiency of, and public confidence in, capital markets generally. In addition, s. 127(1) is a regulatory provision. The sanctions under the section are preventive in nature and prospective in orientation. ...

(Asbestos, supra at paras. 42-43 and 45)

[102] In addition, the Commission should consider general deterrence as an important factor when determining appropriate sanctions. In Cartaway, the Supreme Court of Canada stated that "... it is reasonable to view general deterrence as an appropriate, and perhaps necessary, consideration in making orders that are both protective and preventative" (at para. 60).

[103] In determining the appropriate sanctions in this matter, we must ensure that the sanctions imposed are proportionate to the conduct of the Respondents (Re M.C.J.C. Holdings Inc. and Michael Cowpland, (2002), 25 O.S.C.B. 1133 ("Re M.C.J.C. Holdings") at 1136).

[104] The Commission has previously identified the following as some of the factors that it should be considering when imposing sanctions:

(a) the seriousness of the conduct and the breaches of the Act;

(b) the respondent's experience in the marketplace;

(c) the level of a respondent's activity in the marketplace;

(d) whether or not there has been recognition by a respondent of the seriousness of the improprieties;

(e) whether or not the sanctions imposed may serve to deter not only those involved in the matter being considered, but any like-minded people, from engaging in similar abuses of the capital markets;

(f) the size of any profit obtained or loss avoided from the illegal conduct;

(g) the size of any financial sanction or voluntary payment;

(h) the effect any sanctions may have on the ability of a respondent to participate without check in the capital markets;

(i) the reputation and prestige of the respondent;

(j) the effect any sanction might have on the livelihood of the respondent;

(k) the shame, or financial pain, that any sanction would reasonably cause to the respondent;

(l) the remorse of the respondent; and

(m) any mitigating factors.

(See: Re Belteco Holdings Inc. (1998), 21 O.S.C.B. 7743 at 7746; and Re M.C.J.C. Holdings, supra at 1136).

[105] The Commission did point out, however, that these were only some of the factors that might be considered, observing that "there may be others, and perhaps all of the factors we have mentioned may not be relevant in this or another particular case" (Re M.C.J.C. Holdings, supra at 1136).

[106] The Commission has also affirmed that sanctions should be fair and proportional to the sanctions imposed on others who were participants in the same matter (Re Belteco Holdings, supra at 7747; Cartaway, supra at 69).

[107] The sanctions imposed must be sufficient both to respond to the specific misconduct of the Respondent(s) and to send a message to other registrants about the importance of fulfilling their statutory duties.

ii. Rowan

a. Staff's Submissions

[108] Staff argues that Rowan's violations of the Act were serious. Staff points out that the Hearing Panel found in its Merits Decision that Rowan:

i. "repeatedly breached" section 107 of the Act by failing to file insider reports disclosing the trades in Biovail securities that he conducted in the Trust Accounts;

ii. failed to disclose to Biovail and the investing public through the 2002, 2003 and 2004 Management Information Circulars, the true extent of the Biovail securities over which he had control or direction in the Trust Accounts; and

iii. engaged in a "high volume" of discretionary trading in Biovail securities in the Trust Accounts during Biovail's blackout periods in 2002 and 2003.

(See: Merits Decision, supra at paras. 107, 108 128, 129 and 158)

Insider Reporting Violations

[109] With respect to the insider reporting violations, Staff submits that the scale of the violations at issue is an important consideration. In the present matter, Rowan failed to report 7,410 trades involving in excess of 37 million shares of Biovail during the period between January 1, 2002 and December 31, 2004.

[110] The evidence showed that of these trades, 3,690 transactions (involving over 19 million Biovail shares) occurred in the period after the Commission was granted the ability to impose an administrative penalty of up to $1,000,000 per violation of Ontario securities law, which became effective April 6, 2003.

[111] Staff submits that the sheer scale of the trading engaged in by Rowan while he was a director of Biovail and a member of its Audit Committee and for which no insider reports were filed is an aggravating feature in this case.

[112] Staff refers us to a number of cases involving, amongst other misconduct, the failure to file insider reports that have been determined by the Commission: Re Meridian Resources Inc. (2003), 26 O.S.C.B. 3727; Re Riley (1999), 22 O.S.C.B. 3549; Re Robinson (1996), 19 O.S.C.B. 2643 and 19 O.S.C.B. 3609); and a number of settlement agreements involving such failures: Re Melnyk (2007), 30 O.S.C.B. 5253 ("Melnyk Settlement Reasons"); Re DXStorm. Com Inc. (2007), 30 O.S.C.B. 4731; Re Hinke (2006), 29 O.S.C.B. 3769; Re Freeman (2006), 29 O.S.C.B. 2091; Re Cheung (2005), 28 O.S.C.B. 4685;Re Crabbe Huson Group Inc. (1999), 22 O.S.C.B. 4967; Re Shefsky (1999), 22 O.S.C.B. 3520). We have considered these cases below in our analysis.

[113] However, Staff further points out that none of these past cases addresses serious violations such as those committed by Rowan. They also point out that generally, these cases involved less than a hundred insider reporting violations; in some cases, dealing with settlements, the insiders had already taken steps to address their reporting violations.

[114] In addition, none of the previous decisions and settlements involved respondents who were registrants as well as corporate insiders. If anything, Staff submits that the circumstances of this case are more egregious as Rowan was a capital market professional and was expected to be knowledgeable about securities law obligations. According to Staff, a registrant should be presumed to have a higher level of awareness of the insider reporting regime and its importance to the capital markets. Rowan's failures are therefore significantly more serious than those previously considered.

[115] With respect to Rowan's failure to provide accurate and complete information to Biovail, Staff points out that the parties agreed, and the Hearing Panel found, that Rowan had disclosed his control over the Biovail shares contained in the Conset Account but not the shares contained in the Congor or Southridge Accounts. The information that Rowan provided to Biovail was in turn disclosed to the investing public through Biovail's Management Information Circulars in 2002, 2003, and 2004. The Hearing Panel found that Rowan had failed to disclose his control over between 3 and 4 million Biovail shares in each of these years to the general public.

[116] In Staff's view, the concealment of such a significant block of shares from the investing public, particularly when conducted by an experienced registrant in Rowan's position, can have significant consequences for public confidence in the integrity of Ontario's capital markets and this can be viewed as an aggravating feature concerning the conduct by Rowan.

Trading During Blackout Periods

[117] Staff points out that the Hearing Panel found in its decision at paragraphs 156, 157 and 158 that Rowan had engaged in a "high volume of discretionary trading" in Biovail shares in the Trust Accounts during Biovail blackout periods in 2002 and 2003.

[118] Staff also points out that the Commission has previously recognized the importance of adherence by directors and other insiders to corporate blackout periods (Melnyk Settlement Reasons, supra at para. 31).

[119] Staff submits that the extensive trading by Rowan during Biovail blackout periods is certainly an aggravating feature of his conduct. In Staff's view, if Rowan's trading had not been concealed, questions would have been asked by analysts and investors. In Staff's opinion, in face of public scrutiny, the trading would have come to a halt.

Rowan's Handling of the Southridge Account

[120] Finally, in reviewing Rowan's trading in the Southridge Account, and in particular his failure to properly document his client's instructions and the extent of his authority over the account, Staff points out that the Hearing Panel stressed that the importance of proper handling of discretionary trading accounts is amongst the most fundamental obligations of a registrant. In Staff's submissions, Rowan's failures with regard to this account were significant and reveal a troubling lax attitude towards his fundamental duties as a registrant.

Profits Resulting from Illegal Conduct

[121] Further, Staff submits that we should be mindful of the fact that the Hearing Panel found that Watt Carmichael earned a total of approximately $2,350,000 in commissions from trading in the Trust Accounts during the period from 2002 to 2004. Rowan owned approximately 29% of the shares of Watt Carmichael as at December 31, 2005. Staff submits that the proceeds of these trades, together with their distribution, provide a useful reference point for sanctions, particularly when determining the appropriateness and quantum of an administrative penalty.

b. Respondents' Submissions

[122] Counsel for the Respondents submits that the sanctions sought are not reasonable in light of the findings made by the Hearing Panel, and in particular when considering that the most serious allegations against Rowan have been dismissed by the Hearing Panel.

[123] Counsel acknowledges that Rowan has been found to have breached sections 107 and 127 of the Act in failing, as a director of Biovail, to file insider reports, in failing to provide complete and accurate information to Biovail for its information circulars, and in trading during the Biovail blackout periods. He submits that most of the facts underlying these findings were admitted in the Agreed Statement of Facts or not disputed at the hearing.

[124] Counsel submits that all of the findings against the other respondents arise from the unique and never to be repeated "concatenation" of Rowan's simultaneous role as an insider of a publicly traded company and as a registrant with a episodic discretionary trading authority. Rowan resigned as a director of Biovail in 2005. There has been no director of a publicly traded company at Watt Carmichael since his resignation. Watt Carmichael is prepared to undertake that none of its registrants will ever be officers or directors of publicly traded companies. Accordingly, these events that caused the findings against the Respondents will not be repeated.

[125] According to counsel, the sanctions sought against Rowan are vindictive. Counsel submits that Rowan has lost much of his business as a result of the allegations of insider trading and misleading the Commission. In the circumstances, he would have no prospect of re-entering the business at this stage of his career after any period of suspension, much less a two year suspension.

[126] Counsel submits that there is no risk of future harm by Rowan as he has been working in the industry for over thirty years since 1977, and has never been the subject of disciplinary proceedings. The events that give rise to the findings against Rowan occurred between five and seven years ago, in the period between 2002 and 2004.

[127] Further, counsel refers us to mitigating factors that we should be considering when making our decision on sanctions. Counsel emphasizes that all of the findings against Rowan relate to trading in shares in the Trust Accounts. None of the findings against Rowan arise in respect of trades of Biovail shares owned by him and that his shares were fully disclosed in the Biovail information circulars. When he traded his shares, Rowan filed insider reports. Rowan also observed Biovail blackout periods when trading his own Biovail shares.

[128] Counsel also filed character and personal references in the form of letters from various individuals for Rowan.

[129] Counsel submits that Rowan's dual role as a director of Biovail and as registered representative trading in Biovail was disclosed to the regulatory authorities at all times. Counsel states that the IDA knew that Rowan was a Biovail director, that he was the adviser in respect of the Congor and Conset accounts, that the Congor and Conset accounts traded heavily in Biovail before and after Rowan became a Biovail director.

[130] Counsel further points out that there was a lack of guidance from regulatory authorities respecting the obligations of a registered representative who trades clients' securities while being an insider of a publicly traded company. Rowan was candid about the facts that he treated shares held in the client trust accounts differently than those which he personally owned. Further, there was no dispute that Rowan traded Biovail securities held in the Trust Accounts during the Biovail blackout periods.

[131] Counsel submits that Rowan was mistaken as to the manner in which he was required to trade and report on Biovail trades in discretionary client accounts and that it cannot be repeated. Counsel submits that the only two factors that Staff cites in support of the harsh administrative penalty are the high volume of trading in Biovail and the fact that Rowan is a registered representative. Neither factor supports the administrative penalty sought by Staff nor suggests deliberate conduct.

[132] Counsel submits that consideration of the factors stated in Re M.C.J.C. Holdings highlights the fact that the remedy sought by Staff is inappropriate as:

(a) there was no profit made from the illegal conduct. It is Rowan's status as a director, which gave rise to the regulatory failures in this case. Rowan would have earned the same commissions if he were not a Biovail director, or if he had filed insider reports;

(b) the sanctions sought by the Commission would completely eviscerate the ability of Rowan to make a living. It is not reasonable to expect that Rowan could retain clients over one or two years while his registration is suspended;

(c) the enormous financial penalty sought of between $750,000 and $1,000,000 is draconian and seems to be targeted at bankrupting Rowan;

(d) there can be no realistic concern about Rowan participating in the capital markets "unchecked" in light of the fact that Rowan has done precisely this over the past three years without incident and the fact that the circumstances that gave rise to the regulatory breach in this case no longer exist;

(e) until these incidents, Rowan's reputation was unblemished. Neither he nor Watt Carmichael has ever been the subject of any regulatory proceeding;

(f) Rowan has already suffered tremendously as a result of the serious allegations levelled against him. The degree of shame and financial damage are already proportionate to the findings against him; and

(g) Rowan regrets not having taken definitive measures to clarify his reporting and trading obligations in the unique circumstances.

[133] Further, counsel submits that the cases referred to by Staff are of no assistance as respondents in those cases have either admitted to failing to meet insider reports obligations or have been convicted of the same. For instance, in the Melnyk Settlement Reasons the respondent was found not only to have failed to file insider reports but also to have misled the IDA, one of the allegations that was dismissed against Rowan. In Re Hinke, the respondent failed to file insider reports despite that he was required to do so by the terms of a settlement agreement and he had been advised by Staff of his obligation to file insider reports. They also refer to the recent case of Re Wells Fargo Financial Corp., (2005), 28 O.S.C.B. 1791 ("Wells Fargo") where the Commission made the following statements, which although arising in a different context, are apposite in the present case:

We've considered the various factors that have been listed in the cases to take into account in applying sanctions generally. But we believe, when it comes to deterrence and an administrative penalty, it is important to address factors such as wilfulness, negligence, carelessness, warnings that may have been issued, repeated violations, and also to look at the actual practice of Commission staff in the past in pursuing violations of the nature before us.

While precedent, where available, may be helpful in setting sanctions, precedent is not necessary or determinative in any case. This is because the various factors we have to take into account will rarely be identical in each case. Sanctions must be tailored to the facts. This is almost self-evident when it comes to specially tailored orders such as a cease trading order, but it is equally applicable in applying monetary sanctions, in the form of administrative penalties, which are not meant to be penal or remedial, but are meant to be protective and preventive.

The case before us is novel. It's the first one for an administrative penalty. It also represents a departure, in the sense that staff have indicated to us, and by their action today have shown, that they intend in the future to vigorously enforce late filings to the extent they haven't in the past.

Therefore, this case is a signal to the marketplace of the increased vigilance on the part of staff and the danger to market participants in failing to comply with these technical, but necessary, requirements of our law.

We note that the offences today are a first offence on the part of Wells Fargo. We also note that there is a certain shame factor. We are aware that the first time that a violation of a particular nature is enforced, perhaps it would be unjust to come forth with a huge administrative penalty, and, therefore, although $20,000 as the agreed amount appears on the light side, we think it is appropriate in this particular case.

The street should not take this as a precedent and the indication of a scale that might be applied in the future. The warning signal has been given. Let the street take note.

(Wells Fargo, supra at paras. 25-30 [emphasis added])

[134] Counsel submits that the circumstances of this case are analogous to the circumstances giving rise to the reasoning in Wells Fargo, as: there were no warnings issued in this case despite that the trading was known to the IDA; this is a first offence for Rowan; Rowan has endured not only the "shame" of being associated with very serious allegations such as insider trading, but has had to deal also with the harm to his business; this case is novel and arises from unique facts; this is the first case where the Commission has informed the marketplace that registered representatives must report personally for client accounts over which they have discretionary trading authority.

[135] Rowan also described, during his testimony, the impact of the proceeding on him. He indicated that the proceeding has been very harmful to him and exceedingly embarrassing both personally and professionally. He also mentioned that shortly after the initial public disclosure of the proceeding, some significant accounts that he managed left the firm, which would have produced at least $100,000 to $150,000 of gross revenues to the firm. He also mentioned that Biovail, which had been covering his legal fees until January 2008, is now seeking to recover from him the legal fees previously paid on his behalf. Finally, he testified that the sanctions sought by Staff, if ordered, would have a devastating impact on him, as his principal assets are his house and his ownership in Watt Carmichael.

[136] Counsel submits that the appropriate sanction against Rowan is a reprimand and a prohibition on Rowan to become a director of a reporting issuer, as this sanction is connected to the breaches at issue, all of which arise due to Rowan's former status as a Biovail insider. Counsel submits that the sanctions sought, other than the administrative penalty, are not sufficiently connected to the harm at issue to fall within the Commission's public interest jurisdiction. Further, the administrative penalty sought is completely disproportionate to the findings against Rowan.

c. Analysis

Rowan's Insider Reporting Violations

[137] As stated above, the Hearing Panel found that Rowan breached section 107 of the Act by failing to file insider reports disclosing the trades in Biovail shares that he conducted in the Trust Accounts:

... Rowan, as an insider of Biovail by virtue of his role as a director of Biovail, was required to file insider reports with respect to trades of Biovail securities in the Trust Accounts in accordance with subsection 107(2) of the Act.

(Merits Decision, supra at para. 107).

[138] The Hearing Panel also stressed that the requirement to file insider reports set out in section 107 of the Act serves two purposes:

(a) a deterrent purpose: insiders are less likely to engage in improper trading if such trading is subject to public scrutiny. Insider reporting allows the market and securities regulatory authorities to monitor insider transactions and take action if improper trading is identified; and

(b) a signaling purpose: investors are provided with information concerning the trading activities of insiders, and, by inference, the insiders' views concerning the prospects of the issuer, thereby enhancing market efficiency.

(Merits Decision, supra at para. 78, citing Report of the Attorney General's Committee on Securities Legislation in Ontario (the "Kimber Report"), Toronto: Queen's Printer, 1965), paras. 2.02 -- 2.05)

[139] The Hearing Panel acknowledged that "timely, accurate and efficient disclosure of information" is one of the primary means of achieving the purposes of the Act (Merits Decision, supra at para. 79). The Hearing Panel affirmed that the insider reporting requirements have an integral role to play in fulfilling this objective. Citing previous Commission jurisprudence regarding section 107 of the Act, it observed that:

[t]hese requirements are intended to discourage trading with knowledge of material undisclosed information, and enhance investor confidence in the securities market. Additionally, the reports have been of use to market participants as an indicator of perceptions that insiders have about issuers and their prospects.

(Merits Decision, supra at para. 81, citing Notice and Request for Comments on Proposed Refinement of the Early Warning Regime and the Rules Regarding Insider Reporting, Takeover Bids and Control Block Distributions as they Apply to Investors in General, Including Portfolio Managers and Portfolio Clients (1994), 17 O.S.C.B. 4438, quoted in Re Robinson, supra at para. 252)

[140] Indeed, the Commission has previously stated that it "considers a failure to comply with the reporting requirements of the Act respecting insider trading [to be] a serious breach of the Act" and a "failure to meet these obligations should result in serious consequences" (Re Cheung, supra at para. 18 [emphasis added]).

[141] Rowan failed to report a large number of trades involving shares of Biovail during the period between January 1, 2002 and December 31, 2004. Of these trades, it should be noted that a significant portion of the transactions occurred in the period after the Commission was granted the ability to impose an administrative penalty of up to $1,000,000 for each failure to comply with Ontario securities law.

[142] The Commission has previously considered a number of cases involving, amongst other misconduct, the failure to file insider reports (Re Meridian Resources Inc., supra; Re Riley, supra; and Re Robinson, supra).

[143] The Commission has also approved a number of settlement agreements involving such failures (See: Melnyk Settlement Reasons, supra; Re DXStorm. Com Inc., supra; Re Hinke, supra; Re Freeman, supra; Re Cheung, supra; Re Crabbe Huson Group Inc., supra; Re Shefsky, supra).

[144] In the present case, the Hearing Panel took note of the "significant volume and frequency of trading" of Biovail shares in Trust Accounts, and thus, found that Rowan repeatedly breached the insider reporting requirements of section 107 of the Act (Merits Decision, supra at para. 108).

[145] As a registrant, the President of a registered broker and investment dealer, and a director and member of an audit committee of a reporting issuer, Rowan was expected to have a higher level of awareness of the insider reporting regime and its importance to the capital markets. Rowan's breaches of Ontario securities law are therefore significantly more serious than those previously considered.

The Failure to Make Complete and Accurate Disclosure to Biovail

[146] In the present case, the parties agreed and the Hearing Panel found that Rowan had disclosed his control over the Biovail shares contained in the Conset Account but not the shares contained in the Congor or Southridge Accounts. The information that Rowan provided to Biovail was in turn disclosed to the investing public including Biovail shareholders through Biovail's Management Information Circulars in 2002, 2003 and 2004.

[147] The Hearing Panel therefore found that Rowan had failed to disclose in Biovail's Management Information Circulars, which are provided to Biovail shareholders and others, between 3,000,000 and 4,000,000 Biovail shares over which he exercised or shared control in each of the three years. (See: Merits Decision, supra at para. 33). As the Hearing Panel observed:

... It is incumbent on a director of a reporting issuer, through the filing of insider reports or otherwise, to ensure that the issuer has accurate, current information as to the director's ownership of or control or direction over securities of the issuer so as to enable the issuer to properly discharge its reporting obligations and failure by a director to do so, is, in our opinion, contrary to the public interest.

(Merits Decision, supra at para. 127)

[148] Further, the Hearing Panel found that Rowan failed to disclose to Biovail and to the investing public the true extent of the Biovail shares in the Trust Accounts over which he exercised or shared control or direction:

We find that Rowan's failure to report the Biovail holdings in the Congor and Southridge Accounts caused the disclosure contained in Management Information Circulars for 2002, 2003 and 2004 to be misleading or untrue or caused them to not state a fact that was required to be stated or that was necessary to make the statements in the circulars not misleading.

The disclosure of only the securities in the Conset Trust in the Management Information Circular, plus the clear instructions on Form 30 to include the number of each class of voting securities of the issuer over which control or direction is exercised by the proposed director, should, at a minimum, have triggered further inquiries on the part of Rowan with regard to his obligation to disclose his holdings in the Congor and Southridge Accounts. But there is no convincing evidence that Rowan made such inquiries or consulted with legal counsel specifically about his responsibility to make such disclosure. ...

(Merits Decision, supra at paras. 125-126).

[149] We note that, in approving the Melnyk Settlement, the Commission made the following observations regarding the harm caused to the investing public as a result of disclosure violations of insider trading information:

... Our insider reporting rules, and other requirements related to disclosure by insiders of their share ownership, are important elements of our securities law regime and disclosure of insider trading information is considered by many market participants to influence their own investment decisions. We do not discount the impact that public knowledge of the trading by the Trusts might have had on investment decisions made by investors and other shareholders of Biovail.

(Melnyk Settlement Reasons, supra at para. 26)

[150] The failure to disclose such a significant block of shares to the investing public, particularly when done by an experienced registrant like Rowan is highly reprehensible. Such a failure can have significant consequences for public confidence in the integrity of Ontario's capital markets.

The Blackout Period Allegations

[151] The Hearing Panel found that Rowan engaged in a "high volume" of discretionary trading in the Biovail shares contained in the Trust Accounts during Biovail's blackout periods in 2002 and 2003. At all material times, Biovail had a clear and detailed policy concerning insider reporting and trading blackout periods. In the circumstances, Rowan's conduct was abusive of the integrity of the capital markets of Ontario, and contrary to the public interest.

[152] And as the Hearing Panel confirmed:

[c]ompanies generally impose blackout periods on management and other insiders because of the increased risk posed by insiders having access to material undisclosed information during such periods. Blackout periods have played an important role in maintaining confidence in the capital markets for a considerable period of time.

(Merits Decision, supra at para. 142)

[153] The Commission has previously recognized the importance of adherence by directors and other insiders to corporate blackout periods. In the Melnyk Settlement Reasons the Commission wrote:

[c]orporate black-out policies form an important element of securities law compliance by public companies and their insiders. There should be a heavy onus on any insider who trades, or recommends trading, during a black-out period to demonstrate that he or she did so without knowledge of any material fact or material change. ...

(Melnyk Settlement Reasons, supra at para. 31).

[154] The Hearing Panel found that Rowan had engaged in a "high volume" of discretionary trading in Biovail shares in the Trust Accounts during Biovail's blackout periods in 2002 and 2003. Specifically, it concluded that:

... in 2002 ... there were acquisitions in excess of 2.5 million Biovail common shares at a cost of approximately U.S. $110 million, and dispositions in excess of 2 million Biovail common shares for proceeds of approximately U.S. $100 million during the 2002 Biovail Blackout Periods.

In 2003 ... there were acquisitions in excess of 2.5 million Biovail common shares at a cost of approximately US$90 million and in excess of 2.8 million Biovail common shares were sold for proceeds of approximately US $100 million. Further, more than 11,000 Biovail call options were acquired at a cost of approximately US$4 million ...

(Merits Decision, supra at paras. 156-157)

[155] As a result, the Hearing Panel said:

We find there is ample evidence that Rowan engaged in a high volume of discretionary trading in Biovail securities in the Trust Accounts during the Biovail Blackout Periods in 2002 and 2003.

We do not agree with the Respondents that blackout periods are simply a matter between the issuer and its insiders. Issuers establish blackout periods to ensure there will be no trading in the corporation's securities by persons who have access to undisclosed material information until that information has been disclosed to the market and sufficient time has elapsed to permit its evaluation. In this case, Rowan was an insider of Biovail and should have respected the Biovail Blackout Periods.

... Rowan's conduct fell below the standards applicable to a registrant who is both in a senior position at a registered broker and investment dealer and director of a reporter issuer and a member of its Audit Committee. We find that, in the circumstances of this case, Rowan's conduct was abusive of the integrity of the capital markets of Ontario and contrary to the public interest.

(Merits Decision, supra at paras. 158-160).

[156] The ASC has previously considered a case in which a director of a reporting issuer has traded in securities of the issuer in contravention of a blackout period (Re Armstrong, [2004] A.S.C.D. No. 1489). This case, however, did not involve trading as extensive as that conducted by Rowan or in a reporting issuer with the market capitalization and prominence of Biovail.

Proportionality of Sanctions

[157] Watt Carmichael earned a total of approximately $2,350,000 in commissions from trading in the Trust Accounts during the period from 2002 to 2004. Rowan owned approximately 29% of the shares of Watt Carmichael as at December 31, 2005. He was also "the registered representative at Watt Carmichael for the Conset, Congor and Southridge Accounts ..." (Merits Decision, supra at para. 5). In this case, Staff submits the proceeds of these trades, together with their distribution, provide a useful reference point for sanctions, particularly when determining the appropriateness and quantum of an administrative penalty. However, while the proceeds may provide a useful reference point with respect to sanctions generally, section 127(1)9 provides the Commission with the power to impose an administrative penalty of not more than $1 million for each failure to comply with Ontario securities law. The Panel when determining the appropriate quantum of an administrative penalty must consider all relevant factors to ensure that the penalty meets the regulatory objective of general and specific deterrence as mandated by section 127(1)9 of the Act.

[158] Similarly, it is relevant to note the sanctions imposed on Melnyk as part of a resolution of related allegations. In a Settlement Agreement resolving the allegations against him, Melnyk agreed to the following sanctions:

• to pay an administrative penalty to the Commission in the amount of $750,000.00, to be allocated by the Commission to or for the benefit of third parties pursuant to section 3.4(2)(b) of the Act;

• to be prohibited from acting as a director of Biovail for a period of one year beginning June 30, 2007;

• to be reprimanded; and

• to pay to the Commission $250,000.00 representing a portion of the costs of the Commission's investigation in relation to this proceeding.

(Melnyk Settlement Reasons, supra at para. 33)

d. Conclusion

[159] Unlike in Wells Fargo where Wells Fargo Financial Canada Corporation, a public issuer in Ontario, engaged in a straightforward conduct which did not require extensive investigations, that is the failure to file financial information on a timely basis, the conduct of the Respondents in this case required an extensive investigation in connection with numerous serious allegations. This is not the only difference of course, but this is one that deserves highlighting at the outset. In Wells Fargo, the public issuer failed, on four occasions between February 2003 and October 2004, to file prospectus supplements on time as required by part 8 of Canadian Securities Administrators National Instrument 44-102 for shelf prospectus distributions of medium-term notes.

[160] The Panel in Wells Fargo considered the fact that this was the first time that a violation of that particular nature was enforced as a factor militating in favour of not imposing a huge administrative penalty. In its oral reasons, the Panel stated: "[t]he street should not take this as a precedent and the indication of a scale that might be applied in the future. The warning signal has been given. Let the street take note" (Wells Fargo, supra at para. 30). Although the Respondents argue that the same rationale should apply when considering sanctions against them, we do not agree. In particular, with respect to Rowan, we stress that his conduct was egregious and involved several violations of the Act that occurred on a repeated basis over an extended period of time.

[161] Rowan failed to comply with Ontario securities law by: breaching section 107 of the Act by failing to file insider reports in respect of trades in Biovail securities that he executed in the Trust Accounts; engaging in conduct contrary to the public interest by failing to provide complete and accurate information to Biovail concerning the number of Biovail common shares held in the Trust Accounts over which he exercised or shared control or direction; and engaging in conduct contrary to the public interest by trading in Biovail securities in the Trust Accounts during Biovail's Blackout Periods. Further, the Hearing Panel found that Rowan's conduct was contrary to the public interest.

[162] We also note that Rowan's testimony about the harm to himself and his firm as a result of the proceeding, were not substantiated by any financial record or documentary evidence. This is despite Staff's earlier request for particulars and documents supporting the claim about of any harm to his business.

[163] The 'character' and personal letters filed on Rowan's behalf, whilst impressive, do not excuse his egregious conduct.

[164] In light of the circumstances of this case, Rowan's conduct fell well below the standards applicable to both a registrant who was also the President of a registered broker and investment dealer and an insider who was a director of a reporting issuer and a member of its Audit Committee. In the circumstances, Rowan's conduct was abusive of the integrity of the capital markets of Ontario and contrary to the public interest.

[165] We consider these breaches to be serious when considered individually and collectively. Further, these were repeated failures to comply with Ontario securities law over an extended period spanning from 2002-2004. Section 127(1)9 of the Act provides for a maximum administrative penalty of $1 million for each failure to comply with Ontario securities law. We are mindful, however, that we must consider the administrative penalty in the context of the other sanctions imposed on a respondent. Further, we must consider the total effect of the sanction on the individual respondent as well as on the public in general, in order to appropriately penalize and to deter.

[166] In light of our determination on the issue of retrospectivity, we require that Rowan pay an administrative penalty in the amount of $520,000, to be allocated by the Commission to or for the benefit of third parties pursuant to section 3.4(2)(b) of the Act, in order to deter him from engaging in other conduct contrary to the Act and contrary to the public interest and to deter others from engaging in similar conduct. Were it not for our finding on the application of retrospectivity in this case, the administrative penalty would have been more in the range of $900,000 to $1,000,000.

[167] We therefore impose the following sanctions against Rowan:

(a) his registration is suspended for a period of 12 months;

(b) at the conclusion of his suspension of registration, his registration shall be subject to a condition that he not be approved to act in any supervisory role for a further period of 18 months;

(c) he is required to resign any position that he currently holds as a director or officer of a reporting issuer or a registrant;

(d) he is prohibited from becoming or acting as a director or officer of a reporting issuer or an affiliate of a reporting issuer for a period of 7 years;

(e) he is prohibited from becoming or acting as a director or officer of a registrant for a period of 3 years;

(f) he is reprimanded; and

(g) he shall pay an administrative penalty in the amount of $520,000 to the Commission pursuant to section 127(1)9, to be allocated by the Commission to or for the benefit of third parties pursuant to section 3.4(2)(b) of the Act.

iii. Carmichael

a. Staff's Submissions

[168] Staff submits that Carmichael, as a person responsible for Watt Carmichael's overall compliance with regulatory requirements, failed to ensure that Watt Carmichael had appropriate policies and procedures in place to discharge its regulatory responsibilities and failed to ensure that McKenney was providing proper oversight to the trading in the Trust Accounts.

[169] Staff submits that, as this Commission and other securities regulatory authorities have recognized, proper supervision by a registrant is a critical component of the securities regulatory system. Registered firms and those that are charged with supervisory responsibilities serve as gatekeepers with the responsibility of detecting misconduct promptly before there is harm or further harm to investors and the capital markets generally.

[170] As stated above, Watt Carmichael earned a total of approximately $2,350,000 in commissions from trading in the Trust Accounts during the period from 2002 to 2004. Carmichael owned approximately 44% of the shares of Watt Carmichael as at December 31, 2005.

[171] Staff submits that the proceeds of these trades, together with their distribution provide a useful reference point for sanctions, particularly when determining the appropriateness and quantum of an administrative penalty.

b. Respondents' Submissions

[172] Counsel submits that Carmichael is the Chairman and CEO of Watt Carmichael and is the driving force and the key operator of Watt Carmichael. The company, which has fifteen (15) employees, has operated under Carmichael's direction for years, including over the last two very trying years when the firm has laboured under the heavy cloud of allegations of insider trading and misleading the Commission.

[173] Counsel submits that Carmichael has never been the subject of a disciplinary proceeding and has a reputation for integrity and professionalism, as was demonstrated in the letters of support introduced during the hearing.

[174] Counsel stresses that the evidence shows that the Hearing Panel's findings arise in unique and complex supervisory circumstances that will not be repeated. The sanctions sought by Staff against Carmichael are completely out of proportion with the Hearing Panel's finding, and following Mithras, beyond the public interest jurisdiction of the Commission.

[175] Counsel submits that although the Commission has found that Watt Carmichael should have had additional policies in place, Carmichael did put relevant policies in place. Carmichael segregated Rowan's RR Code so that his trading could be reviewed. Specifically, he put in place regulations to prevent trading of Biovail in managed accounts, and he directed McKenney to ensure, to the extent possible, that Rowan was not trading with inside information.

[176] Carmichael stated that there was no policy in place to ensure that Rowan was not trading during blackout periods or filing insider reports. This fact, which has now been found to be a regulatory failing, must be put in context. Simply stated, counsel submits that there is no precedent for such a supervisory requirement.

[177] Counsel submits that there was extensive evidence led during the hearing respecting the extent to which the Trust Accounts were reviewed by the IDA. According to counsel, it is a significant mitigating factor that Watt Carmichael's policies and procedures were reviewed and approved by the IDA, which was itself aware of the circumstance. As Carmichael testified, he took comfort in the fact that the firm supervisory policies were consistently IDA-approved.

[178] Counsel further submits that the evidence before the Hearing Panel clearly shows that the question of whether or not there was an obligation on the part of Watt Carmichael to supervise Rowan's filing of insider reports and his trading in client accounts during blackout periods was not free from doubt. Carmichael was operating in unique supervisory circumstances without pre-existing guidance.

[179] Carmichael recognizes the Hearing Panel's findings and understands clearly that these will now serve as a guide to him and for others with supervisory responsibilities in relation to registrants who are also insiders of publicly traded companies. He accepts that a reprimand and caution for the future is necessary to signal to the market that the Commission views this as a serious matter.

[180] Counsel also filed character and personal reference letters from various individuals attesting to Carmichael's character.

[181] Carmichael also described, during his testimony, the impact of the proceeding on him and on his firm. He indicated that the proceeding has been very harmful to Watt Carmichael, to the individuals involved and caused a great deal of financial duress. He also mentioned that the proceeding has created embarrassment and that one of the partners left the firm resulting in a loss of $300,000 a year in net profit between commissions, fees and the like. He also mentioned that he personally incurred a loss of approximately 10% of the assets that he managed prior to the proceeding translating in a loss of $160,000 in gross revenues a year for Watt Carmichael over the last two years, and the company also incurred considerable legal fees.

c. Analysis

[182] As Chairman, CEO and acknowledged UDP of Watt Carmichael, Carmichael is responsible for the firm's overall compliance with regulatory requirements, and for overseeing the development and implementation of its compliance practices and procedures" (Merits Decision, supra at para. 346).

[183] The Hearing Panel found that Carmichael failed to ensure that Watt Carmichael had adequate policies and procedures in place to discharge its regulatory responsibilities and failed to ensure that McKenney was providing proper oversight to the trading in the Trust Accounts. (See: Merits Decision, supra at paras. 351-352).

[184] Carmichael testified that he joined the investment industry in 1973 and has spent his entire career at Watt Carmichael.

[185] Given his knowledge of the unique nature of the Trust Accounts, Carmichael should have ensured that Watt Carmichael had adequate policies, procedures and practices in place to ensure Watt Carmichael's compliance with its responsibilities.

[186] The Hearing Panel accepted Kleberg's expert evidence only as it related to industry standards for brokerage compliance practices. Kleberg testified about the division of supervisory responsibilities that is mandated within securities brokerages. Each firm must have a UDP who is responsible for the firm's overall compliance with regulatory requirements as well as overseeing the development and implementation of its compliance practices and procedures. Kleberg testified that these Trust Accounts warranted especially close supervision and required effective policies and procedures. In his words, the Trust Accounts were "screaming for attention". He highlighted the salient features of the Trust Accounts from a supervisory perspective:

(i) the accounts held a very large position in Biovail securities;

(ii) the accounts were highly concentrated in Biovail securities;

(iii) the accounts conducted very active trading in Biovail securities;

(iv) the registered representative assigned to the accounts was an insider of Biovail; and

(v) the registered representative held discretionary trading authority over the accounts.

[187] Kleberg also testified that the UDP should ensure that his CCO carries out his responsibilities including supervising the filing of insider reports.

[188] As Chairman, CEO and UDP, Carmichael was ultimately responsible for ensuring that Watt Carmichael had appropriate policies, procedures and practices in place, and for ensuring that McKenney, as CCO, satisfied his oversight responsibilities. Carmichael failed to fulfill this responsibility as Chairman, CEO and UDP, contrary to the public interest (Merits Decision, supra at para. 352).

[189] Carmichael, given his knowledge of the unique nature of the Trust Accounts, should have ensured that Watt Carmichael had adequate policies, procedures and practices in place to ensure Watt Carmichael's compliance with its responsibilities.

[190] The Commission has previously considered cases involving supervisory failures, including failures by securities firms, UDPs and CCOs (Re Marchment & MacKay Ltd. (1999), 22 O.S.C.B. 4705; Re E.A. Manning Ltd. (1995), 19 O.S.C.B. 5317). The Commission, together with other Canadian securities regulators, has also considered a number of settlement agreements concerning allegations of inadequate supervision. These cases reflect a wide range of supervisory failures, not all of which are directly comparable to the present case (Re Union Securities Ltd. 2006 BCSECCOM 220; Re Simpson (2005), 28 O.S.C.B. 7126; Re Bruce (2004) 27 O.S.C.B. 9319 and 9320; Re Yorkton Securities Inc. (2002) 25 O.S.C.B. 1106; Re RT Capital Management Inc. (2000) 23 O.S.C.B. 5117, 23 O.S.C.B. 5118, 23 O.S.C.B. 5177; Re Yorkton Securities Inc. (1994) 17 O.S.C.B. 5386).

[191] Although Carmichael's violations of the Act were not as significant as those of Rowan, we nevertheless find that Carmichael as Chairman, CEO and acknowledged UDP of Watt Carmichael had an important leadership role in the brokerage firm and was responsible to ensure that the firm and its employees operated in compliance with Ontario securities law by adopting appropriate policies, procedures and practices. Carmichael, in light of his role and long-standing career in the industry, should not have abdicated his responsibilities. In particular, Carmichael's failure to supervise trading by Rowan and to address the issues arising from Rowan's dual role as a director of Biovail and as a registered representative trading in Biovail securities amounted to serious misconduct.

[192] We also note that Carmichael's testimony about the harm to himself and his firm as a result of the proceeding, was not substantiated by any financial record or documentary evidence. This is despite Staff's earlier request for particulars and documents supporting the claim about any harm to the business.

[193] Carmichael failed to comply with Ontario securities law by failing to "... adequately supervise Rowan's trading in Biovail securities in the Trust Accounts ..."(Merits Decision, supra at para. 345). The breaches in this case are serious when considered individually and collectively. Further, they were repeated failures to comply with Ontario securities law over an extended period from 2002-2004.

[194] Section 127(1)9 of the Act provides for a maximum administrative penalty of $1 million for each failure to comply with Ontario securities law. We are mindful however, that we must consider the administrative penalty in the context of the other sanctions imposed on a respondent. Further, we must consider the total effect of the sanction on the individual respondent as well as on the public in general, in order to appropriately deter the respondent and others and do justice in the circumstances.

[195] As stated above, Watt Carmichael earned a total of approximately $2,350,000 in commissions from trading in the Trust Accounts during the period from 2002 to 2004. A significant number of shares of Watt Carmichael, approximately 44%, were owned by Carmichael as at December 31, 2005. In this case, Staff submits the proceeds of these trades, together with their distribution, provide a useful reference point for sanctions, particularly when determining the appropriateness and quantum of an administrative penalty. However, while the proceeds may provide a useful reference point with respect to sanctions generally, section 127(1)9 provides the Commission with the power to impose an administrative penalty of not more than $1 million for each failure to comply with Ontario securities law. The Panel when determining the appropriate quantum of an administrative penalty must consider all relevant factors to ensure that the penalty meets the regulatory objective of general and specific deterrence as mandated by section 127(1)9 of the Act.

[196] Having regard to all of the circumstances, including the sales compliance reviews by IDA/IIROC and the impressive character and personal letters concerning Carmichael's background and public service and in light of our determination on the issue of retrospectivity, we require that Carmichael pay an administrative penalty in the amount of $250,000, to be allocated by the Commission to or for the benefit of third parties pursuant to section 3.4(2)(b) of the Act, in order to deter him from engaging in other conduct contrary to the Act and contrary to the public interest and to deter others from engaging in similar conduct. Were it not for our finding of the application of retrospectivity in this case, the administrative penalty would have been more in the range of $450,000 to $550,000.

[197] In considering a prohibition on Carmichael from acting as a director or officer of a registrant, we are cognizant of the effect that such prohibition would have on a small firm such as Watt Carmichael, when combined with our decision to impose a suspension on its President. Although, in other circumstances, we would have imposed a longer prohibition, we have determined that a 45-day suspension is appropriate in the circumstances.

d. Conclusion

[198] We therefore impose the following sanctions against Carmichael:

(a) he is required to resign any position that he currently holds as a director or officer of a registrant;

(b) he is prohibited from becoming or acting as a director or officer of a registrant for a period of 45 days;

(c) a condition is imposed on his registration that he not be approved to act in any supervisory role for a period of 45 days;

(d) he is reprimanded; and

(e) he shall pay an administrative penalty in the amount of $250,000, to be allocated by the Commission to or for the benefit of third parties pursuant to section 3.4(2)(b) of the Act.

iv. McKenney

a. Staff's Submissions

[199] Staff submits that the CCO is responsible for creating awareness of compliance issues within the firm, monitoring adherence with regulatory requirements and ensuring compliance with such requirements (Merits Decision, supra at para. 330).

[200] Staff points out that McKenney admitted being aware of the concentration of Biovail securities in the Trust Accounts, the unusually high volume of trading in the Biovail securities in the Trust Accounts, that these were offshore accounts and that Melnyk was the settlor (Merits Decision, supra at para. 332).

[201] According to Staff, in spite of the clear risks McKenney failed to properly supervise Rowan's trading in the Trust Accounts. In particular, McKenney, as CCO, failed to ensure that:

(a) Rowan filed insider reports relating to his trading in Biovail securities in the Trust Accounts;

(b) Rowan ceased trading in Biovail securities in the Trust Accounts during Biovail Blackout Periods; and

(c) Rowan ceased trading in Biovail securities in the Trust Accounts during periods where he was in possession of material undisclosed information concerning Biovail.

(Merits Decision, supra at para. 333)

[202] The Hearing Panel found that McKenney "made only sporadic and inadequate attempts to determine when Rowan had knowledge of information not generally disclosed" (Merits Decision, supra at para. 334).

b. Respondents' Submissions

[203] Counsel submits that, like the other respondents, McKenney has never been the subject of any regulatory proceedings. He began working in the industry as a clerk/messenger almost 50 years ago. Counsel submits that McKenney did take steps to monitor Rowan's trading in Biovail. He established a segregated code for trading in Biovail by Rowan, which facilitated monitoring of Biovail trading by Rowan in daily reviews. He reviewed trading on a daily basis and consistent with the Hearing Panel's findings, never found anything that would indicate that Rowan was engaged in insider trading.

[204] Counsel submits that McKenney testified that he did not consider it to be part of his supervisory responsibilities to monitor Rowan's compliance with Biovail blackout periods or to monitor whether Rowan was filing insider reports for trades in client accounts. As already submitted, there was no law, regulation or prior finding of this Commission which would impose a specific supervisory obligation to review for such matters. Counsel states that the Commission has now, through its Merits Decision, provided guidance to the Ontario capital markets for the future.

[205] According to counsel, McKenney suffers from poor health and has retired, and any further action against McKenney would be inappropriate in the circumstances.

c. Analysis

[206] McKenney joined the investment industry in 1962, and joined Watt Carmichael in 1996. McKenney was at all material times the Chief Financial Officer and CCO of Watt Carmichael (Merits Decision, supra at para. 9).

[207] The Hearing Panel found that, as CCO of Watt Carmichael, McKenney was responsible for supervising Rowan's trading to ensure compliance and failed to do so. The Hearing Panel found that his failures include:

(a) making "only sporadic and inadequate attempts" to determine when Rowan had knowledge of undisclosed information;

(b) accepting "information provided by a registered representative at face value" rather than performing independent checks;

(c) relying on "happenstance" to determine when Rowan was attending a Biovail Board or Audit Committee meeting; and

(d) failure to adhere to Watt Carmichael's own policies by only monitoring trading in Biovail securities in accounts controlled by Rowan

(Merits Decision, supra at paras. 334-342).

[208] The CCO should be vigilant and ensure that all the employees and senior staff are aware of compliance issues within the firm and monitor compliance with regulatory requirements. Kleberg testified that industry standards would not generally require the CCO to monitor adherence to corporate blackout periods by a brokerage client who is an insider of a reporting issuer. However, it was his view that where a registered representative who is also an insider of a reporting issuer ("RR/insider") has discretionary authority to trade in securities of the reporting issuer, close supervision by the CCO is required to ensure that an RR/insider does not trade in the issuer's securities during the issuer's blackout periods. Kleberg stated that this monitoring would not be difficult since the CCO could simply ask the reporting issuer to notify him of any blackout periods. This monitoring was required to ensure that Rowan did not transmit any inside information concerning