Ontario Securities Commission Bulletin

Issue 33/03 - January 22, 2010

Ont. Sec. Bull. Issue 33/03

Table of Contents

Chapter 1 - Notices / News Releases

Notices

• Current Proceedings before the Ontario Securities Commission

• OSC Staff Notice 33-733 -- Report on Focused Reviews of Investment Funds, September 2008 -- September 2009

• Notice of Ministerial Approval of Amendments to NI 21-101 Marketplace Operation and NI 23-101 Trading Rules

Notices of Hearing

• Nest Acquisitions and Mergers et al. -- ss. 37, 127, 127.1

News Releases

• Peter Robinson Sentenced to Four Months in Jail for Contempt

• OSC Reports on focused Reviews of Investment Funds

Notices from the Office of the Secretary

• New Life Capital Corp. et al.

• Coventree Inc. et al.

• W.J.N. Holdings Inc. et al.

• Abel Da Silva

• Shallow Oil & Gas Inc. et al.

• Nest Acquisitions and Mergers et al.

Chapter 2 - Decisions, Orders and Rulings

Decisions

• Meritas Financial Inc. et al.

• Counsel Portfolio Services Inc. et al.

• Goodman & Company, Investment Counsel Ltd. and Dynamic Venture Opportunities Fund Ltd.

• I.C.T.C. Holdings Corporation -- s. 1(10)

• Mecachrome International Inc.

• Claymore Investments, Inc. et al.

• Roxmark Mines Limited -- s. 1(10)

• Canadian Zinc Corporation

• Verenex Energy Inc. -- s. 1(10)

• Gazit America Inc.

Orders

• New Life Capital Corp. et al. -- s. 127

• Coventree Inc. et al. -- s. 127

• W.J.N. Holdings Inc. et al. -- ss. 127(1), 127(8)

• Abel Da Silva -- ss. 127, 127.1

• Shallow Oil & Gas Inc. et al. -- ss. 127(1), 127(8)

• Borealis International Inc. et al.

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 5 - Rules and Policies

• Notice of National Instrument 55-104 Insider Reporting Requirements and Exemptions and Related Companion Policy 55-104CP and Repeal of Related Predecessor Instruments

• OSC Rule 13-502 Fees and Companion Policy 13-502CP Fees

• OSC Rule 13-503 (Commodity Futures Act) Fees and Companion Policy 13-503CP (Commodity Futures Act) Fees

• Amendments to NI 21-101 Marketplace Operation, NI 23-101 Trading Rules and Companion Policy 23-101CP Trading Rules

Chapter 8 - Notice of Exempt Financings

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

Chapter 11 - IPOs, New Issues and Secondary Financings

Chapter 12 - Registrations

• Registrants

Chapter 13 - SROs, Marketplaces, and Clearing Agencies

SROs

• MFDA Sets Hearing Dates in the Matter of The Investment House of Canada Inc., Sanjiv Sawh and Vlad Trkulja

• MFDA Hearing Panel Issues Reasons for Decision with Respect to Douglas St. Arnault Settlement Hearing

• MFDA Issues Notice of Hearing Regarding Connor Financial Corporation and Joel Gerrett (Gerry) Connor

• MFDA Sets Date for Luc Laverdiere Hearing in Vancouver, British Columbia

• MFDA Hearing Panel Makes Findings Against Daniel Moyaert

• MFDA Sets Dates for ASL Direct Inc. and Adrian Leemhuis Hearing on the Merits

Marketplaces

• TSX Inc. -- Proposed Changes to the Operations of TSX Inc. to Introduce Two New Order Features: Post Only Order and Self-Trade Prevention -- Notice and Request For Feedback

• TSX Inc. -- Notice of Proposed Changes

• Notice and Request for Feedback -- Proposed Changes to the Operations of Alpha ATS L.P., Passive Only Order Type, Odd Lot Orders and Bypass Cross

• Alpha ATS L.P. -- Notice of Proposed Changes

Chapter 25 - Other Information

Consents

• JG Capital Corp. -- s. 4(b) of the Regulation

Approvals

• Northern Rivers Capital Management Inc. -- s. 213(3)(b) of the LTCA

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Chapter 1 -- Notices / News Releases

Current Proceedings Before The Ontario Securities Commission

JANUARY 22, 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

OSC Staff Notice 33-733 -- Report on Focused Reviews of Investment Funds, September 2008 -- September 2009

OSC Staff Notice 33-733 -- Report on Focused Reviews of Investment Funds, September 2008 -- September 2009 is reproduced on the following internally numbered pages. Bulletin pagination resumes at the end of the Report.

OSC Staff Notice 33-733

2010

Report on Focused Reviews of

Investment Funds, September 2008 -- September 2009

Executive Summary

This report summarizes the compliance review work conducted by staff of the Compliance and Registrant Regulation Branch (Compliance Team) and the Investment Funds Branch of the Ontario Securities Commission (OSC) in response to concerns emerging from the market turmoil experienced by the global financial services industry. Beginning in September 2008, the Compliance Team and the Investment Funds Branch conducted extensive reviews through a three-phased approach, focusing on major segments of the Canadian investment fund industry, namely money market funds, non-conventional investment funds and hedge funds.

Our primary focus in all three phases was to assess fund managers' compliance with Ontario securities laws. We did not assess the merits of the investment products covered by our reviews. We gathered information about the funds' portfolio holdings, exposure to distressed and/or illiquid assets, valuation methodologies, and how the managers managed the risk of large redemptions during the market downturn.

This report summarizes the findings from our questionnaire responses and the observations from our on-site visits, and includes further reporting on our review of money market funds and non-conventional investment funds in more detail than was previously provided in OSC Staff Notice 33-732 2009 Compliance Team Annual Report. It also includes some suggested practices. We encourage fund managers to use this report as a self-assessment tool to strengthen their compliance with Ontario securities laws and to improve their systems of internal controls and supervision.

In phase one, the review of money market funds, our focus was to determine if Canadian money market funds faced issues similar to those faced by U.S. money market funds relating to exposure to financial institutions having financial difficulties, illiquid securities or redemption risk. We observed that during the review period all funds were able to meet redemption requests, no investments held by the funds defaulted or were written down, and most funds were in compliance with the securities laws regulating money market funds.

In phase two, we reviewed non-conventional investment funds which include open-end and closed-end funds listed and traded on the Toronto Stock Exchange (TSX). We observed that some of these funds adopted more protective investment strategies as a result of the market turmoil and maintained higher levels of cash. Some fund managers reorganized some of their funds. Fund managers monitored redemption levels closely and provided additional disclosure to their investors on the impact of the market turmoil.

In phase three, we reviewed hedge funds which are sold primarily to high-net-worth individuals and institutional investors by way of an offering memorandum. We observed that hedge fund assets were held with independent custodians, fund portfolios were fairly liquid, well-diversified and securities were valued appropriately.

Despite the overall market downturn and its impact on the returns of many of these products during our review period, we did not observe any industry-wide compliance issues. We noted some instances of non-compliance during our on-site visits which we addressed separately with each individual fund manager.

Background

The global financial markets have experienced a period of market turmoil. The subprime mortgage crisis in the U.S., which began in the summer of 2007, is generally viewed as the triggering event. Due to a significant increase in the default and foreclosure rates for subprime mortgages, structured-finance products (such as mortgage-backed securities, asset-backed commercial paper (ABCP) and collateralized debt obligations (CDOs)) performed poorly. Investor confidence weakened, causing the resale market for some of these products to collapse and liquidity to evaporate. The weakening of the market for these products also led to valuation problems for those holding these products.

In Canada, the market turmoil led to the freezing of the then $35 billion market for non-bank sponsored ABCP in August 2007. Some retail mutual funds were invested in non-bank sponsored ABCP when it froze. Mutual fund managers or other related entities of these mutual funds voluntarily bought all of the frozen ABCP from the funds at par plus accrued interest. This ensured that retail mutual fund investors would not incur losses from these investments.{1}

The market turmoil continued into 2008 creating significant liquidity challenges. Balance sheets were under pressure as a result of the near shutdown of the securitization markets. Lending between banks came to a halt, essentially freezing the credit markets. With the near failure of Bear Stearns in the spring of 2008 and the collapse of Lehman Brothers in September of that year, broker-dealers became less willing to extend credit to their counterparties, including hedge funds. Also, in September 2008 a money market fund in the U.S. known as the Reserve Primary Fund "broke the buck". Some hedge funds were also put under redemption pressure and were forced to liquidate assets as financing terms tightened. As a group, beginning in late summer 2008, their performance deteriorated sharply which led to further investor redemptions.

In response to the concerns emerging from these market events, the OSC executed a three-phased review initiative to assess the impact of the market turmoil in major segments of the Canadian investment fund industry. The three phases focused on fund managers that manage (1) money market funds; (2) non-conventional investment funds; and (3) hedge funds.

Given the events affecting the money market fund industry in the U.S. and liquidity concerns over the short-term debt market, we initiated a focused review of Ontario-based money market funds in September 2008. Our focus, in phase one, was to determine if our money market funds faced issues similar to those faced by U.S. money market funds relating to exposure to financial institutions having financial difficulties, illiquid securities or redemption risk.

In phase two, we extended our work to non-conventional investment funds. Our initial concerns were liquidity, credit risk and counterparty risk stemming from the credit crisis.

In phase three, we focused on hedge funds. The hedge fund industry has become an increasingly important component of Ontario's capital markets. Hedge funds offer flexibility in investment style and diversification benefits to investors. These benefits may also bring challenges and risks which were magnified when the global markets came under tremendous pressure in the second half of 2008.

Overview of the focused reviews

The Compliance Team and the Investment Funds Branch began the market turmoil focused reviews in September 2008 and completed them in September 2009. We executed our work in a three-phased approach. In all three phases, we focused on funds that were offered to Ontario investors and managed by fund managers based in Ontario. Over the course of the year, we sent out approximately 200 questionnaires, conducted meetings with senior management of selected fund managers and executed 56 on-site visits. Appendix A summarizes information relating to the fund managers that completed the questionnaires and those that received a site visit.

The comments in this report relate only to our observations of those fund managers that completed our questionnaires and those that were subject to an on-site visit. These observations are also limited to the scope of our reviews.

Phase one -- money market funds

Investors generally view money market funds as safe and liquid investment vehicles. Portfolios held by these funds are generally more liquid because money market funds in Canada are subject to a number of investment restrictions in National Instrument 81-102 Mutual Funds (NI 81-102). A common feature of money market funds in Canada is that they strive to maintain a constant net asset value (NAV) of $10. However, there is no guarantee that the NAV will remain at $10.

Phase one, the review of money market funds, began in September 2008. We sent a questionnaire to 50 fund managers offering open-ended mutual funds in Ontario. These 50 managers had money market fund assets under management of approximately $67 billion, representing approximately 93% of the total money market fund assets{2}. We risk-ranked the questionnaires and selected 18 fund managers that would receive an on-site visit. The period reviewed was from August 1, 2007 to September 19, 2008.

We also completed further follow-up work on the money market funds subsequent to the on-site visits. We sent a follow-up questionnaire in May 2009 to the same fund managers of money market funds to assess whether any material changes had occurred since our review in September 2008.

Phase two -- non-conventional investment funds

The focus of phase two was non-conventional investment funds listed and traded on the TSX. These include split share companies{3}, actively managed funds, index tracking funds and structured products based on credit related derivatives{4}. Non-conventional investment funds have some of the following characteristics:

• Product complexity. Because non-conventional investment funds are generally subject to fewer regulatory investment restrictions than conventional mutual funds, they are able to employ more complex investment strategies and use leverage.

• Illiquid assets. Some non-conventional investment funds may have significant exposure to illiquid assets, which can lead to valuation issues.

• Market risk. Volatile markets can affect exchange-traded investment funds by lowering the value of their portfolio holdings. The trading value of the investment fund's own units or shares can also be negatively affected.

• Sector exposure. Some funds may have significant exposure to the foreign financial sector, senior loan markets and mortgage-backed securities.

• Redemption risk. Most non-conventional investment funds allow an annual (or more frequent) redemption at NAV. The risk of arbitrage for these funds can be increased if the discount between NAV and the listed price of the securities widens.

Phase two, the review of non-conventional investment funds, began in October 2008. We sent questionnaires to 27 Ontario-based managers of non-conventional investment funds. These managers had assets under management of approximately $36 billion, representing 84% of the industry total{5}. Based on the information reported in the questionnaires, staff selected six fund managers that would receive an on-site visit. The period reviewed was from August 1, 2007 to September 30, 2008.

Our review of non-conventional investment funds also included continuous disclosure reviews of certain investment fund issuers that received our questionnaire but were not selected for an on-site visit. We also performed a review of disclosure provided by linked note issuers and monitored information provided in the media by non-conventional investment funds. This included reviewing press releases relating to non-conventional investment funds. We focused on announcements of any suspension of redemptions, deferrals of or reductions to expected distributions, re-organizations or credit rating downgrades.

Phase three -- hedge funds

Hedge funds in Ontario are typically pooled funds that are sold primarily to sophisticated or high-net-worth investors by way of an offering memorandum. They are not subject to certain securities laws and are generally required to provide less disclosure to potential investors. They are also subject to fewer investment restrictions as compared to traditional mutual funds. Hedge fund managers, however, are subject to Ontario securities laws which require investment fund managers to exercise their duties honestly, in good faith and in the best interests of their investment funds and the investors who have invested their money in their funds.

Issues affecting hedge funds include:

• Valuation. Many hedge funds hold complex, over-the-counter or illiquid financial instruments. The valuation of these instruments can be difficult as they may not have a verifiable market value.

• Leverage. While hedge funds employ leverage with the objective of magnifying potential returns, the use of leverage also magnifies losses suffered by investors and lenders in the event that the hedge fund incurs losses. In addition, leverage magnifies fluctuations in securities prices.

• Liquidity. Some hedge funds may experience redemption pressure because of illiquid markets and limited credit.

• Transparency. Many hedge fund managers are reluctant to disclose their investment holdings for competitive reasons. This lack of transparency creates concerns as to whether investors have adequate information to assess the investment risks of a particular hedge fund.

The review of hedge funds began in February 2009. We sent a questionnaire to approximately 90 hedge fund managers in Ontario. After risk ranking the responses, we selected 32 fund managers for an on-site visit. The period reviewed was from July 1, 2007 to December 31, 2008. These fund managers managed 192 funds, totalling $16 billion in assets under management as at December 31, 2008. Of these funds, 93 funds, totalling $8.9 billion, were funds of hedge funds, and 99 funds, totalling $7.1 billion, were standalone funds.

1. Phase one -- money market funds

Our review of money market funds focused on the following areas:

1.1 Compliance with NI 81-102 restrictions

1.2 Portfolio holdings

1.3 Redemption risk

1.4 Valuation of portfolio securities

1.5 Change in fees and expenses

1. Phase one -- money market funds

1.1 Compliance with NI 81-102 restrictions

Securities laws require money market funds to restrict their investments to a diversified portfolio of short- term debt instruments of a specific credit quality.

Observations

• Most money market funds complied with the investment restrictions under section 1.1 of NI 81-102{6} and with the concentration restrictions under section 2.1 of NI 81-102{7}. Fund managers had adequate monitoring procedures to ensure compliance with these restrictions.

• Where fund managers outsourced their fund administrative functions to an external service provider, they generally had good oversight procedures over the service provider.

• We noted some instances of non-compliance with the dollar-weighted average term to maturity requirement and with the 10% concentration restriction under NI 81-102. The instances of non-compliance were not material and were addressed with each individual fund manager.

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Suggested practices

• Perform daily monitoring of compliance with the investment restrictions and concentration restrictions under NI 81-102 as money market funds are bought and sold daily.

• Include bankers' acceptances and bearer deposit notes in monitoring concentration restrictions under NI 81-102.

• Develop appropriate procedures to identify non-compliance with the investment restrictions and concentration restrictions under NI 81-102.

• Fund managers should ensure that the portfolio managers:

• are familiar with all applicable regulatory requirements

• monitor compliance on a frequent basis

• report any instances of non-compliance immediately to the fund manager

• rectify any non-compliance immediately

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1.2. Portfolio holdings

Observations

• Fund managers generally performed adequate and regular reviews of fund portfolios to ensure compliance with securities laws and with the funds' investment mandates.

• Chart 1 below shows the top five categories of portfolio holdings held by money market funds as at September 19, 2008 and April 30, 2009. The portfolio holdings are shown as a percentage of total portfolio holdings held by money market funds that completed our questionnaire. The top five categories of portfolio holdings as at April 30, 2009, based on responses from the follow-up questionnaire, did not change.



• Most funds were only exposed to Canadian issuers of money market securities. A small number of funds were also exposed to issuers in the U.S. and in Europe.

• None of the funds had exposure to illiquid assets.

• None of the fund managers wrote down any securities.

• The level of cash held in funds increased as a means to meet an increase in redemptions. In many cases, the term to maturity of the portfolios became shorter.

• ABCP held by the funds was bank-sponsored and had global-style liquidity support. Where the fund manager was also the portfolio manager, the fund manager performed adequate due diligence prior to investing in ABCP, and monitored the quality of the holdings on a continuous basis.

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Suggested practices

• Monitor concentration risk by:

• calculating and monitoring exposure to a single issuer at least on a daily basis

• calculating exposure to a single issuer by including bank deposits with securities issued by that issuer

• aggregating and monitoring exposure to an issuer and its related issuers

• Document procedures for monitoring credit quality of issuers, including:

• frequency of review of credit ratings

• procedures to deal with situations where inappropriate credit risk in a security or issuer is identified

• ongoing credit monitoring procedures

• record keeping (i.e. retain information to document the monitoring of credit risk)

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1.3 Redemption risk

Observations

• Fund managers did not have issues in meeting redemption requests by fund investors. In addition, they did not foresee issues in meeting future redemption requests given the high level of liquidity of their portfolios.

• Fund managers put a number of mechanisms in place to manage redemption requests. We noted that:

• fund managers generally maintained a more liquid portfolio and decreased the weighted average term to maturity of the fund portfolios

• some fund managers monitored the holdings of individual unitholders so as to monitor the risk of having a single large unitholder redeem

• some fund managers used a large unitholder agreement to restrict further purchases, to require a minimum holding period, or to require a longer notice period for a large redemption

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Suggested practices

• Review daily sales and redemptions reports along with investments by maturity to manage cashflows effectively

• Monitor the holdings of individual unitholders to monitor the risk of having a single large unitholder redeem

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1.4 Valuation of portfolio securities

Observations

• All fund managers valued their money market instruments in their money market funds at amortized cost, i.e. at cost plus accrued interest, based on their conclusion that amortized cost approximated fair market value.

• A number of fund managers also calculated the market value of their fund's portfolio which they compared to the amortized cost of the portfolio to confirm that amortized cost remained a valid approximation of fair market value.

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Suggested practices

• Where amortized cost is used, ensure compliance with National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) which requires that the fund's portfolio be valued at market. The valuation of the fund's portfolio should be performed as often as the NAV of the fund is calculated.

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1.5 Change in fees and expenses

Observations

• In light of the current low interest rate environment, nearly all of the fund managers reviewed had reduced or waived management fees and certain expenses to ensure that their money market funds continued to have a positive yield.

• Some managers chose to reduce trailer fees paid to dealers on money market funds held in the dealers' client accounts.

• Many fund managers disclosed the fee changes to their investors by issuing a press release, providing the information on the fund manager's website or filing an amendment to the fund's simplified prospectus.

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Suggested practices

• Fund managers should ensure that information regarding fee changes is disclosed to their investors on a timely basis.

• Any waivers or absorptions of fees are required to be disclosed in the fund's financial statements and management reports of fund performance.

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2. Phase two -- non-conventional investment funds

Our review of non-conventional investment funds focused on the following areas:

2.1 Response to the market turmoil

2.2 Counterparty, credit and financial sector exposure

2.3 Level and valuation of illiquid assets

2.4 Investor communication and continuous disclosure

2. Phase two -- non-conventional investment funds

2.1 Response to the market turmoil

Observations

• Fund managers monitored market conditions and assessed the impact on their funds on a continual basis. They worked with portfolio managers, dealers and other stakeholders in devising action plans aimed at protecting their funds, within the parameters of the constating documents of each fund. These plans included suspension of redemptions, decreases in distributions, equity offerings, rights offerings, changes to investment objectives and strategies, and fund mergers.

• Within the limits of each fund's investment restrictions, funds adopted more protective strategies, such as holding a higher proportion of the fund's portfolio in cash, or writing covered call options.

• Fund mergers were used to consolidate assets of non-conventional investment funds in order to provide unitholders with better liquidity and economies of scale. Some fund managers had different policies for mergers of non-conventional funds than for mergers of conventional funds that they also manage.

• Where an investment fund has a fund manager, administrator, portfolio manager, sub-advisors and valuation agent, the division of duties and obligations between them may overlap. In responding to the market turmoil, some fund managers needed additional time to determine which of the other service providers should be involved in particular decisions and to collect relevant information from them.

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Suggested practices

• The investment restrictions followed by the fund are material information that investors use when making their investment decisions. Changes to the investment restrictions should be publicly disclosed in a timely manner.

• Fund managers should bear the cost of merging their non-conventional investment funds. While a fund merger may benefit unitholders, fund managers also benefit from mergers by maintaining assets under management. The policy rationale underlying the rules applicable to conventional mutual fund mergers applies equally, in staff's view, to mergers of non-conventional investment funds.

• When functions are delegated to third-party service providers, fund managers should maintain appropriate oversight and have the ability to review the accuracy and quality of the services provided in a timely manner. Even if delegating to service providers, fund managers maintain the ultimate responsibility for the operations of the fund. Fund managers should always be aware of the issues affecting their funds, such as potential counterparty risks or the valuation of illiquid assets.

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2.2 Counterparty, credit and financial sector exposure

Observations

• Some non-conventional investment funds were exposed to the foreign financial sector, certain debt markets (that were under stress) and complex credit derivatives, but this exposure was limited in comparison to the overall number and size of all non-conventional investment funds in the industry.

• Many structured products offered leverage exposure to the financial sector that was not expected to be volatile. The downturn in the financial sector had a severe impact on some of these structured products, which triggered protection events in favour of the debt holders, so that equity investors would be unable to participate in any future market recovery.

• Most of the non-conventional investment funds we reviewed were exposed to Canadian counterparties, which did not result in elevated counterparty risk. A small number of non-conventional investment funds were using foreign counterparties, but the level of exposure to the foreign entity was relatively small.

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Suggested practices

• In addition to complying with the existing continuous disclosure requirements, managers of sector or specialized investment funds should provide updated and timely information to investors so that investors can understand and assess the impact of the market conditions to their fund. For example, for a complex investment structure, a sensitivity analysis may be helpful.

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2.3 Level and valuation of illiquid assets

Observations

• Some funds invested a substantial portion of their assets in illiquid investments, creating liquidity issues and valuation issues. These funds were generally trading at a significant discount to their NAV, as investors made their own assessment of the value of the illiquid assets.

• Fund managers incorporated the market developments into their valuation methodology for illiquid assets, but not always to the same degree. For some illiquid securities, the changes in valuation did not fully reflect the overall change in value in the particular sector. In some cases, fund managers remained more optimistic about the future value of certain portfolio holdings.

• Some fund managers provided additional disclosure to investors regarding the level and valuation of illiquid assets in their fund.

• In at least one case, previous fund mergers resulted in the continuing fund facing challenges with respect to the combined level of illiquid assets.

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Suggested practices

• The valuation of illiquid assets is inherently difficult and subject to numerous variables. Each NAV calculation should take into consideration all available information at the time the calculation is being made to properly reflect the fund's current value, not the manager's anticipation of the fund's value at a future point in time.

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2.4 Investor communication and continuous disclosure

Observations -- continuous disclosure reviews

• Fund managers were active in communicating with investors during the market turmoil. In most cases, the impact of the market turmoil was discussed in the funds' management report of fund performance.

• In addition to required regulatory filings, fund managers used their websites to update investors regarding the funds' investment exposure. One fund manager managing credit linked investment products used sensitivity analyses to show what the impact would be if certain credit events materialized.

• Investment funds based on credit related derivatives were generally structured as passive vehicles employing limited discretionary portfolio management. When these investment funds were under stress, fund managers responded differently. Most managers did not intervene to modify the fund's strategy. However, one fund manager actively implemented a defensive strategy by securitizing distribution payments in return for the ability of the fund to absorb further unfavourable credit events.

Observations -- linked notes

• Linked notes had become increasingly popular and available to retail investors. However, these investments are usually complex and the exposure they offer can have features similar to certain embedded derivatives.

• Linked note issuers provided necessary information during the pre-clearance process.{8} However, as linked notes are not investment funds, they do not file financial statements and management reports of fund performance (they are included in the issuer's own disclosure filings). The primary source of continuous disclosure information specific to the linked note is the issuer's website.

• The impact of the market turmoil on the current value of the linked notes appeared to be in line with our expectations based on the underlying assets the notes were linked to.

• Linked notes have many key terms and conditions, including mitigating control features based on market disruption events. During the period of market turmoil, the interpretation of certain key terms was subject to additional scrutiny, raising questions of how certain linked note features should operate (for example, determining if a "market disruption event" had occurred which would trigger the need for an independent valuation agent).

Observations -- media surveillance

• There was an increase in the number of press releases and filings during the period we examined.

• Many non-conventional investment funds announced that they were deferring or suspending scheduled distribution payments in order to preserve their net asset value. Some also gave advance notice that they would not be accepting redemption requests if they were close to an upcoming redemption date.

• Many non-conventional investment funds announced restructurings, including mergers, and capital raising initiatives (such as rights offerings). In addition to regulatory filings, fund managers were actively issuing press releases to clarify issues, including exposure to ABCP, specific investment exposure, as well as more details regarding material holdings of illiquid assets.

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Suggested practices

• Information should be provided to investors in a manner designed to help them understand the impact of unusual market events on their investment. Fund managers should use their websites as effectively as possible to provide timely information to investors.

• The interpretation and applicability of key terms and conditions of linked notes, such as the market disruption clause, knock-out and knock-in events, should be stated in a clear and easily understood manner so that investors can better understand when certain events will trigger each of them.

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3. Phase three -- hedge funds

Our review of hedge funds focused on the following areas:

3.1 Custody

3.2 Portfolio holdings

3.3 Leverage usage and monitoring

3.4 Prime broker / counterparty exposure

3.5 Monitoring of funds of hedge funds

3.6 Liquidity or viability issues

3.7 Fund valuation

3.8 Use of service providers

3.9 Offering document disclosure

3.10 Other regulatory compliance matters

3.11 Comparison of fund manager practices to best practices suggested by Alternative Investment Management Association (AIMA)

3. Phase three -- hedge funds

3.1 Custody

Observations

• Fund portfolio assets were segregated and held with independent, reputable custodians. We verified the existence of fund assets by reviewing custodial statements on a sample basis and did not note any issues.

• Most fund managers performed reconciliations to the custodian's reported holdings on a regular basis.

• A few managers used the same bank account to process investors' transactions and corporate activities.

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

Suggested practices

• Maintain separate banking accounts to process investors' transactions and corporate activities. Effective September 28, 2009, section 14.6 of National Instrument 31-103 -- Registration Requirements and Exemptions requires all registered firms to segregate and hold in trust client assets.

• Reconcile securities positions to the custodian's reported holdings on a regular basis. Follow up any discrepancies in a timely manner.

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

Other statistics

• 93% of the fund managers used a third-party custodian; 7% of the fund managers used an affiliate as the custodian.

• 95% of the fund managers used a member firm of Investment Industry Regulatory Organization of Canada for prime brokerage and custodial services.

• 75% of the fund managers used affiliates of Canadian Schedule 1 banks for prime brokerage and custodial services.

• The top four prime brokers and custodians used by the fund managers were affiliates of Canadian Schedule 1 banks.

3.2 Portfolio holdings

Observations

• The majority (83% based on assets under management) of the standalone hedge funds held a diversified portfolio (i.e. not more than 10% of the fund's net assets invested in any single holding).

• Hedge funds managed in Ontario had fairly liquid portfolios. The majority (91% based on assets under management) of the funds held less than 10% of the fund's net assets in private or illiquid holdings.

• Fund managers performed adequate and regular reviews of fund portfolios to ensure compliance with the funds' investment objectives, and to monitor portfolio risk and the liquidity level of each of their funds. A few large fund managers/portfolio managers also had an independent committee, separate from the portfolio management team, to oversee and manage portfolio risk and liquidity risk of the funds.

• Five hedge funds in our sample did not comply with the prohibited investment restrictions under subsection 111(2)(b) of the Act{9}, which prohibits a mutual fund from making an investment in a company in which it is a substantial security holder. This subsection applies to hedge funds that meet the definition of a mutual fund under the Securities Act (Ontario).

• Six hedge fund managers, who were also the portfolio manager for their funds, did not comply with subsections 118(2)(a) and 118(2)(b) of the Act{10}.

• Five hedge fund managers were providing investment advice without registration as a Portfolio Manager with the OSC.

• In each case of non-compliance with securities laws, we addressed the specific issues with the individual fund managers.

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

Suggested practices

• Have a strong and independent compliance function appropriate to the size and complexity of the operations. The individual(s) responsible for the compliance function should possess adequate regulatory knowledge and industry experience to establish and maintain a strong compliance system and to ensure compliance with securities laws.

• Develop policies and procedures to prevent and detect conflicts of interest. Such policies and procedures should include, but are not limited to:

• review ownership percentage in each investment held by a hedge fund on a regular basis

• monitor outside business activities of responsible persons and their associates and create a list of related issuers that the funds cannot invest in

• prohibit cross trading between accounts of a responsible person, an associate of a responsible person or the portfolio manager

• have officers and directors sign an undertaking to report their holdings

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

Other statistics

• The majority (81%) of the hedge fund managers (or their affiliates) were also the portfolio manager to their funds.

• The majority (75%) of the hedge fund managers (or their affiliates) were also the distributor of their funds.

• Funds of hedge funds represented about 42% of total hedge fund assets.

• Two funds had a combined exposure of $8 million to Madoff, which was a large ponzi scheme uncovered in the U.S.

• Equity long/short strategy dominated our marketplace. Chart 2 below shows a breakdown by strategy of the standalone hedge fund assets as at December 31, 2008.



• Chart 3 illustrates the percentage of the funds' net assets invested in private or illiquid holdings as at December 31, 2008. For example, 3% of the funds reviewed (based on net assets) held between 31% to 50% of their net assets in private or illiquid holdings.

3.3 Leverage usage and monitoring

As with the other statistics in this report, we reviewed the use of leverage at a specific point in time (December 31, 2008). We did not collect data on leverage embedded in derivatives or underlying investments held by hedge funds.

Observations

• Hedge funds borrowed from prime brokers on a collateralized basis through margining, short selling and use of credit facilities. The level of borrowing is often quoted as a ratio of assets to capital or equity (e.g. 3: 1 or 3 times capital){11}.

• We observed that the majority of hedge funds employed a very low level of borrowing (1 to 1.1 times capital) as at December 31, 2008. This finding represented a snapshot at a point in time and appeared to be consistent with the tight lending conditions and general conservative investment style at that time.

• As at December 31, 2008, the highest level of borrowing was 12 times capital. This represented about 1% of the hedge fund assets.

• We observed that fund managers had adequate monitoring procedures over the level of leverage of their funds. This included daily or weekly reviews of fund valuation, leverage calculations and margin reports from prime brokers.

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

Suggested practices

• Monitor leverage level regularly. Depending on the level of leverage, this may require daily or weekly monitoring.

• Stress tests should be done to assess the appropriateness of the level of leverage under both normal and exceptional circumstances (for example, an increased level of redemptions, drop in market values, changing spreads).

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

3.4 Prime broker / counterparty exposure

Observations

• The majority of the fund managers used prime brokers that are affiliates of Canadian Schedule 1 banks.

• The majority of the hedge fund managers used counterparties that are major banks in Canada or the U.S.

• Most fund managers monitored the creditworthiness of their counterparties informally. Some fund managers had formal procedures in place to monitor their counterparty exposure. Procedures included setting a minimum credit rating requirement, monitoring the credit rating of counterparties on a regular basis, and reviewing aggregate exposure to each counterparty.

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Suggested practices

• Monitor, on a regular basis, the financial stability and credit risk of all counterparties including prime brokers by assessing the fund's aggregate exposure to each counterparty regularly, checking the credit rating of counterparties regularly, and maintaining regular contact with the counterparties.

• Diversify counterparty risk, where possible.

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

3.5 Monitoring of funds of hedge funds

This section relates only to those fund managers who were also acting as the portfolio manager.

Observations

• The majority of the fund of hedge fund managers performed adequate due diligence before making an investment in an underlying hedge fund. We observed fund managers having well-documented and traceable procedures for selecting underlying hedge funds based on both qualitative and quantitative characteristics of the funds and the fund manager.

• The majority of the fund managers received an in-person meeting with the underlying fund manager. They reviewed the most recent audited financial statements of the underlying fund and made appropriate enquiries in considering whether the liquidity level of the underlying fund was appropriate and sufficient for the fund of hedge funds to meet its redemption obligations.

• Some fund managers would only invest in an underlying hedge fund if an external fund administrator performed the valuation function.

• The majority of the fund of hedge fund managers had regular communication (usually weekly) with the underlying fund managers to evaluate fund performance, portfolio composition and the financial condition of the underlying funds.

• Some fund of hedge fund managers did not have full transparency of the underlying fund holdings at any time. Some managers only had full transparency on an infrequent basis.

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Suggested practices

• Before making an investment decision, a fund of hedge fund manager should make reasonable enquiries to ensure that:

• the underlying portfolio manager possesses adequate expertise, experience and qualifications

• assets of the underlying fund are held by an independent, reputable custodian

• the underlying fund is audited by an independent, reputable auditor at least annually

• the underlying fund manager has well-established systems and controls in place to administer their funds. If any functions are outsourced to a service provider, assess that there is adequate oversight of the service provider

• the valuation function is performed independently

• the underlying fund manager will provide adequate information on the fund's activities on a regular basis; this information should include information on fund holdings, leverage level, financial results, and significant events

• the liquidity level of the underlying fund is appropriate and sufficient for the fund of hedge funds to meet its redemption obligations

• it has considered the liquidity of the types of instruments held by the underlying fund and is aware of any limitations on redemption privileges that can be imposed by the underlying fund manager

• Document due diligence performed when selecting the underlying hedge funds.

• Obtain and review the most recent audited financial statements of the underlying funds prior to investing. Subsequent to that, obtain and review the audited financial statements at least annually.

• Have full transparency of the underlying fund holdings at all times in order to manage the fund portfolio and assess risks at the aggregate fund level.

• Collect leverage information from each underlying fund and assess overall leverage at the portfolio level.

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3.6 Liquidity or viability issues

Observations

• Most fund managers increased cash balances during the market turmoil in anticipation of heavier than normal redemptions. This, along with the low percentage in private or illiquid holdings in general (as noted under Portfolio Holdings section above), enabled most fund managers to not have to exercise their right to suspend redemptions.

• Redemption restrictions imposed by the fund managers in our sample were carried out as permitted by the funds' offering documents. We did not note any incidences where preferential treatment was given to some unitholders allowing them to redeem their holdings prior to the fund manager deciding to suspend or restrict redemptions of a fund.

• Fund managers took appropriate steps to distribute assets of funds that were in the process of winding up in an equitable manner.

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Suggested practices

• Monitor unitholder activities and liquidity requirements on a regular basis

• Communicate major events to investors in a timely manner

• Consider the interests of all unitholders when dealing with redemption requests

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Other statistics

• 21 (0.9% based on assets under management) hedge funds had been wound up or were in the process of winding up, primarily as a result of market conditions.

• 16 (0.7% based on assets under management) hedge funds suspended redemptions during our review period. 12 (0.5% based on assets under management) of those that suspended redemptions were in the process of winding up during our review period.

3.7 Fund valuation

Observations

• The majority of fund managers used an independent third-party service provider to perform the valuation function.

• We observed fund managers using appropriate valuation methodologies to value portfolio securities. They applied their valuation methodologies consistently, and maintained adequate documentation to support any manually-priced securities and write-downs.

• Fund managers reviewed pricing of hard-to-value securities frequently (usually weekly) to determine if a revaluation was warranted. Some fund managers had individuals who were independent of the portfolio management function (for example, an independent valuation committee or a compliance officer) review and approve securities revaluation.

• Some fund managers valued restricted stocks at the market value of the freely traded underlying stock price and failed to apply a discount to reflect the illiquidity of these investments.

• Some fund managers valued warrants at the intrinsic value rather than the fair value. These fund managers did not have a process in place to ensure that the intrinsic value and the fair value were not materially different.

• Some fund managers did not have adequate written policies and procedures in the following areas:

• valuation methodologies and processes to be followed for private, illiquid or restricted securities

• processes for making manual price adjustments

• review and approval processes for NAV calculations

• processes to rectify NAV errors

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Suggested practices

• Develop and implement written policies and procedures that include, at a minimum, the following:

• valuation methodologies for all types of securities held in the funds' portfolios

• valuation processes for securities that do not have readily available market prices

• procedures to review and approve each NAV calculation, and to detect non-compliance with internal guidelines

• procedures to investigate price variances over a pre-determined tolerance level

• procedures for the identification, rectification and accounting treatment for NAV errors

• Disclose valuation policies and procedures, the role of third parties, and procedures for mitigating potential conflicts of interest during valuation.

• Apply valuation policies and procedures consistently.

• For hard-to-value securities, the fund manager may be involved in pricing the securities. The fund manager should provide the external fund administrator with sufficient supporting documentation.

• Ensure that responsibilities between the portfolio management function and the valuation function are segregated.

• Where it is necessary to use estimates in a fund of hedge fund structure to calculate NAV, develop appropriate procedures to review and adjust the NAV for any differences between the actual and the estimated NAV of the underlying funds.

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3.8 Use of service providers

Observations

• The majority of the fund managers used a third-party fund administrator to perform administrative functions, including fund valuation. These fund managers maintained adequate controls over key functions, and adequate oversight over their service providers. They reviewed NAV calculations, fee calculations and reconciliations prepared by their service provider, and reconciled their own records with those of the service provider.

• Some fund managers did not maintain adequate books and records evidencing their oversight of the service provider. They did not maintain evidence of review or approval of NAV calculations, fee calculations and reconciliations prepared by the service provider.

• Three fund managers delegated their fund administration responsibility to a service provider but did not enter into a written service level agreement outlining the roles and responsibilities of the service provider in administering their funds.

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Suggested practices

• Fund managers should maintain appropriate oversight and have the ability to review the accuracy and quality of the services provided in a timely manner. Even if delegating to service providers, fund managers maintain the ultimate responsibility for the operations of the fund.

• Enter into agreements that clearly outline the service providers' roles and responsibilities.

• Review service providers' processes, information flows, NAV and fee calculations, and ensure that adequate operational controls are maintained by the service providers.

• When the valuation of certain instruments can only be done by the manager, it is important that the external fund administrator also maintains documentation supporting the valuation.

• Assess service quality of all service providers at least annually, considering issues encountered and errors made by the service providers.

• Establish guidelines on how to monitor each outsourced function. This would include the types and frequency of reports to be provided by service providers, the types of issues that should be escalated to the fund manager; maintain evidence of the reviews of the outsourced functions.

• Maintain effective internal controls, checks and balances and segregation of duties. For example, require dual signatures to approve significant transactions, and reconcile cash and securities positions to the service provider's records regularly.

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3.9 Offering document disclosure

Hedge funds are sold primarily to high-net-worth individuals and institutional investors by way of an offering memorandum.

Observations

• Overall, hedge fund managers in our sample provided adequate and clear disclosure in their funds' offering documents in most areas, except as noted below:

• six fund managers did not adequately disclose risk factors associated with investing in their funds, including:

• counterparty risk

• credit risk

• interest rate risk

• risk of using derivatives

• risk of using leverage

• five fund managers did not fully disclose the fees and expenses incurred by their funds, including:

• personnel and office space expenses

• administrative fees

• legal, audit and custodian fees

• five fund managers did not disclose the material contracts they entered into on behalf of their funds, including with service providers

• seven fund managers provided inconsistent, incorrect or outdated information in the offering documents of their funds

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Suggested practices

• Fund managers should disclose all material information consistently and accurately in the fund's offering document. Such information should include, at a minimum, the following:

• investment objectives, strategies and restrictions, including the use of leverage and derivatives

• material risk factors

• valuation policies and procedures

• types of fees and expenses incurred by the fund

• material contracts, including the use of service providers

• conflicts of interest and procedures to identify and address them

• subscription and redemption policies

• Fund managers should provide investors with adequate information throughout the life of their investment to allow them to monitor the investment over time. Such information should include, at a minimum, the following:

• semi-annual and annual financial statements

• periodic performance information

• regular investor communication, reporting on significant events, any changes in the fund's risk profile, etc.

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3.10 Other regulatory compliance matters

• Four fund managers distributed units of their hedge funds without being registered as an Exempt Market Dealer (formally Limited Market Dealer) with the OSC. Firms that are in the business of distributing hedge fund securities pursuant to a prospectus exemption must be registered as an Exempt Market Dealer.

• If the hedge fund meets the definition of a mutual fund, NI 81-106, which contains continuous disclosure requirements, applies. Sections 2.1 and 2.3 of NI 81-106 describe the filing requirements, and section 2.11 exempts certain funds from these filing requirements if certain criteria are met. One of these criteria requires the delivery of the fund's financial statements to unitholders within a specified time period. Six hedge fund managers did not deliver the annual and semi-annual financial statements of their funds to their unitholders within 90 days after the year-end and within 60 days after the end of a semi-annual period. These instances of non-compliance were addressed with each individual fund manager.

3.11 Comparison of fund manager practices to best practices suggested by Alternative Investment Management Association (AIMA)

AIMA published Guide to Sound Practices for Hedge Fund Administrators in September 2009. We compared the practices of the fund managers visited against some of the key suggested best practices by AIMA. The results are shown in Appendix B.

{1} The impact of market turmoil on non-bank sponsored ABCP and mutual funds was discussed in the CSA Consultation Paper - Securities Regulatory Proposals Stemming from the 2007-08 Credit Market Turmoil and its Effect on the ABCP Market in Canada dated October 2008.

{2} Money market fund assets under management was $72 billion as at January 2009: Investment Funds Institute of Canada.

{3} A split share company, for the purposes of our review, is an investment fund that acquires a fixed portfolio of securities and issues two classes of shares (preferred shares and capital shares) to investors.

{4} Structured products based on credit related derivatives, for the purposes of our review, are funds that invest in credit default securities or derivatives whose performance is based on credit events of specified issuers.

{5} Non-conventional fund assets under management, measured by market capitalization, was $43 billion as at March 2008: TMX Group.

{6} Money market funds are required to comply with the investment restrictions under section 1.1 of NI 81-102, including (i) all of the assets must be invested in cash, cash equivalents, debt with a term to maturity of no more than 365 days and/or floating rate debt; (ii) dollar-weighted average term to maturity should not exceed 90 days; (iii) not less than 95% of the assets must be invested in the currency in which the NAV of the fund is calculated; and (iv) not less than 95% of the assets must be invested in cash, cash equivalents or evidence of indebtedness of issuers, provided that the commercial paper of the issuer has an approved credit rating.

{7} Under section 2.1 of NI 81-102, a mutual fund is prohibited from purchasing securities of an issuer if, after the purchase, more than 10% of its net assets would be invested in any one issuer.

{8} See CSA Staff Notice 44-304 Linked Notes Distributed Under Shelf Prospectus System for a description of linked notes and the pre-clearance process.

{9} Subsection 111(2)(b) of the Act prohibits a mutual fund from making an investment in any person or company in which the mutual fund, alone or together with one or more related mutual funds, is a substantial security holder, i.e. owning more than 20% of the voting securities.

{10} Subsection 118(2)(a) of the Act prohibited a portfolio manager from investing in an issuer in which a responsible person is an officer or director. Subsection 118(2)(b) of the Act prohibited a portfolio manager from cross trading between two accounts. With the implementation of National Instrument 31-103 -- Registration Requirements and Exemptions (NI 31-103), section 118 of the Act was repealed. Section 13.5 of NI 31-103 contains prohibitions on certain managed account transactions and captures the same type of transactions that were prohibited under section 118 of the Act.

{11} There are several ways borrowing is measured in the industry. Some common measures are:

• gross market exposure, measured by the total of long and short positions, divided by capital

• net market exposure, measured by long positions less short positions, divided by capital

The majority of the fund managers quoted borrowing on a gross market exposure basis.

Appendix A: Statistics on fund managers who completed our questionnaire and who received a site visit

{12} 50 fund managers received our questionnaire, but only 36 of them managed money market fund(s).

{13} As at September 19, 2008.

{14} Total market capitalization as at March 2008: TMX Group.

{15} This represents the total net assets of the hedge funds managed by the hedge fund managers as at December 31, 2008, which includes fund assets held by Canadians and non-Canadians.

{16} This represents the portion of total net assets held by Ontario investors as at December 31, 2008.

{17} This represents the total number of hedge funds managed by the hedge fund managers as at December 31, 2008, which includes funds offered to Canadians and non-Canadians.

{18} This represents the number of hedge funds with investors residing in Ontario.

Appendix B: Hedge fund managers' practices against AIMA's suggested best practices{19}

{19} Alternative Investment Management Association, Guide to Sound Practices for Hedge Fund Administrators, September 2009.

Notice of Ministerial Approval of Amendments to NI 21-101 Marketplace Operation and NI 23-101 Trading Rules

NOTICE OF MINISTERIAL APPROVAL OF AMENDMENTS TO

NATIONAL INSTRUMENT 21-101 MARKETPLACE OPERATION AND

NATIONAL INSTRUMENT 23-101 TRADING RULES

On January 12, 2010, the Minister of Finance approved amendments (Amendments) to National Instrument 21-101 Marketplace Operation and National Instrument 23-101 Trading Rules (together the "Marketplace Rules"). The Commission has also adopted amendments to Companion Policy 21-101CP and Companion Policy 23-101CP (the "Companion Policies").

The amendments to the Marketplace Rules and the Companion Policies not related to the Order Protection Rule{1}, including the prohibition on locked and crossed markets and the update of systems requirements applicable to marketplaces, previously published in the Bulletin on December 18, 2009, will come into force in Ontario on January 28, 2010. The amendments to the Marketplace Rules and the Companion Policies related to the Order Protection Rule will come into force on February 1, 2011. A CSA staff notice that outlines expected milestone dates regarding the implementation of the Order Protection Rule will be published shortly. The Amendments are published in Chapter 5 of the Bulletin. As well, an unofficial consolidated version of the Marketplace Rules and Companion Policies may be found online at www.osc.gov.on.ca.

{1} For a description of the Order Protection Rule, please see the CSA Notice published on November 13, 2009.

Nest Acquisitions and Mergers et al. -- ss. 37, 127, 127.1

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

NEST ACQUISITIONS AND MERGERS,

IMG INTERNATIONAL INC.,

CAROLINE MYRIAM FRAYSSIGNES,

DAVID PELCOWITZ, MICHAEL SMITH, AND

ROBERT PATRICK ZUK

NOTICE OF HEARING

(Sections 37, 127 and 127.1)

TAKE NOTICE THAT the Ontario Securities Commission (the "Commission") will hold a hearing pursuant to sections 37, 127 and 127.1 of the Ontario Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act"), at the offices of the Commission at 20 Queen Street West, 17th Floor Hearing Room on Thursday, January 28, 2010 at 10 a.m., or as soon thereafter as the hearing can be held,

TO CONSIDER whether, in the opinion of the Commission, it is in the public interest, pursuant to ss. 127 and 127.1 of the Act to order that:

(a) trading in any securities by the respondents cease permanently or for such period as is specified by the Commission, pursuant to s. 127(1)2 of the Act;

(b) the acquisition of any securities by the respondents is prohibited permanently or for such other period as is specified by the Commission, pursuant to s. 127(1)2.1 of the Act;

(c) any exemptions contained in Ontario securities law do not apply to the respondents permanently or for such period as is specified by the Commission, pursuant to s. 127(1)3 of the Act;

(d) the respondents be reprimanded, pursuant to s. 127(1)6 of the Act;

(e) Smith resign one or more positions that he holds as a director or officer of any issuer pursuant to s. 127(1)7 of the Act;

(f) the individual respondents be prohibited from becoming or acting as a director or officer of any issuer pursuant to s. 127(1)8 of the Act;

(g) the individual respondents be prohibited from becoming or acting as a director or officer of a registrant or investment fund manager, pursuant to ss. 127(1)8.2 and 8.4 of the Act;

(h) the individual respondents be prohibited from becoming or acting as a registrant, an investment fund manager, or promoter, pursuant to s. 127(1)8.5 of the Act;

(i) the respondents pay an administrative penalty of not more than $1 million for each failure by that respondent to comply with Ontario securities law, pursuant to s. 127(1)9 of the Act;

(j) the respondents disgorge to the Commission any amounts obtained as a result of non-compliance by that respondent with Ontario securities law, pursuant to s. 127(1)10 of the Act;

(k) the respondents be ordered to pay the costs of the Commission investigation and the hearing, pursuant to s. 127.1 of the Act; and

(l) such other orders as the Commission may deem appropriate.

AND TO CONSIDER whether, in the opinion of the Commission, an order should be made pursuant to section 37 of the Act that the respondents cease permanently to telephone from within Ontario to any residence within or outside Ontario for the purpose of trading in any security or any class of securities; and

BY REASON OF the allegations as set out in the Statement of Allegations dated January 18, 2010 and such further additional allegations as counsel may advise and the Commission may permit;

AND TAKE FURTHER NOTICE that any party to the proceedings 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 any further notice of the proceedings.

DATED at Toronto this 18th day of January 2010.

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

NEST ACQUISITIONS AND MERGERS,

IMG INTERNATIONAL INC.,

CAROLINE MYRIAM FRAYSSIGNES,

DAVID PELCOWITZ, MICHAEL SMITH, AND

ROBERT PATRICK ZUK

STATEMENT OF ALLEGATIONS

OF STAFF OF THE

ONTARIO SECURITIES COMMISSION

Staff of the Ontario Securities Commission (the "Commission") make the following allegations:

I. OVERVIEW

1. This proceeding centres on the solicitation of various residents of the United Kingdom (the "U.K. Residents") by Nest Acquisitions and Mergers ("Nest A&M") and IMG International Inc. (a.k.a "Investors Marketing Group International Inc", collectively, "IMG") in respect of the sale of securities.

2. Staff allege that the respondents' course of conduct spanned the period from August 14, 2008 to June 11, 2009 (the "Material Time").

II. BACKGROUND

A. The Individual Respondents

3. None of the individual respondents were registered in any capacity with the Commission during the Material Time.

4. Caroline Myriam Frayssignes ("Frayssignes") is a resident of Oakville, Ontario. Frayssignes is the sole proprietor of a business called "Nest". Frayssignes is one of two signatories to a bank account she set up in the name of Nest at a Royal Bank of Canada branch in Oakville, Ontario (the "Nest Account").

5. David Paul Pelcowitz ("Pelcowitz") is a former registrant in various capacities, who was last registered as a trading officer, director and supervisory procedures officer. His registration with the Commission ended on June 27, 2000. Pelcowitz is a resident of Thornhill, Ontario.

6. Michael Smith (a.k.a "Micheal") ("Smith") is the sole director and officer of IMG and resides at an unknown address.

7. Robert Patrick Zuk ("Zuk") is a resident of Oakville, Ontario and is Frayssignes' boyfriend. He is the other signatory to the Nest Account. Zuk was the subject of an order of the Commission to, among other things, cease trading in securities for a period of 15 years from March 1, 2007 (the "Zuk Order"). Zuk was registered with the Commission in the category of salesperson from February 13, 1987 to November 15, 1990.

B. The Corporate Respondents

8. None of the corporate respondents were registrants in Ontario during the Material Time.

9. IMG was incorporated in Ontario on June 17, 2008. Smith was the sole director and officer of IMG during the Material Time.

10. Nest A&M is a fictitious business, purporting to be based in St. Vincent and the Grenadines.

III. THE ADVANCED-FEE SCHEMES

A. The Solicitations

11. The U.K. Residents received unsolicited phone calls from representatives of Nest A&M or IMG and were told that Nest A&M or IMG had buyers for securities already held by the U.K. Residents.

12. The U.K. Residents were then told that they would have to pay "performance bonds", "non-resident taxes" and/or fees to remove "share restrictions" to Nest A&M or IMG before Nest A&M or IMG could complete the sale of the securities.

13. Pelcowitz provided documents to the U.K. Residents on behalf of Nest A&M and IMG, which provided details of the proposed sale of the securities, including that the U.K. Residents would received significant premiums to the value of the securities held by them. The documents also detailed the wire-transfer information for, in the case of Nest A&M, the Nest Account, and, in the case of IMG, the U.K. Residents were instructed to send funds to a bank account in the name of IMG at the Parama Lithuanian Credit Union located in Toronto, Ontario (the "IMG Account").

14. The U.K. Residents sent their "performance bond" or other advance-fee funds via wire transfer to the Nest Account or the IMG Account.

15. The U.K. Residents were subsequently approached and advised they would have to pay further fees so that the transactions could proceed. When the U.K. Residents refused to send further funds to either the Nest Account or the IMG Account, they stopped receiving communications from representatives of Nest A&M or IMG.

16. None of the transactions for which the U.K. Residents wired funds to the Nest Account or the IMG Account have been completed.

17. During the Material Time, Smith, Pelcowitz, Zuk and Frayssignes misappropriated the funds obtained from the U.K. Residents.

18. The respondents participated in acts, solicitations, conduct, or negotiations directly or indirectly in furtherance of the sale or disposition of securities for valuable consideration, in circumstances where there were no exemptions available to the respondents under the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act").

B. Fraudulent Conduct

19. During the Material Time, Smith, Pelcowitz and other employees, representatives or agents of Nest A&M or IMG provided information to the U.K. Residents that was false, inaccurate and/or misleading, including, but not limited to, the following:

(a) that Nest A&M or IMG could arrange to sell securities held by the U.K. Residents for significant premiums over the current market value of the securities;

(b) that Nest A&M or IMG had received funds from the purported purchasers of the securities held by the U.K. Residents and that these funds were being "sequestered in our Trust Account";

(c) that within three business days of the U.K. Residents providing advance fees they would receive all of the funds for the sale of their securities;

(d) that the funds were "fully refundable"; and

(e) that certain U.K. Residents were offered a five percent discount on a "non-resident tax" because the U.K. Residents were over sixty-five years old.

20. The false, inaccurate and misleading representations were made with the purported intention of effecting trades in the securities belonging to the U.K. Residents.

21. Once funds were wire transferred by the U.K. Residents to the Nest Account or the IMG Account the funds were withdrawn as cash or cheques, which were primarily payable or provided to Pelcowitz, Zuk, Frayssignes, David O'Brien Professional Legal Corp., and others.

22. The respondents and other employees, representatives or agents of Nest A&M or IMG engaged in a course of conduct relating to securities that they knew or reasonably ought to have known would result in a fraud on persons.

IV. MISLEADING STATEMENTS MADE TO THE COMMISSION

23. Frayssignes gave evidence to Commission Staff appointed to investigate this matter on July 16, 2009, which contained materially misleading and/or untrue statements, contrary to s. 122(1)(a) of the Act, relating to the following:

(a) the source of funds received into the Nest Account;

(b) the disposition of funds received into the Nest Account; and

(c) whether she had received instructions to purchase securities of an Over-The-Counter issuer called Church and Crawford.

24. Zuk gave evidence to Commission Staff appointed to investigate this matter on November 12, 2009, which contained materially misleading and/or untrue statements, contrary to s. 122(1)(a) of the Act, relating to the following:

(a) the source of funds received into the Nest Account;

(b) the disposition of funds received into the Nest Account; and

(c) his knowledge concerning Church and Crawford and whether he instructed Frayssignes to purchase its securities.

V. CONDUCT CONTRARY TO ONTARIO SECURITIES LAW AND CONTRARY TO THE PUBLIC INTEREST

25. The specific allegations advanced by Staff are:

(a) During the Material Time, the respondents traded in securities without being registered to trade in securities, contrary to section 25(1)(a) of theAct;

(b) During the Material Time, the respondents engaged or participated in acts, practices or courses of conduct relating to securities that the respondents knew or reasonably ought to have known perpetrated a fraud on persons, contrary to section 126.1(b) of the Act;

(c) During the Material Time, Smith, being the sole director and officer of IMG, did authorize, permit or acquiesce in the commission of the violations of sections 25 and 126.1 of the Act, as set out above, by IMG or by the employees, agents or representatives of IMG, pursuant to section 129.2 of the Act;

(d) Frayssignes gave evidence to Commission Staff appointed to investigate this matter on July 16, 2009, which contained materially misleading and/or untrue statements, contrary to s. 122(1)(a) of the Act;

(e) Zuk gave evidence to Commission Staff appointed to investigate this matter on November 12, 2009, which contained materially misleading and/or untrue statements, contrary to s. 122(1)(a) of the Act;

(f) During the Material Time, Zuk breached the Zuk Order by trading in securities, contrary to section 122(1)(c) of the Act; and

(g) The above-described conduct of the respondents was contrary to the public interest.

26. Staff reserve the right to make such other allegations as Staff may advise and the Commission may permit.

DATED AT TORONTO this 18th day of January 2010.

Peter Robinson Sentenced to Four Months in Jail for Contempt

FOR IMMEDIATE RELEASE

January 15, 2010

PETER ROBINSON SENTENCED TO

FOUR MONTHS IN JAIL FOR CONTEMPT

TORONTO -- An Ontario Superior Court judge has sentenced Peter Robinson to four months in jail for contempt as a result of his failure to comply with Ontario Securities Commission summonses and with Court orders.

Mr. Robinson was a respondent in an Application, initiated by the OSC, in the Ontario Superior Court of Justice. In this matter, the OSC sought a finding that Mr. Robinson was in contempt.

Mr. Justice Frank Newbould found Mr. Robinson in contempt on October 27, 2009 for failing to attend at the OSC as lawfully required to answer questions in connection with three investigations. At that time, Mr. Robinson was ordered by the court to attend at the OSC and answer questions on specified dates in November 2009. Mr. Robinson failed to attend on those dates.

On January 7, 2010, a hearing was held for Mr. Robinson to show cause why he should not be subject to one or more sanctions for contempt. On January 14, 2010, Mr. Justice Donald R. Cameron of the Superior Court of Justice sentenced Mr. Robinson to four months in jail for his contempt.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets. Investors are urged to check the registration of any person or company offering an investment opportunity and to review the OSC investor materials available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

OSC Reports on Focused Reviews of Investment Funds

FOR IMMEDIATE RELEASE

January 19, 2010

OSC REPORTS ON

FOCUSED REVIEWS OF INVESTMENT FUNDS

TORONTO -- The Ontario Securities Commission (OSC) today issued Staff Notice 33-733 Report on Focused Reviews of Investment Funds, September 2008 -- September 2009, which summarizes compliance review work conducted by staff of the OSC's Compliance and Registrant Regulation Branch and Investment Funds Branch.

The publication of this notice follows the September 2009 completion of a three-phase review of investment funds. The report describes our observations from the last phase, a review of Ontario-based hedge funds, and provides further reporting from the money market funds and non-conventional investment funds reviews previously reported on in OSC Staff Notice 33-732 2009 Compliance Team Annual Report.

Staff Notice 33-733 includes suggested practices for fund managers to strengthen their compliance with Ontario securities laws and to improve their systems of internal controls and supervision. The suggested practices cover a broad spectrum of issues, including: fund valuations, portfolio holdings, use of service providers, and offering document disclosure.

Staff Notice 33-733 Report on Focused Reviews of Investment Funds, September 2008 -- September 2009 is available on the OSC website, www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

New Life Capital Corp. et al.

FOR IMMEDIATE RELEASE

January 14, 2010

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

NEW LIFE CAPITAL CORP.,

NEW LIFE CAPITAL INVESTMENTS INC.,

NEW LIFE CAPITAL ADVANTAGE INC.,

NEW LIFE CAPITAL STRATEGIES INC.,

1660690 ONTARIO LTD.,

L. JEFFREY POGACHAR,

PAOLA LOMBARDI AND ALAN S. PRICE

TORONTO -- The Commission issued an Order in the above named matter which provides that the hearing is adjourned to February 16, 2010 at 9:00 a.m. at which time the matter of scheduling the hearing on the merits will be spoken to.

A copy of the Order dated January 13, 2010 is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Coventree Inc. et al.

FOR IMMEDIATE RELEASE

January 15, 2010

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

COVENTREE INC., GEOFFREY CORNISH AND

DEAN TAI

TORONTO -- The Commission issued an Order which provides that this matter is adjourned to a confidential pre-hearing conference to be held on February 10, 2010.

A copy of the Order dated January 14, 2010 is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

W.J.N. Holdings Inc. et al.

FOR IMMEDIATE RELEASE

January 18, 2010

I IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

W.J.N. HOLDINGS INC., MSI CANADA INC.,

360 DEGREE FINANCIAL SERVICES INC.,

DOMINION INVESTMENTS CLUB INC.,

LEVERAGEPRO INC., PROSPOREX

INVESTMENT CLUB INC., PROSPOREX

INVESTMENTS INC., PROSPOREX LTD.,

PROSPOREX INC., PROSPOREX FOREX SPV TRUST,

NETWORTH FINANCIALGROUP INC.,

NETWORTH MARKETING SOLUTIONS, DOMINION

ROYAL CREDIT UNION, DOMINION ROYAL

FINANCIAL INC., WILTON JOHN NEALE,

EZRA DOUSE, ALBERT JAMES,

ELNONIETH "NONI" JAMES, DAVID WHITELY,

CARLTON IVANHOE LEWIS, MARK ANTHONY

SCOTT, SEDWICK HILL, TRUDY HUYNH,

DORLAN FRANCIS, VINCENT ARTHUR,

CHRISTIAN YEBOAH, AZUCENA GARCIA,

AND ANGELA CURRY

TORONTO -- The Commission issued an Order in the above matter which provides that (1) the Temporary Order is extended to March 26, 2010; and (2) a hearing in this proceeding will take place commencing on March 25, 2010 at 10:00 a.m. and continuing on March 26, 2010, as may be required.

A copy of the Order dated January 15, 2010 is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Abel Da Silva

FOR IMMEDIATE RELEASE

January 18, 2010

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

ABEL DA SILVA

TORONTO -- Following a hearing held today, the Commission issued an Order today which provides that the hearing with respect to the Notice of Hearing dated October 21st, 2008 and Staff's Statement of Allegations dated October 20th, 2008 is adjourned to April 12th, 2010 at 10:00 a.m.

A copy of the Order dated January 12, 2010 is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Shallow Oil & Gas Inc. et al.

FOR IMMEDIATE RELEASE

January 18, 2010

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

SHALLOW OIL & GAS INC., ERIC O'BRIEN,

ABEL DA SILVA, GURDIP SINGH GAHUNIA

ALSO KNOWN AS MICHAEL GAHUNIA,

ABRAHAM HERBERT GROSSMAN

ALSO KNOWN AS ALLEN GROSSMAN,

MARCO DIADAMO, GORD McQUARRIE,

KEVIN WASH, AND WILLIAM MANKOFSKY

TORONTO -- The Commission issued an Order in the above noted matter which provides that the hearing with respect to the Notice of Hearing dated June 11, 2008 and Staff's Statement of Allegations dated June 10, 2008 is adjourned to June 28, 2010 at 10:00 a.m. for the purpose of a status hearing.

A copy of the Order dated January 12, 2010 is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Nest Acquisitions and Mergers et al.

FOR IMMEDIATE RELEASE

January 19, 2010

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

NEST ACQUISITIONS AND MERGERS,

IMG INTERNATIONAL INC.,

CAROLINE MYRIAM FRAYSSIGNES,

DAVID PELCOWITZ, MICHAEL SMITH, AND

ROBERT PATRICK ZUK

TORONTO -- The Office of the Secretary issued a Notice of Hearing setting the matter down to be heard on January 28, 2010 at 10:00 a.m. or as soon thereafter as the hearing can be held in the above named matter.

A copy of the Notice of Hearing dated January 18, 2010 and Statement of Allegations of Staff of the Ontario Securities Commission dated January 18, 2010 are available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Chapter 2 -- Decisions, Orders and Rulings

Meritas Financial Inc. et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted to mutual funds for extension of lapse date of prospectus for 53 days -- Lapse date extended to after completion of acquisition and amalgamation of the manager -- Extension of lapse date will not affect the currency or accuracy of the information contained in the prospectus -- Securities Act (Ontario).

Applicable Legislative Provisions

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

January 5, 2010

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

MERITAS FINANCIAL INC.

(the "Filer")

AND

IN THE MATTER OF

MERITAS MONEY MARKET FUND,

MERITAS CANADIAN BOND FUND,

MERITAS BALANCED PORTFOLIO FUND,

MERITAS MONTHLY DIVIDEND

AND INCOME FUND,

MERITAS JANTZI SOCIAL INDEX® FUND,

MERITAS U.S. EQUITY FUND AND

MERITAS INTERNATIONAL EQUITY FUND

(collectively, the "Funds")

DECISION

Background

The securities regulatory authority or regulator in Ontario (the "Decision Maker") has received an application from the Filer on behalf of the Funds for a decision under the securities legislation of the Jurisdiction (the "Legislation") that the time limits for the renewal of the simplified prospectus and annual information form of the Funds dated February 6, 2009 (the "Prospectus") be extended to those time limits that would be applicable if the lapse date of the Prospectus was March 31, 2010 (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 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, Québec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Nunavut and Yukon.

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 and the Funds:

1. The Filer is the manager of the Funds, with its head office located in Kitchener, Ontario. The Filer and the Funds are not in default of any of the requirements of the Legislation.

2. The Funds are open-ended mutual funds and are reporting issuers under the Legislation. Securities of the Funds are currently qualified for distribution in each of the provinces and territories of Canada under the Prospectus, as amended.

3. The lapse date for the distribution of securities of the Funds under the Prospectus is February 6, 2010 (the "Lapse Date").

4. Pursuant to the Legislation, provided a pro forma simplified prospectus is filed not less than 30 days before February 6, 2010, a final simplified prospectus is filed by February 16, 2010, and a receipt for the final simplified prospectus is issued by the securities regulatory authorities by February 26, 2010, the securities of the Funds may be distributed after the Lapse Date during this prospectus renewal period.

5. On December 2, 2009, the Filer announced by press release the signing of a definitive agreement for the acquisition by Qtrade Canada Inc. ("Qtrade") of all of the issued and outstanding shares of the Filer subject to regulatory approvals and other conditions as set out in the agreement. A corresponding material change report and amendments to the Prospectus and annual information form of the Funds were filed on SEDAR. It is contemplated that the share sale and acquisition will close on March 31, 2010 and will be followed by the amalgamation of the Filer with two other wholly-owned subsidiaries of Qtrade, Qtrade Fund Management Inc. and OceanRock Capital Partners Inc. The combined entity will continue under the name Qtrade Fund Management Inc.

6. The acquisition and amalgamation (together, the "Transaction") will be effected in accordance with applicable requirements of the Legislation, including National Instrument 81-102 Mutual Funds, National Instrument 81-106 Investment Fund Continuous Disclosure and National Instrument 31-103 Registration Requirements and Exemptions.

7. In order to reduce the cost of renewing the Prospectus in February and then subsequently amending and restating the Prospectus in April following the proposed Transaction, the Filer wishes to extend the Lapse Date to March 31, 2010 so that the renewal simplified prospectus can be filed by April 10, 2010, following completion of the proposed Transaction.

8. If the Exemption Sought is not granted, the Legislation requires that the Funds file the renewal simplified prospectus by February 16, 2010, within 43 days of the proposed Transaction. Requiring the Funds to file a renewal simplified prospectus and then amend the renewal simplified prospectus within such a short period of time would lead to increased costs borne by the Funds (and ultimately by investors in the Funds).

9. Since February 6, 2009, the date of the Prospectus, there have been no material changes in respect of the Funds other than those for which amendments to the Prospectus have been filed. Accordingly, the Prospectus contains all material facts regarding the Funds.

10. The extension requested will not affect the currency or accuracy of the information contained in the Prospectus, as amended, and, accordingly, will not be prejudicial to the public interest.

Decision

The Decision Maker 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 Maker under the Legislation is that the Exemption Sought is granted.

Counsel Portfolio Services Inc. et al.

Headnote

NP 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval of Mutual Fund Mergers -- approval required because the 3 proposed mergers do not meet the criteria for pre-approval -- fee structures of terminating funds and corresponding continuing funds not substantially similar.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 5.5(1)(b), 5.6(1)(a)(ii).

January 7, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(THE "JURISDICTION")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATION IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

COUNSEL PORTFOLIO SERVICES INC.

(THE "FILER")

AND

IN THE MATTER OF

COUNSEL SELECT CANADA,

COUNSEL SELECT AMERICA AND

COUNSEL SELECT INTERNATIONAL

(each a "TERMINATING FUND" and collectively,

the "TERMINATING FUNDS")

AND

IN THE MATTER OF

COUNSEL CANADIAN GROWTH,

COUNSEL U.S. GROWTH AND

COUNSEL INTERNATIONAL GROWTH

(each a "CONTINUING FUND" and collectively,

the "CONTINUING FUNDS")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Terminating Funds for a decision under the securities legislation of the Jurisdiction (the "Legislation") approving the Proposed Mergers (as defined below) of the Terminating Funds into the corresponding Continuing Funds (the Terminating Funds and the Continuing Funds are referred to as the "Funds" and each referred to as a "Fund") pursuant to subsection 5.5(1)(b) of National Instrument 81-102 Mutual Funds ("NI 81-102") (the "Approval 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 ("Principal Regulator"); 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 British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, Northwest Territories, Nunavut and Yukon (together with the Principal Regulator, the "Decision Makers").

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 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 Filer:

1. The Filer is a corporation governed by the laws of Ontario and is registered as a portfolio manager in Ontario.

2. The Filer is the manager and trustee of the Funds, each of which is an open-ended mutual fund trust governed under the laws of Ontario.

3. Series A, D, and I units of the Terminating Funds and Series A, D, E, F, I and P units of the Continuing Funds are available and offered for sale in all provinces and territories of Canada other than Quebec under a simplified prospectus and annual information form dated October 22, 2009, as amended.

4. The Funds are reporting issuers under the applicable securities legislation of each province and territory of Canada other than Quebec and are not in default of securities legislation in any of these Canadian provinces or territories.

5. Each of the Funds follows the standard investment restrictions and practices in NI 81-102, except pursuant to the terms of any exemption that has been previously obtained in respect of that Fund.

6. The net asset value for each series of securities of the Funds is calculated on a daily basis on each day the Toronto Stock Exchange is open for trading.

7. The Filer proposes to merge the Terminating Funds into the Continuing Funds as follows (each a "Proposed Merger" or collectively, the "Proposed Mergers"):

Terminating Fund	Continuing Fund
Counsel Select	Counsel Canadian
Canada	Growth
Counsel Select	Counsel U.S.
America	Growth
Counsel Select	Counsel
International	International
	Growth

8. The investment objectives of the Terminating Funds are compatible with those of the corresponding Continuing Funds.

9. Approval of the Proposed Mergers is required because the Proposed Mergers do not satisfy all of the criteria for pre-approved reorganizations and transfers set out in section 5.6 of NI 81-102 because contrary to subsection 5.6(1)(a)(ii) of NI 81-102, a reasonable person could consider that the fee structures of the Terminating Funds are not "substantially similar" to their corresponding Continuing Funds.

10. Except as noted above, the Proposed Mergers will otherwise comply with all other criteria for pre-approved reorganizations and transfers set out in section 5.6 of NI 81-102.

11. As required by National Instrument 81-107 Independent Review Committee for Investment Funds, an Independent Review Committee (the "IRC") has been appointed for the Funds. The Filer presented the terms of the Proposed Mergers to the IRC for a recommendation. The IRC reviewed the Proposed Mergers and recommended that it be put to unitholders of the Terminating Funds and Counsel U.S. Growth for their consideration on the basis that the Proposed Mergers would achieve a fair and reasonable result for the Terminating Funds and Counsel U.S. Growth.

12. At the special meetings ("Special Meetings") of unitholders to be held on or about January 25, 2010, unitholders of all mutual funds managed by the Filer (the "Counsel Funds") will be asked to vote on a proposal ("Administration Fee Proposal") to change the basis of calculating the operating expenses of Counsel Funds to a fixed rate administration fee ("Fixed Administration Fee").

13. At the Special Meetings, unitholders of the Terminating Funds and Counsel U.S. Growth will be asked to approve the Proposed Mergers. For each Proposed Merger that is approved, following the merger, unitholders in each Terminating Fund will become unitholders in its corresponding Continuing Fund and adopt the Continuing Fund's investment objectives, strategies, and fee structure (i.e. if unitholders voted in favour of the Administration Fee Proposal for the Continuing Fund, then the Continuing Fund will adopt the Fixed Administration Fee structure. If unitholders voted against the Administration Fee Proposal for the Continuing Fund, then the Continuing Fund will adopt the current operating expense methodology structure). For each Proposed Merger that is approved, unitholders will receive the corresponding series of units of the Continuing Funds in exchange for their units of the Terminating Funds.

14. The Filer will pay the costs of holding the Special Meetings and solicitation of proxies in connection with the Proposed Mergers.

15. As at December 7, 2009, Counsel U.S. Growth had net assets of approximately $13.31 million and Counsel Select America had net assets of approximately $157.93 million. Since Counsel U.S. Growth is substantially smaller than Counsel Select America, the Filer has decided to also convene a meeting of unitholders of Counsel U.S. Growth to consider and vote on the Proposed Merger of Counsel Select America into Counsel U.S. Growth. However, the Filer does not consider the Proposed Merger of Counsel Select America into Counsel U.S. Growth to be a "material change" to Counsel U.S. Growth.

16. If the approval of unitholders of a Terminating Fund or Counsel U.S. Growth is not received in its Special Meeting, then that Proposed Merger will not proceed.

17. Subject to the required approvals of the Decision Makers and the unitholders of the Funds, the Proposed Mergers will be implemented on or about February 5, 2010 (the "Effective Date").

18. Terminating Fund unitholders will continue to have the right to redeem their securities or exchange their securities for securities of any other Counsel Fund at any time up to the close of business on the business day immediately preceding the Effective Date. Terminating Fund unitholders who switch their units for units of other Counsel Funds will not incur any charges. Unitholders who redeem units may be subject to redemption charges.

19. A tailored prospectus, which consists of the current Part A and the Part B of the simplified prospectus of the Continuing Funds, and a management information circular describing the Proposed Mergers and how a Terminating Fund investor can access or obtain the most recent interim and annual financial statements of a corresponding Continuing Fund was filed on SEDAR and was mailed to unitholders of record of the Terminating Funds and Counsel U.S Growth, as at December 18, 2009, on or before January 4, 2010.

20. Following the Proposed Mergers, the Continuing Funds will continue as publicly offered open-ended mutual funds.

21. Following the Proposed Mergers, material change reports and an amendment to the simplified prospectus and annual information form of the Funds will be filed.

22. The Filer submits that the Proposed Mergers will result in the following benefits:

a) Lower management fees: The management fee of each Continuing Fund is lower than the management fee of the corresponding Terminating Fund.

b) Larger net assets: Counsel Canadian Growth and Counsel International Growth have significantly larger net assets than Counsel Select Canada and Counsel Select International, respectively. Following the Proposed Mergers, the Filer expects that Counsel U.S. Growth will have significantly larger net assets than its current net assets. As such, the Filer expects that after the Proposed Mergers, unitholders of Counsel Select Canada and Counsel Select International may enjoy enhanced portfolio diversification and liquidity, and Counsel Select America will continue to enjoy these benefits.

c) Similar investment objectives: For each Proposed Merger, both the Terminating Fund and the Continuing Fund operate using similar investment objectives: (i) Counsel Select Canada and Counsel Canadian Growth both invest in Canadian equity and fixed income securities; (ii) Counsel Select America and Counsel U.S. Growth both invest in U.S. equity securities; and (iii) Counsel Select International and Counsel International Growth both invest in international equity securities.

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 Approval Sought is granted.

Goodman & Company, Investment Counsel Ltd. and Dynamic Venture Opportunities Fund Ltd.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted for extension of lapse date of prospectus for 2 days -- Lapse date extended due to Filer's error in calculating the timelines per section 62(2) of the Securities Act (Ontario).

Applicable Legislative Provisions

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

January 8, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the "Principal Jurisdiction")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

GOODMAN & COMPANY, INVESTMENT COUNSEL LTD.

(the "Manager")

AND

DYNAMIC VENTURE OPPORTUNITIES FUND LTD.

(the "Fund")

DECISION

Background

The Principal Regulator (as defined below) in the Principal Jurisdiction has received an application from the Manager on behalf of the Fund for a decision under Subsection 62(5) of the Securities Act (Ontario) (the "Act") and the equivalent provisions contained in the securities legislation of the other Jurisdictions (as defined below) that the lapse date of the long form prospectus of the Fund dated January 9, 2009 (the "Current Prospectus") be extended to January 11, 2010 and that the time limits prescribed by Subsection 62(2) of the Act and of the equivalent provisions in the securities legislation of the other Jurisdictions be extended accordingly (the "Relief Sought").

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

(a) the Ontario Securities Commission is the principal regulator (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 all other provinces and territories of Canada (collectively, the "Jurisdictions").

Interpretation

Defined terms contained in National Instrument 14-101 -- Definitions and MI 11-102 have the same meanings in this decision ("Decision") unless they are otherwise defined in this Decision.

Representations

This Decision is based on the following facts represented by the Manager:

1. The Manager is the manager and portfolio advisor of the Fund.

2. The Fund filed a final prospectus dated January 9, 2009 (the Current Prospectus) for which it obtained a receipt and under which it has been distributing its securities since the date of the Current Prospectus.

3. The lapse date (the "Lapse Date") for the Current Prospectus is January 9, 2010 and accordingly to qualify for the timelines stipulated by subsection 62(2) of the Act (and the equivalent in the other Jurisdictions) a pro forma prospectus should have been filed no later than December 9, 2009.

4. The Fund filed a prospectus on December 11, 2009 (the "Pro Forma Prospectus") in connection with the continuous public offering of the securities of the Fund to the public beyond the Lapse Date.

5. Subsection 62(5) of the Act (and the equivalent in the other Jurisdictions) provides that "the Commission may, upon an application of a reporting issuer, extend, subject to such terms and conditions as it may impose, the time provided by subsection (2) where in its opinion it would not be prejudicial to the public interest to do so".

6. If the Relief Sought is not granted, the Fund will no longer distribute its securities in the Jurisdictions pursuant to the Current Prospectus following January 9, 2010.

7. The Manager filed the Pro Forma Prospectus on December 11, 2009 in reliance on its interpretation that the lapse date of the Current Prospectus was in fact January 11, 2010. Its interpretation was based on the definition of "lapse date" at subsection 62(1) of the Act where in it refers to a date that is 12 months "after" the date of the most recent prospectus.

8. The Manager represents that it was a reasonable mistake in interpretation and accepts that January 9, 2010 is the correct lapse date.

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.

I.C.T.C. Holdings Corporation -- s. 1(10)

Headnote

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).

January 14, 2010

Dear Sir or Madam:

The Applicant has applied to the Ontario Securities Commission (the "Decision Maker") for a decision under the securities legislation (the "Legislation") of the Jurisdiction that the Applicant is not a reporting issuer.

As the Applicant has represented to the Decision Maker that:

(a) the outstanding securities of the Applicant, including debt securities, are beneficially owned, directly or indirectly, by fewer than 15 security holders in Ontario 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 the Jurisdiction 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,

the Decision Maker 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.

Mecachrome International Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Issuer is not a reporting issuer -- Issuer has no publicly held securities following CCAA proceedings.

Applicable Legislative Provisions

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

January 15, 2010

Translation

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUEBEC, ONTARIO, MANITOBA,

SASKATCHEWAN, ALBERTA,

BRITISH COLUMBIA, NEW BRUNSWICK,

NOVA SCOTIA, PRINCE EDWARD ISLAND AND

NEWFOUNDLAND AND LABRADOR

(the "Jurisdictions")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

MECACHROME INTERNATIONAL INC.

(the "Filer")

DECISION

Background

The securities regulatory authority or regulator 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") that the Filer is not a reporting issuer in the Jurisdictions (the "Exemptive Relief Sought").

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

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

(b) the decision is the decision of the principal regulator and evidences the decision of each other Decision Maker.

Interpretation

Terms defined in Regulation 14-101 respecting Definitions 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 organized under the Canada Business Corporations Act (the "CBCA") with its head office in Montréal, Québec.

2. The Filer is a reporting issuer in the Jurisdictions.

3. On December 12, 2008, the Filer obtained an order of protection from the Québec Superior Court (the "Court") granting inter alia a stay of proceedings by its creditors pursuant to the Companies' Creditors Arrangement Act (Canada) (the "CCAA"). The stay of proceedings has been extended from time to time by the Court and will currently expire on January 18, 2010.

4. On August 26, 2009, the Filer's creditors approved its proposed plan of reorganization and compromise dated August 4, 2009 (the "Plan").

5. On September 1, 2009, the Filer obtained an order from the Court sanctioning the Plan pursuant to the CCAA and Section 191 of the CBCA.

6. On December 16, 2009, pursuant to the Plan, the Filer filed an amended and restated plan (the "Amended Plan").

7. Immediately prior to the effective date of the Amended Plan the authorized share capital of the Filer consisted of an unlimited number of multiple voting shares (the "Multiple Voting Shares"), an unlimited number of subordinate voting shares (the "Subordinate Voting Shares") and an unlimited number of preferred shares issuable in series.

8. Immediately prior to the effective date of the Amended Plan the Filer had 7,509,532 Multiple Voting Shares, 16,264,972 Subordinate Voting Shares and no preferred shares were issued and outstanding.

9. Immediately prior to the effective date of the Amended Plan the Filer had €200 million aggregate principal amount of unsecured Senior Subordinated Notes bearing interest at the annual rate of 9%, due in 2014 that were issued and outstanding (the "Notes").

10. On December 17, 2009, the Amended Plan became effective.

11. As provided in the Amended Plan, the following actions occurred, amongst others:

a) the amendment of the share capital of the Filer to create the following new classes of shares: (i) a class of redeemable non-voting preferred shares (the "Preferred Shares"); (ii) a class of voting common shares (the "Common Shares"); (iii) a class of multiple voting redeemable common shares (the "MVRCS"); and (iv) a class of subordinate voting redeemable common shares (the "SVRCS");

b) the Multiple Voting Shares were exchanged for MVRCS;

c) the Subordinate Voting Shares were exchanged for SVRCS;

d) in consideration of a subscription amount of approximately €43,595,095 paid by Mecadev S.A.S. to the Filer, Macadev S.A.S. was issued 43,594,995 Preferred Shares and 100 Common Shares of the Filer;

e) the MVRCS and the SVRCS were redeemed by the Filer and cancelled;

f) the amendment of the share capital of the Filer to amend and cancel the Multiple Voting Shares and the Subordinate Voting Shares; and

g) the Notes were cancelled in accordance with the Amended Plan.

12. As a result, as at the effective date of the Amended Plan, Mecadev S.A.S. became the sole security holder of the Filer.

13. The Filer contravened its obligations under the Legislation as a reporting issuer, due to the fact that it did not file:

a) its annual financial statements, annual management's discussion and analysis and annual information form for the year ended December 31, 2008, as required pursuant to sections 4.1, 4.2, 5.1, 6.1 and 6.2 of Regulation 51-102 respecting Continuous Disclosure Obligations (the "Regulation 51-102");

b) its annual certificates for the year ended December 31, 2008, as required pursuant to Part 4 of Regulation 52-109 respecting Certification of Disclosure in Issuers' Annual and Interim Filings (the "Regulation 52-109");

c) its interim financial statements and interim management's discussion and analysis for the interim periods ended March 31, 2009, June 30, 2009 and September 30, 2009, as required pursuant to sections 4.3, 4.4 and 5.1 of Regulation 51-102; and

d) its interim certificates for the interim periods ended March 31, 2009, June 30, 2009 and September 30, 2009, as required pursuant to Part 5 of Regulation 52-109.

14. The Filer did not surrender its status as a reporting issuer in British Columbia pursuant to British Colombia Instrument 11-502 Voluntary Surrender of Reporting Issuer Status (the "BC Instrument") in order to avoid the 10-day waiting period under the BC Instrument.

15. As a result of representations 13 and 14, the Filer is not eligible to use the simplified procedure under CSA Staff Notice 12-307 Applications for a Decision that an Issuer is not a Reporting Issuer in order to apply for the Exemptive Relief Sought.

16. The Filer's has regularly filed its bi-weekly default status reports as required pursuant to Section 4.4 of Policy Statement 12-203 respecting Cease Trade Orders for Continuous Disclosure Defaults.

17. The securities of the Filer are not the object of a cease trade order in any of the Jurisdictions.

18. The Filer's Subordinate Voting Shares were delisted from the Toronto Stock Exchange as at the close of business on January 23, 2009.

19. The Notes of the Filer were delisted from the Luxembourg Stock Exchange as at the close of business on December 18, 2009.

20. The Filer has no shares or other securities listed on any stock exchange or marketplace as defined in Regulation 21-101 respecting Marketplace Operation.

21. The Filer has no current intention of distributing its securities in any jurisdiction in Canada through a public or private offering.

22. The outstanding securities of the Filer, including debt securities, are beneficially owned directly or indirectly, by fewer than 15 security holders in each of the jurisdictions in Canada and fewer than 51 securities holders in total in Canada.

23. The Filer has applied for a decision that it is not a reporting issuer in all of the jurisdictions in Canada in which it is currently a reporting issuer.

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 Exemptive Relief Sought is granted.

Claymore Investments, Inc. et al.

Headnote

MP 11-102 and NP 11-203 -- exemption granted from 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. 6.1(2), 6.1(3)(b), 6.2, 6.3, 19.1.

January 15, 2010

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

CLAYMORE INVESTMENTS, INC.

(the "Filer")

AND

IN THE MATTER OF

CLAYMORE GOLD BULLION ETF

(the "ETF")

AND

IN THE MATTER OF

THE BANK OF NOVA SCOTIA

(the "Custodian")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the ETF for a decision under the securities legislation of the Jurisdiction (the "Legislation") for a decision that exempts the ETF from:

1. Section 6.1(2) of National Instrument 81-102 -- Mutual Funds ("NI 81-102") to permit the ETF's gold bullion to be acquired, stored and held outside of Canada by a custodian or sub-custodian for purposes other than facilitating portfolio transactions of the ETF outside of Canada;

2. Section 6.1(3)(b) of NI 81-102 to permit the Custodian to appoint an entity that is not listed in Section 6.2 of NI 81-102 to act as a sub-custodian;

3. Section 6.2 of NI 81-102 to permit an entity not listed in Section 6.2 of NI 81-102 to act as a sub-custodian for portfolio assets of the ETF held in Canada; and

4. Section 6.3 of NI 81-102 to permit an entity not listed in Section 6.3 of NI 81-102 to act as a sub-custodian for portfolio assets of the ETF held outside of Canada,

(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 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, British Columbia, Saskatchewan, Manitoba, Quebec, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, Yukon, Northwest Territories and Nunavut.

Interpretation

Defined terms contained 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 terms shall also have the meanings ascribed below:

"Basket of Physical Gold Bullion" means a preset amount of gold bullion that the Filer will determine and publish on its website following the close of business on each trading day.

"Designated Brokers" means registered brokers and dealers that enter into agreements with the ETF to perform certain duties in relation to the ETF.

"Fund" means Claymore Gold Bullion Trust.

"Prescribed Number of Units" means the number of Units of the ETF determined by the Filer from time to time for the purpose of subscription orders, exchanges, redemptions or for other purposes.

"Units" means the hedged common units and non-hedged common units of the ETF.

"Underwriters" means registered brokers and dealers that have entered into underwriting agreements with the ETF and that subscribe for and purchase Units from the ETF, and "Underwriter" means any one of them.

"Unitholders" means beneficial and registered holders of Units.

Representations

1. This decision is based on the following facts represented by the Filer, the ETF and the Custodian.

The ETF and the Filer

2. On May 19, 2009, the Fund filed a (final) prospectus (the "Prospectus") with the securities regulatory authorities in each of the Jurisdictions to qualify the issuance of its units (the "Initial Units"). Each Initial Unit was comprised of one redeemable, transferable trust unit of the Fund (each, a "Fund Unit") and one warrant (each, a "Warrant"). The Initial Units separated into Fund Units and Warrants immediately upon the closing (the "Closing Date") of the offering (the "Offering"). Each Warrant entitled the holder thereof to acquire one Fund Unit at an exercise price of $10.00 at any time before 4:00 p.m. (Toronto time) on the date that was 6 months following the closing date of the Offering (the "Expiry Time"). Warrants not exercised by the Expiry Time expired and are void and of no value.

3. Pursuant to the Prospectus, the Fund automatically converted into an exchange traded fund if, commencing after November 28, 2009, the daily weighted average trading price of the Fund Units was greater than a discount of 2% of the net asset value per Fund Unit for that day, for a period of 10 consecutive trading days. The conversion test has been met and, effective the date of receiving a final receipt for the preliminary prospectus (the "ETF Prospectus") dated December 14, 2009 relating to the continuous offering of its units, the Fund Units shall convert into the Hedged Common Units (as described below).

4. After conversion, the new name of the Fund will be the "Claymore Gold Bullion ETF". Pursuant to the ETF Prospectus, the ETF will offer on a continuous distribution basis two classes of units: (i) hedged common units (the "Hedged Common Units") and (ii) non-hedged common units (the "Non-Hedged Common Units").

5. The principal offices of the Filer and the ETF are located at 200 University Avenue, 13th Floor, Toronto, Ontario, M5H 3C6.

6. Neither the Filer nor the ETF is in default of the securities legislation in any of the Jurisdictions.

The ETF's Investment Objective and Investment Restrictions

7. The investment objective of the ETF is to replicate the performance of the price of gold bullion, less the ETF's expenses and fees. The ETF is not actively managed. The ETF does not anticipate making regular distributions.

8. The ETF has been created to provide holders of Units with an exposure to physical gold bullion. The Hedged Common Units will also provide a currency hedge against the US dollar ("USD"). The Filer believes that the ETF will provide a secure, low-cost and convenient alternative to investors interested in holding gold bullion.

9. The ETF's investment restrictions provide that (a) the ETF will hold a minimum of 90% of its net assets in physical gold bullion in 100 or 400 troy ounce international bar sizes and (b) for working capital purposes, the ETF may hold no more than 10% of its net assets in cash and interest-bearing accounts, short-term government debt or short-term investment grade corporate debt or permitted gold certificates.

10. The assets of the ETF consist of physical gold bullion which the ETF purchases and holds in accordance with its investment objective, strategy, policies and restrictions, as well as the forward contracts relating to the currency hedge, cash and permitted gold certificates, if any.

The Units

11. The Fund Units are currently listed on the Toronto Stock Exchange ("TSX") under the symbol CGL.UN. The Filer, on behalf of the ETF, has applied (i) to change the name of the Fund to the "Claymore Gold Bullion ETF", (ii) to change the name of the currently traded Fund Units to "Common Units", (iii) to list the Non-Hedged Common Units on the TSX and (iv) for a supplemental listing of additional Hedged Common Units. Subject to receiving conditional approval and meeting the TSX's listing requirements with respect to the Units, the Units of the ETF will be offered on a continuous basis.

12. The only difference between the Hedged Common Units and the Non-Hedged Common Units is that the Hedged Common Units will contain a currency hedge against the USD. Accordingly, the net asset value ("NAV") per Unit of each class of Unit will not be the same as a result of the hedging strategy of the ETF. The attributes of the Units will be identical in all other respects.

13. The Units issued by the ETF will not be Index Participation Units within the meaning of NI 81-102. After conversion, the Fund will be generally described as an ETF and would become a "mutual fund" under applicable securities laws and accordingly, would be subject to the provisions of NI 81-102.

14. After completion of conversion of the Fund to an ETF, annual redemptions will no longer be available and Unitholders will be able to exchange and redeem their Units daily. Upon completion of the conversion, on any trading day, Unitholders may exchange the Prescribed Number of Units (or an integral multiple thereof) for Baskets of Physical Gold Bullion and cash. Also upon conversion, on any trading day, Unitholders may redeem Units of the ETF for cash at a redemption price per Unit equal to 95% of the closing price for the Units on the TSX on the effective day of the redemption.

The ETF's Bullion Custody Arrangements

15. All of the ETF's physical gold bullion is held on an allocated basis by the Bank of Nova Scotia, a Canadian Schedule I chartered bank, acting through its ScotiaMocatta division (the "Custodian") or an affiliate or a division thereof, or a sub-custodian. The Custodian has advised the ETF that due to physical storage capacity constraints, having regard to the amount of gold bullion which the ETF currently holds (due to both the Offering and pursuant to the exercise of the Warrants) and anticipates acquiring and holding in connection with the continuous distribution of its Units, the ETF will be required to store and hold the physical gold bullion in the vault facilities of the Custodian or an affiliate or a division thereof or a sub-custodian, in Canada, London and New York. The custody arrangements between the ETF and the Custodian are governed by the terms of a custodian agreement (the "Custodian Agreement").

16. As a result of the foregoing, the Custodian has advised the ETF that, in order to accommodate the objectives of the ETF, the Custodian will be required to use the services of sub-custodians. The Custodian has advised the ETF that it proposes to use The Brinks Company ("Brinks"), a public company listed on the NYSE (acting through a subsidiary) and Via Mat International Ltd. ("Via Mat") as sub-custodians for the gold bullion of the ETF held in Canada, London and New York.

17. 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, diamantaires. Brinks and Via Mat are also authorized depositories for NYMEX/COMEX or have vault facilities that are accepted as warehouses for the London Bullion Market Association.

18. The number of entities in Canada which are eligible to act as sub-custodians for the physical storage of gold bullion is limited. Of these eligible entities, some already have exclusive relationships with other investment funds for storage purposes who have first right to any additional capacity whereas others simply do not have the excess capacity needed to store the amount of physical gold bullion that the ETF currently holds (due to both the Offering and pursuant to the exercise of the Warrants) and anticipates acquiring and holding in connection with the continuous distribution of its Units, and have advised that they would be required to secure additional space through the vaulting facilities of Brinks and/or Via Mat or such other equivalent service provider. 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.

19. In all instances, the relationship between the Custodian and either Brinks or Via Mat is primarily one whereby the Custodian is sub-contracting the vault facilities of these service providers for the purposes of storing physical gold bullion. The Custodian remains responsible for (i) ensuring that adequate safeguards are in place, including satisfactory insurance arrangements and (ii) indemnifying the ETF for any losses that may occur in connection with any material that is stored at such facilities.

20. The ETF, the Manager and the Custodian believe that both Brinks and Via Mat are appropriate sub-custodians for the gold bullion held in the Portfolio of the ETF. The activities of Brinks and Via Mat will be limited to holding the gold bullion of the ETF and the Custodian will be responsible for all cash holdings.

21. Pursuant to the Custodian Agreement, in carrying out its duties, the Custodian is required to exercise: (i) the degree of care, diligence and skill that a reasonably prudent custodian of property would exercise in the circumstances; or (ii) at least the same degree of care which it gives to its own property of a similar kind under its custody, if this is a higher degree of care than in paragraph (i) above

22. Prior to using the custody services of any sub-custodians, and periodically after engaging those services, the Custodian engages in a review of the facilities, procedures, records and creditworthiness of each sub-custodian. The ETF will not have the ability to engage in these services and relies upon the Custodian, who is in the business of precious metals storage, to satisfy itself as to the appropriateness of the use of any potential sub-custodian.

23. All of the gold purchased by the ETF will be certified either "LMBA Good Delivery List" or "COMEX Good Delivery".

24. The ETF does not insure its gold. Allocated gold bullion owned by the ETF is stored in the vaults of the Custodian or an affiliate or a division thereof or sub-custodian once it is delivered to the Custodian or sub-custodian, as applicable. The Custodian maintains insurance as the Custodian deems appropriate against all risk of physical loss or damage except the risk of war, nuclear incident, terrorism events or government confiscation. The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate. The ETF is not a beneficiary of any such insurance and does not have the ability to dictate the existence, nature or amount of coverage.

25. The Custodian is one of the largest providers of precious metals trading and custodial and/or sub-custodial services in the world. The Filer has determined that the Custodian is the appropriate choice to provide custodial services to the ETF. The following are some of the factors which the Filer considered in making this determination:

(a) The Custodian is experienced in providing gold storage and custodial services;

(b) The Custodian is familiar with the unique requirements of ETFs as they relate to the physical handling and storage of gold bullion required in connection with the creation and redemption of Units;

(c) In addition to the other requirements in NI 41-101 and NI 81-102 for custodian agreements, in the Custodian Agreement, the Custodian shall indemnify the ETF in respect of all direct loss, damage or expense arising out of any negligence, wilful misconduct, fraud or lack of good faith by the Custodian or any sub-custodian or sub-sub-custodian; and

(d) The Custodian Agreement provides that the Custodian shall not cancel its insurance except upon 30 days prior written notice to the Filer.

26. The Custodian has arranged for insurance coverage on the facilities and the contents therein in which the Custodian will store physical gold bullion on behalf of the ETF and other clients of the Custodian. The Filer has discussed the level of insurance coverage generally obtained by the Custodian and believes that the level of insurance will be sufficient.

27. As it is in the gold storage business, the Custodian is in the best position, using its business judgment, to determine and obtain the appropriate level of insurance that is required for the storage of gold bullion.

28. The Filer and the ETF believe that the Custodian has obtained and currently provides adequate insurance.

29. The Custodian has also advised the ETF and the Manager that, pursuant to the terms of their existing relationship, each of Brinks and Via Mat have arranged for sufficient insurance coverage in respect of any material held by the Custodian through the facilities of these entities. The Manager has discussed with the Custodian the level of insurance coverage obtained by Brinks and Via Mat and the risks insured against by these sub-custodians and believes that the level of insurance will be sufficient.

30. The ETF's auditors will be present and will verify the physical count of all gold bullion held by the ETF at least once every year. The ETF and its auditors will have the ability, with sufficient advance notice to the Custodian and any sub-custodians, to attend at the vaults of the Custodian or any sub-custodian to verify the gold bullion held by the Custodian or any sub-custodian on behalf of the ETF.

31. The Custodian Agreement provides that, in addition to any other rights of the ETF thereunder, the Custodian shall indemnify and hold harmless the ETF in respect of all direct loss, damage or expense arising out of any negligence, wilful misconduct, fraud or lack of good faith by the Custodian or any subcustodian or sub-subcustodian 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 gold bullion or any other property of the ETF, such gold bullion or other property shall be replaced where commercially practicable and reasonably feasible; provided, however, that, in the context of gold bullion, the replacement gold which is to be provided by the Custodian shall be of the same fineness and shall be in the same form as the allocated gold actually delivered and then held by the Custodian at the time of the incurrence of the relevant loss (and, in such respect, the Custodian's opinion shall be determinative as to such fineness and form);

(b) where replacement of such gold bullion or other property is not commercially practicable and reasonably feasible, the ETF shall be paid the market value of such gold bullion based upon fineness and the form of the allocated gold actually delivered and then held by the Custodian at the time of the incurrence of the relevant loss (and, in such respect, the 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 ETF is entitled, but which is not received by the ETF, shall be paid to it.

32. The Custodian Agreement provides that if the ETF suffers a loss as a result of any act or omission of a subcustodian, or of any other agent appointed by the 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 Custodian Agreement, then the Custodian shall assume liability for such loss directly, and shall reimburse the ETF accordingly.

Arrangements From and After Conversion

33. From and after conversion:

(a) Units may only be subscribed for or purchased directly from the ETF by Underwriters or Designated Brokers and orders may only be placed for Units in the Prescribed Number of Units (or an integral multiple thereof) on any day when there is a trading session on the TSX. Under Designated Broker and Underwriter agreements, the Designated Brokers and Underwriters agree to offer Units for sale to the public only as permitted by applicable Canadian securities legislation, which requires a prospectus to be delivered to purchasers buying Units as part of a distribution. Therefore, first purchasers of Units in the distribution on the TSX will receive a prospectus from the Designated Brokers and Underwriters.

(b) The ETF will appoint Designated Brokers to perform certain functions which include standing in the market with a bid and ask price for Units of the ETF for the purpose of maintaining liquidity for the Units.

(c) For each Prescribed Number of Units issued, a Designated Broker or Underwriter must deliver payment consisting of, in the Filer's discretion as manager of the ETF, (i) one Basket of Physical Gold Bullion and cash in an amount sufficient so that the value of the physical gold bullion and the cash received is equal to the NAV of the Units next determined following the receipt of the subscription order; (ii) cash in an amount equal to the NAV of the Units next determined following the receipt of the subscription order; or (iii) a different combination of physical gold bullion than is represented by a Basket of Physical Gold Bullion and cash, as determined by the Filer, in an amount sufficient so that the value of the physical gold bullion and cash received is equal to the NAV of the Units next determined following the receipt of the subscription order.

(d) The net asset value per Unit of the ETF will be calculated and published daily and will be made available daily on the Filer's website.

(e) Upon notice given by the Filer from time to time and, in any event, not more than once quarterly, a Designated Broker will subscribe for Units in cash in an amount not to exceed 0.3% of the NAV of the ETF, or such other amount established by the Filer and disclosed in the prospectus of the ETF, next determined following delivery of the notice of subscription to that Designated Broker.

(f) Neither the Underwriters nor the Designated Brokers will receive any fees or commissions in connection with the issuance of Units to them. The Filer may, at its discretion, charge an administration fee on the issuance of Units to the Designated Brokers or Underwriters.

(g) Except as described in subparagraphs (a) through (f) above, Units may not be purchased directly from the ETF. Investors are generally expected to purchase Units through the facilities of the TSX. However, Units may be issued directly to Unitholders upon the reinvestment of distributions of income or capital gains and in accordance with the distribution reinvestment plan of the ETF.

(h) Unitholders that wish to dispose of their Units may generally do so by selling their Units on the TSX through a registered broker or dealer, subject to customary brokerage commissions. A Unitholder that holds a Prescribed Number of Units or an integral multiple thereof may exchange such Units for Baskets of Physical Gold Bullion and cash at an exchange price equal to the NAV per Unit on the effective day of the exchange request. Unitholders may also redeem their Units for cash at a redemption price equal to 95% of the closing price of the Units on the TSX on the date of redemption.

(i) As manager, the Filer receives a fixed annual fee from the ETF. Such annual fee is calculated as a fixed percentage of the NAV of the ETF. As manager, the Filer is responsible for all costs and expenses of the ETF except the management fee, any expenses related to the implementation and on-going operation of an independent review committee under National Instrument 81-107, brokerage expenses and commissions, income taxes, goods and services taxes, withholding and other taxes, gold settlement fees and extraordinary expenses.

(j) Unitholders will have the right to vote at a meeting of Unitholders in respect of the ETF in certain circumstances, including prior to any change in the investment objective of the ETF, any change to their voting rights and prior to any increase in the amount of fees payable by the ETF.

Decision

The principal regulator is satisfied that the decision meets the tests 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) In respect of the relief granted from sections 6.1(2), 6.1(3)(b), 6.2 and 6.3, the ETF and the Custodian are limited to using The Brinks Company and Via Mat International Ltd. and their subsidiaries as sub-custodians for the gold bullion of the ETF which will be held only in Canada, London and New York; and

(b) In respect of the compliance reports to be prepared by the Custodian pursuant to sections 6.7(1)(b), 6.7(1)(c)(ii) and 6.7(2)(c), as such sections will not be applicable given the nature of the relief granted herein, the Custodian shall include a statement in such reports in respect of the completion of the Custodian's review process for the sub-custodian of the ETF and that the Custodian is of the view that such sub-custodians continue to be appropriate entities for the safekeeping of the ETF's gold bullion.

Roxmark Mines Limited -- s. 1(10)

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Issuer deemed to no longer be a reporting issuer under securities legislation.

Applicable Legislative Provisions

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

January 19, 2010

Dear Sirs/Mesdames:

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 in Canada 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 Canada 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.

Canadian Zinc Corporation

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 an equity interest in a business whose historical financial statements have not been audited in accordance with Canadian or U.S. GAAS; the issuer is required to include summary information in its business acquisition report (BAR) that is derived from the business's audited annual financial statements; the business's financial statements have been audited in accordance with International Standards on Auditing; for various reasons, it would be impractical to re-audit the business' financial statements in accordance with Canadian or U.S. GAAS.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency, ss. 6.2, 6.3, 9.1.

August 21, 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

CANADIAN ZINC CORPORATION

(the Filer)

DECISION

Background

1 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) granting relief from the requirement contained in sections 6.2 and 6.3 of National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107) to have annual audited financial statements of the Acquired Company (as defined below), from which summary financial information is derived that must be included in the Filer's BAR (as defined below) in respect of the Acquisition (as defined below) under section 8.6 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), audited in accordance with the prescribed form of auditing standards set out in sections 6.2 and 6.3 of NI 52-107 (the Disclosure 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; and

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

Interpretation

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

Representations

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

1. the Filer's head office is located at 650 West Georgia Street, Suite 1710, Vancouver, British Columbia, V6B 4N9;

2. the Filer is a corporation existing under the Business Corporations Act (British Columbia) and is a reporting issuer in each of the Jurisdictions;

3. the Filer is engaged in the business of mineral exploration;

4. the common shares of the Filer are listed and posted for trading on the Toronto Stock Exchange;

5. the Filer is not in default of any of its obligations as a reporting issuer under the Legislation of any of the Jurisdictions;

6. as described in a news release dated June 11, 2009, the Filer has acquired (the Acquisition) 20.01% of the outstanding shares of Vatukoula Gold Mines PLC (Vatukoula);

7. Vatukoula is a public company based in the United Kingdom whose shares are listed on the Alternative Investment Market (AIM) of the London Stock Exchange in the United Kingdom;

8. the Acquisition was a "significant acquisition" for the Filer, within the meaning of section 8.3 of NI 51-102, such that the Filer is required to file a "business acquisition report" (BAR) in accordance with section 8.2 of NI 51-102 in respect of the Acquisition by August 24, 2009;

9. under sections 8.4 and 8.6 of NI 51-102, summary financial information (Summary Information) derived from annual audited financial statements of Vatukoula for the period ended August 31, 2008 (Annual Acquisition Statements) is required to be included in the BAR;

10. the Annual Acquisition Statements have been prepared in accordance with International Financial Reporting Standards and audited in accordance with International Standards on Auditing (ISA);

11. sections 6.2 and 6.3 of NI 52-107 do not permit the Filer to prepare the Summary Information based on Annual Acquisition Statements audited in accordance with ISA, as the Filer is not a "foreign issuer" within the meaning of NI 52-107; and

12. the Annual Acquisition Statements were audited in accordance with ISA pursuant to requirements governing publicly-traded companies in the United Kingdom, including the requirements of the Alternative Investment Market (AIM) of the London Stock Exchange in the United Kingdom; the Filer has only acquired 20.01% of the outstanding shares of Vatukoula; Vatukoula is an equity investee of CZN and the Filer will account for the Acquisition using the equity method; since the Filer does not control Vatukoula, the Filer also does not have control over the production of audited financial statements of Vatukoula or auditor's reports relating thereto; having the Annual Acquisition Statements audited a second time in accordance with Canadian GAAS or U.S. GAAS would also cause the Filer to incur substantial additional costs and management time and possibly material or indefinite delay in filing its BAR in respect of the Acquisition.

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 Disclosure Relief is granted, provided that the Annual Acquisition Statements from which the Summary Information is derived are audited in accordance with ISA.

Verenex Energy Inc. -- 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).

January 15, 2009

Attention: Paulina Tam

Dear Ms. Tam:

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 to be deemed to have ceased to be a reporting issuer in the Jurisdictions.

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 in Canada 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 Canada 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 deemed to have ceased to be a reporting issuer.

Gazit America Inc.

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - Confidentiality -- Application by an issuer for a decision that certain portions of a report previously filed and made public on SEDAR be held in confidence for an indefinite period by the Commission, to the extent permitted by law -- Report contains intimate financial, personal and other sensitive information, the disclosure of which would be seriously prejudicial to the interests of the issuer and other persons affected -- Issuer subsequently filed and made public on SEDAR a redacted version of the report in which the intimate financial, personal and other sensitive information has been omitted or marked to be unreadable -- Information redacted from the redacted version of the report does not contain information that would be material to an investor -- Relief granted, subject to conditions.

Applicable Ontario Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 140(1), 140(2).

Applicable Instruments

National Instrument 51-102 Continuous Disclosure Obligations , Part 12.

January 15, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

THE PROVINCE OF ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

GAZIT AMERICA INC.

(the 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), being subsection 140(2) of the Securities Act (Ontario) (the Act), that certain appraisal reports filed by the Filer on July 16, 2009 (the Original Filed Reports) on the System for Electronic Document Analysis and Retrieval (SEDAR) pursuant to section 9.2(a)(v) of National Instrument 41-101 General Prospectus Requirements (NI 41-101) be marked private on SEDAR (and therefore not available to the public) for an indefinite period, to the extent permitted by law (the Exemption Sought).

Under National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions:

(a) The Ontario Securities Commission is the principal jurisdiction for this Application; and

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

Interpretation

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

Representations

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

1. The Filer was amalgamated under the Business Corporations Act (Ontario) on June 19, 2009.

2. The Filer's corporate and registered head office is in Toronto, Ontario.

3. The Filer is a reporting issuer (or equivalent) in each of the provinces of Canada and is not, to its knowledge, in default of its reporting issuer obligations under the securities legislation of any of Ontario or the Non-Principal Passport Jurisdictions.

4. The Filer filed a final long form prospectus on July 20, 2009 (the Prospectus) to qualify the initial public distribution of a maximum of 9,225,000 common shares in the capital of the Filer (Common Shares) and the Filer received a receipt for the Prospectus on that date. The Filer became a reporting issuer on July 20, 2009.

5. The Toronto Stock Exchange has approved the listing of the Common Shares on the Toronto Stock Exchange under the symbol "GAA".

6. The Prospectus contains a summary description of the Original Filed Reports. The Original Filed Reports were prepared by Altus Group Limited (the Appraiser) and relate to five medical office buildings to be acquired by the Filer from ProMed Properties (CA) Inc. (ProMed) in conjunction with, but prior to, the closing of the Filer's initial public offering. Upon completion of the purchase, ProMed will be a wholly-owned subsidiary of the Filer.

7. On July 16, 2009, the Filer filed on SEDAR the Original Filed Reports under section 9.2(a)(v) of National Instrument 41-101 General Prospectus Requirements (NI 41-101), together with the consent of the Appraiser in accordance with section 10.1(c) of NI 41-101.

8. Thereafter, it came to the Filer's attention that the Original Filed Reports contain certain confidential information (the Confidential Information) that is intimate financial, personal or other information relating to tenants of ProMed and vendors and purchasers of certain investment properties and lands described in the Original Filed Reports (collectively, the Affected Persons) and otherwise contain commercially sensitive operational and financial information concerning ProMed and, therefore, the Filer.

9. The Filer believes that continued public access to the Confidential Information would seriously prejudice the interests of the Affected Persons and the Filer for the following reasons:

(a) None of the Confidential Information, either individually or in the aggregate, is necessary to understand either the summary description of the appraisal reports contained in the Prospectus or the business of the Filer;

(b) The Confidential Information is intimate personal, financial or other information of the Affected Persons and ProMed;

(c) The disclosure of the Confidential Information would allow commercially sensitive information to be available to the general public, including competitors of ProMed and the Filer, which would be prejudicial to the Affected Persons and the Filer;

(d) Maintaining the confidentiality of the Confidential Information is important with respect to the relations of ProMed and the Filer with current and potential tenants, vendors and purchasers and the Affected Persons and ProMed and the Filer's ability to negotiate leases and contracts with potential tenants, vendors and purchasers and the Affected Persons; and

(e) The desirability of avoiding disclosure of the Confidential Information in the interests of the Affected Persons, ProMed and the Filer outweighs the desirability of adhering to the principle that material filed with the Commission be available to the public for inspection and the disclosure of the Confidential Information is not necessary in the public interest.

10. If the Original Filed Reports were material contracts, the Filer would be permitted to file a redacted version of the Original Filed Reports under section 9.3 of NI 41-101 as an executive officer of the Filer reasonably believes that disclosure of the Original Filed Reports would be seriously prejudicial to the interests of the Filer or would violate confidentiality provisions.

11. Following discussions with the principal regulator in the Jurisdiction on July 23, 2009, the Filer re-filed a copy of the Original Filed Reports on SEDAR with the Confidential Information redacted (the Redacted Filed Reports) and staff of the principal regulator in the Jurisdiction temporarily marked the Original Filed Reports private on SEDAR pending granting of this decision.

12. The portions omitted or marked so as to be unreadable from the Original Filed Reports to form the Redacted Filed Reports do not contain information in relation to the Filer or the securities of the Filer that would be material to an investor for purposes of making an investment decision.

13. As a result of the Original Filed Reports being filed and made public on SEDAR, the Original Filed Reports have also been disseminated to subscribers of the SEDAR-SCRIBE service. The Filer has been advised by representatives of CDS Inc., the administrator of the SEDAR-SCRIBE service, that subscribers of the SEDAR-SCRIBE service automatically received (i) notification that the Original Filed Reports had been made private on SEDAR, and (ii) instructions to delete the Original Filed Reports from their systems. The Filer has been advised by representatives of CDS Inc. that subscribers of the SEDAR-SCRIBE service are contractually bound to follow these instructions.

14. The Filer acknowledges that making the Original Filed Reports private on SEDAR does not guarantee that the Original Filed Reports are not available elsewhere in the public domain.

Decision

The principal regulator in the Jurisdiction is satisfied that the decision meets the test set out in the Legislation for the principal regulator in the Jurisdiction to make the decision.

The decision of the principal regulator in the Jurisdiction under the Legislation is that the Exemption Sought is granted, provided that the Filer files on SEDAR a copy of the Redacted Filed Reports that will be made public by the principal regulator and posted on www.sedar.com.

New Life Capital Corp. et al. -- s. 127

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

NEW LIFE CAPITAL CORP.,

NEW LIFE CAPITAL INVESTMENTS INC.,

NEW LIFE CAPITAL ADVANTAGE INC.,

NEW LIFE CAPITAL STRATEGIES INC.,

1660690 ONTARIO LTD.,

L. JEFFREY POGACHAR,

PAOLA LOMBARDI AND ALAN S. PRICE

ORDER

(Section 127)

WHEREAS the Ontario Securities Commission (the "Commission") issued a temporary cease trade order on August 6, 2008 (the "Temporary Order") in respect of New Life Capital Corp., New Life Capital Investments Inc., New Life Capital Advantage Inc., New Life Capital Strategies Inc., 1660690 Ontario Ltd. (all of the corporations together, "New Life"), L. Jeffrey Pogachar ("Pogachar"), Paola Lombardi ("Lombardi") and Alan S. Price ("Price") (collectively, the "Respondents");

AND WHEREAS the Temporary Order ordered that (1) pursuant to clause 2 of subsection 127(1) and subsection 127(5) of the Act, trading in securities of and by the Respondents shall cease; (2) pursuant to clause 3 of subsection 127(1) and subsection 127(5) of the Act, any exemptions contained in Ontario securities law not do not apply to any of the Respondents; and (3) the Order shall not prevent or prohibit any future payments in the way of premiums owing from time to time in respect of insurance policies which were purchased by the Respondents on or before the date of the Order;

AND WHEREAS the Commission issued a Direction on August 6, 2008 to TD Canada Trust, Branch 2492 in Grimsby, Ontario directing TD Canada Trust to retain all funds, securities or property on deposit in the names or under the control of New Life (the "Direction");

AND WHEREAS a Notice of Hearing was issued by the Commission and a Statement of Allegations was filed and delivered to the Respondents by Staff of the Commission ("Staff") on August 7, 2008;

AND WHEREAS the Commission varied the Direction on August 11, 2008 to permit the release of $87,743.54 from the funds that are the subject of the Direction for the purpose of certain immediate and urgent expenses (the "Varied Direction");

AND WHEREAS on August 12, 2008 the Ontario Superior Court of Justice ordered that the Varied Direction, as varied or revoked by the Commission, is continued until final resolution of this matter by the Commission or further order of the Court;

AND WHEREAS on August 15, 2008, the Commission ordered the following exemptions to the Temporary Order: (1) Pogachar, Lombardi and Price may each hold one account to trade securities; (2) each account must be held with a registered dealer to whom this Order and any preceding Orders in this matter must be given at the time of opening the account or before any trading occurs in the account; and (3) the only securities that may be traded in each account are: (a) those listed and posted for trading on the TSX, TSX Venture Exchange, Bourse de Montreal or New York Stock Exchange; (b) those issued by a mutual fund which is a reporting issuer; or (c) a fixed income security;

AND WHEREAS the Respondents are represented by counsel and were served with the Temporary Order, the Notice of Hearing dated August 7, 2008, the Statement of Allegations dated August 7, 2008 and the Affidavit of Stephanie Collins sworn August 7, 2008 (the "Collins Affidavit");

AND WHEREAS on August 21, 2008, Staff and counsel for the Respondents appeared before the Commission, and the Commission ordered that the Temporary Order is continued until September 22, 2008 and that the hearing is adjourned to September 19, 2008, at 2:30 p.m.;

AND WHEREAS the Respondents requested a variance to the Direction to permit outstanding expenses to be paid and additional expenses to be paid going forward and Staff consented to the Respondents' request but only with respect to certain outstanding expenses and certain minimal expenses to be paid going forward (the "Consent Expenses");

AND WHEREAS the Respondents requested a variance to the Direction on September 19, 2008 with respect to the Consent Expenses only;

AND WHEREAS Staff delivered to counsel for the Respondents and filed a Supplementary Affidavit of Stephanie Collins sworn September 19, 2008 detailing the expenses included in the variance requested by the Respondents and consented to by Staff;

AND WHEREAS on September 19, 2008, Staff and counsel for the Respondents appeared before the Commission and the Commission ordered: (i) that the Varied Direction is further varied in order to permit the release of $46,891.35; and (ii) that the Temporary Order is continued until October 15, 2008 and the hearing is adjourned to October 14, 2008 p.m. or such other date as is agreed by Staff and the Respondents and determined by the Office of the Secretary;

AND WHEREAS on October 10, 2008, the Commission ordered that the Temporary Order is continued until October 24, 2008, and the hearing is adjourned to October 23, 2008 at 10:00 a.m., or such other date as is agreed by Staff and the Respondents and determined by the Office of the Secretary;

AND WHEREAS on October 23, 2008 Staff, counsel for New Life and counsel for Pogachar and Lombardi attended before the Commission, New Life brought a motion to seek a variation to the Direction for certain purposes and the Commission ordered that (1) the Temporary Order is continued until November 7, 2008 and the hearing in this matter is adjourned to November 6, 2008 at 9:00 a.m.; and (2) the Direction is varied to permit the release of $60,000.00 to pay Gowling Lafleur Henderson LLP to cover unpaid accounts;

AND WHEREAS a hearing was held on November 6, 2008 at which Staff, counsel for New Life and counsel for Pogachar and Lombardi appeared and the Commission ordered that the Temporary Order was continued until December 8, 2008 and the hearing in this matter was adjourned to December 5, 2008;

AND WHEREAS a hearing was held on December 8, 2008 at which Staff and counsel for Pogachar and Lombardi attended, Staff having been advised as to the consent to proposed hearing dates by counsel for New Life and counsel for Price, and the Commission ordered that the Temporary Order is continued until the conclusion of the hearing on the merits in this matter or until further order of the Commission and the hearing is adjourned to the weeks of August 10 and 17, 2009 but for August 18, 2009;

AND WHEREAS, on application of the Commission pursuant to section 129 of the Act, on December 17, 2008, the Ontario Superior Court of Justice appointed KPMG Inc. as receiver over the property, assets and undertakings of New Life;

AND WHEREAS the Commission was not available for the hearing on the merits during the weeks of August 10 and 18, 2009 and the Commission ordered on August 10, 2009, on consent of the parties, including New Life as represented by counsel for KPMG Inc. as court-appointed receiver, that the hearing on the merits is adjourned to the weeks of January 18 and 25, 2010, and to the scheduling of a pre-hearing conference for Tuesday, October 13, 2009 at 2:30 p.m.;

AND WHEREAS Staff have advised the Commission that they obtained new documents which demonstrate a need for further investigation;

AND WHEREAS to permit investigation of the new information Staff are seeking an adjournment of the hearing on the merits scheduled to commence on January 18, 2010, and Staff will advise the Commission on February 16, 2010, what, if any, further time may be necessary to investigate and a new date for the hearing on the merits will be set;

AND WHEREAS Staff have advised the Commission that Price consents to the requested adjournment and Staff, counsel for Pogachar and Lombardi and counsel for KPMG Inc., the court-appointed receiver for New Life, appeared before the Commission today;

IT IS ORDERED that the hearing is adjourned to February 16, 2010 at 9:00 a.m. at which time the matter of scheduling the hearing on the merits will be spoken to.

DATED at Toronto this 13th day of January, 2010.

"James E. A. Turner"

Coventree Inc. et al. -- s. 127

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

COVENTREE INC., GEOFFREY CORNISH AND

DEAN TAI

ORDER

(Section 127)

WHEREAS the Ontario Securities Commission ("the Commission") issued a Notice of Hearing and Statement of Allegations in this matter dated December 7, 2009;

AND WHEREAS on January 14, 2010, Staff and counsel for the parties appeared before the Commission and consented to the scheduling of a confidential pre-hearing conference on February 10, 2010;

AND WHEREAS the pre-hearing conference will be confidential and the public will be excluded;

IT IS ORDERED that this matter is adjourned to a confidential pre-hearing conference to be held on February 10, 2010.

Dated at Toronto, this 14th day of January, 2010.

"James Turner"

W.J.N. Holdings Inc. et al. -- ss. 127(1), 127(8)

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

W.J.N. HOLDINGS INC., MSI CANADA INC.,

360 DEGREE FINANCIAL SERVICES INC.,

DOMINION INVESTMENTS CLUB INC.,

LEVERAGEPRO INC., PROSPOREX

INVESTMENT CLUB INC., PROSPOREX

INVESTMENTS INC., PROSPOREX LTD.,

PROSPOREX INC., PROSPOREX FOREX SPV TRUST,

NETWORTH FINANCIALGROUP INC.,

NETWORTH MARKETING SOLUTIONS, DOMINION

ROYAL CREDIT UNION, DOMINION ROYAL

FINANCIAL INC., WILTON JOHN NEALE,

EZRA DOUSE, ALBERT JAMES,

ELNONIETH "NONI" JAMES, DAVID WHITELY,

CARLTON IVANHOE LEWIS, MARK ANTHONY

SCOTT, SEDWICK HILL, TRUDY HUYNH,

DORLAN FRANCIS, VINCENT ARTHUR,

CHRISTIAN YEBOAH, AZUCENA GARCIA,

AND ANGELA CURRY

TEMPORARY ORDER

(Sections 127(1) and (8))

WHEREAS on March 11, 2009 the Ontario Securities Commission (the "Commission") made a Temporary Order pursuant to subsections 127(1) and (5) of the Securities Act, R.S.O. 1990, c. S.5 (the "Act") that (a) pursuant to clause 2 of subsection 127(1) of the Act all trading in securities of MSI Canada Inc., Prosporex Investment Club Inc. and Dominion Investment Club Inc. shall cease; (b) pursuant to clause 2 of the subsection 127(1) of the Act trading in any securities by all of the respondents shall cease; and (c) pursuant to clause 3 of subsection 127(1) of the Act any exemptions contained in Ontario securities law do not apply to the respondents (the "Temporary Order");

AND WHEREAS on March 24, 2009 the Commission ordered that the Temporary Order of March 11, 2009 be extended to July 24, 2009, subject to an exception concerning the respondent Sedwick Hill;

AND WHEREAS on July 23, 2009 the Commission extended the Temporary Order to November 25, 2009 and adjourned the hearing to November 24, 2009 at 2:30 p.m.;

AND WHEREAS on August 25, 2009 the Commission varied the Temporary Order to remove the exception that had applied to the respondent Sedwick Hill and extended the Temporary Order, as varied to November 24, 2009;

AND WHEREAS on November 24, 2009 the Commission added Prosporex Forex SVP Trust as a respondent, extended the Temporary Order, as varied to January 18, 2010 and adjourned the hearing to January 15, 2009 at 10:00 a.m.;

AND WHEREAS the Commission held a hearing in this matter on January 15, 2010;

AND WHEREAS 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 subsection 3.5(3) of the Act, each of W. David Wilson, James E. A. Turner, David L. Knight, Carol S. Perry, Patrick J. LeSage, James D. Carnwath and Mary Condon, acting alone, is authorized to make orders under subsection 127(8) of the Act;

IT IS ORDERED THAT:

(1) the Temporary Order is extended to March 26, 2010; and

(2) a hearing in this proceeding will take place commencing on March 25, 2010 at 10:00 a.m. and continuing on March 26, 2010, as may be required.

DATED at Toronto this 15th day of January, 2010.

"Carol S. Perry"

Abel Da Silva -- ss. 127, 127.1

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

ABEL DA SILVA

ORDER

(Sections 127 & 127.1)

WHEREAS on October 21st, 2008 the Ontario Securities Commission (the "Commission") issued a Notice of Hearing in this matter and scheduled a hearing to commence on November 27th, 2008 at 3:00 p.m.;

AND WHEREAS Staff of the Ontario Securities Commission ("Staff") filed a Statement of Allegations dated October 20th, 2008 with the Commission;

AND WHEREAS Staff served Abel Da Silva ("Da Silva") with a certified copy of the Notice of Hearing and Staff's Statement of Allegations as evidenced by the Affidavit of Service of Wayne Vanderlaan, sworn on November 10th, 2008, filed with the Commission;

AND WHEREAS a panel of the Commission held a hearing on November 27th, 2008 at 3:00 p.m. and Staff attended and made submissions, including advising the panel of the Commission that the disclosure was available on this matter, and Staff undertook to notify Da Silva that disclosure is available;

AND WHEREAS on November 27th, 2008, Da Silva did not appear at the hearing;

AND WHEREAS on November 27th, 2008, a panel of the Commission ordered that the hearing in this matter is adjourned to June 4th, 2009 at 11:00 a.m.;

AND WHEREAS Staff served Da Silva with a certified copy of the Order of the Commission dated November 27th, 2008 as evidenced by the Affidavit of Service of Kathleen McMillan sworn on June 3rd, 2009;

AND WHEREAS on June 4th, 2009, a status hearing was held commencing at 11:00 a.m. and Staff appeared before a panel of the Commission and provided the panel of the Commission with a status update with respect to this matter;

AND WHEREAS on June 4th, 2009, Da Silva did not attend before the panel of the Commission;

AND WHEREAS on June 4th, 2009, the panel of the Commission considered the submissions of Staff;

AND WHEREAS on June 4th, 2009, the panel of the Commission ordered that the hearing with respect to the Notice of Hearing dated October 21st, 2008 and Staff's Statement of Allegations dated October 20th, 2008 be adjourned to September 10th, 2009 at 10:30 a.m.

AND WHEREAS on September 10th, 2009, a status hearing was held commencing at 10:30 a.m. and Staff appeared before a panel of the Commission and provided the panel of the Commission with a status update with respect to this matter;

AND WHEREAS on September 10th, 2009, the panel of the Commission ordered that the hearing with respect to the Notice of Hearing dated October 21st, 2008 and Staff's Statement of Allegations dated October 20th, 2008 be adjourned to January 12th, 2010 at 10:30 a.m.

AND WHEREAS on January 12th, 2010, a status hearing was held commencing at 10:30 a.m. and Staff appeared before a panel of the Commission and provided the panel of the Commission with a status update with respect to this matter;

AND WHEREAS on January 12th, 2010, Da Silva did not attend before the panel of the Commission despite being made aware of the hearing date;

AND WHEREAS on January 12th, 2010, the panel of the Commission considered the submissions of Staff;

IT IS HEREBY ORDERED that the hearing with respect to the Notice of Hearing dated October 21st, 2008 and Staff's Statement of Allegations dated October 20th, 2008 is adjourned to April 12th, 2010 at 10:00 a.m.

DATED at Toronto this 12th day of January, 2010.

"David L. Knight"

Shallow Oil & Gas Inc. et al. -- ss. 127(1), 127(8)

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

SHALLOW OIL & GAS INC., ERIC O'BRIEN,

ABEL DA SILVA, GURDIP SINGH GAHUNIA

ALSO KNOWN AS MICHAEL GAHUNIA,

ABRAHAM HERBERT GROSSMAN

ALSO KNOWN AS ALLEN GROSSMAN,

MARCO DIADAMO, GORD McQUARRIE,

KEVIN WASH, AND WILLIAM MANKOFSKY

ORDER

(Subsections 127(1) & 127(8))

WHEREAS on January 16, 2008, the Ontario Securities Commission ("the Commission") issued a Temporary Order pursuant to subsections 127(1) and (5) of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act") that: (i) all trading in securities by Shallow Oil & Gas Inc. ("Shallow Oil") shall cease and that all trading in Shallow Oil securities shall cease; and (ii) Eric O'Brien ("O'Brien"), Abel Da Silva ("Da Silva"), Gurdip Singh Gahunia, also known as Michael Gahunia ("Gahunia"), and Abraham Herbert Grossman, also known as Allen Grossman ("Grossman"), cease trading in all securities (the "Temporary Order");

AND WHEREAS on January 16, 2008, the Commission ordered that the Temporary Order shall expire on the 15th day after its making unless extended by order of the Commission;

AND WHEREAS on January 18, 2008, the Commission issued a Notice of Hearing to consider, among other things, the extension of the Temporary Order, such hearing to be held on January 30, 2008;

AND WHEREAS hearings to extend the Temporary Order were held on January 30 and January 31, 2008, and March 31, 2008, and the Temporary Order was extended by the Commission on January 31 and March 31, 2008;

AND WHEREAS Staff of the Commission ("Staff") filed a Statement of Allegations dated June 10, 2008 with the Commission;

AND WHEREAS on June 11, 2008, the Commission issued a Notice of Hearing for June 18, 2008 to consider, among other things:

(a) the issuance of a temporary cease trade order against Marco Diadamo ("Diadamo"), Gord McQuarrie ("McQuarrie"), Kevin Wash ("Wash"), and William Mankofsky ("Mankofsky"); and,

(b) the extension of the original Temporary Order dated January 16, 2008;

AND WHEREAS on June 18, 2008, a hearing was held and Staff and Grossman appeared, presented evidence and made submissions, and Diadamo, McQuarrie, and Mankofsky appeared before a panel of the Commission and made submissions as to the issuance of a temporary cease trade order against them;

AND WHEREAS on June 18, 2008, the panel of the Commission considered the evidence and submissions of Staff and Grossman, and the submissions of Diadamo, McQuarrie, and Mankofsky;

AND WHEREAS on June 18, 2008, the panel of the Commission ordered, pursuant to subsection 127(8) of the Act, that:

(a) the Temporary Order as against Shallow Oil, O'Brien, Da Silva, and Grossman be extended until the conclusion of the hearing on the merits in this matter; and

(b) the Temporary Order as against Gahunia be extended until November 26, 2008;

AND WHEREAS on June 18, 2008, the panel of the Commission ordered, pursuant to subsection 127(5) of the Act, that Diadamo, McQuarrie, Wash, and Mankofsky cease trading in any securities (the "Second Temporary Order"), with the following exception:

Diadamo shall be permitted to trade in securities that are listed on a public exchange recognized by the Commission and only in his own existing trading accounts. Furthermore, any such trading by Diadamo shall be for his sole benefit and only through a dealer registered with the Commission;

AND WHEREAS on June 18, 2008, the panel of the Commission ordered, pursuant to subsection 127(8) of the Act, that the Second Temporary Order be extended until November 26, 2008 and that the hearing with respect to the Second Temporary Order in this matter be adjourned to November 25, 2008;

AND WHEREAS on November 25, 2008, a hearing was held and Staff and McQuarrie appeared before a Panel of the Commission and made submissions as to the extension of the Temporary Order and the Second Temporary Order;

AND WHEREAS on November 25, 2008, the panel of the Commission considered the submissions of Staff and McQuarrie;

AND WHEREAS on November 25, 2008, the panel of the Commission ordered, pursuant to subsection 127(8) of the Act, that:

(a) the Temporary Order is extended as against Gahunia until the conclusion of the hearing on the merits in this matter and the Second Temporary Order is extended as against Diadamo, McQuarrie, Wash, and Mankofsky until the conclusion of the hearing on the merits in this matter; and,

(b) the hearing with respect to the Notice of Hearing dated June 11, 2008 and Staff's Statement of Allegations dated June 10, 2008 is adjourned to June 4, 2009 for a status hearing;

AND WHEREAS on May 10, 2009, McQuarrie and Staff entered into a settlement agreement with respect to the allegations against McQuarrie in the Statement of Allegations dated June 10, 2008 and that agreement was subsequently approved by a panel of the Commission;

AND WHEREAS on July 17, 2009, Mankofsky and Staff entered into a settlement agreement with respect to the allegations against Mankofsky in the Statement of Allegations dated June 10, 2008 and that agreement was subsequently approved by a panel of the Commission;

AND WHEREAS on June 4 and September 10, 2009, status hearings were held before the Commission and, on each date, a panel of the Commission ordered that the hearing with respect to the Notice of Hearing dated June 11, 2008 and Staff's Statement of Allegations dated June 10, 2008 be adjourned;

AND WHEREAS on January 12, 2010, a status hearing was held commencing at 10:00 a.m. and Staff appeared before a panel of the Commission and provided the panel of the Commission with a status update with respect to this matter;

AND WHEREAS on January 12, 2010, Shallow Oil, O'Brien, Da Silva, Gahunia, Grossman, Diadamo and Wash did not appear;

AND WHEREAS on January 12, 2010, the panel of the Commission considered the submissions of Staff;

IT IS HEREBY ORDERED that the hearing with respect to the Notice of Hearing dated June 11, 2008 and Staff's Statement of Allegations dated June 10, 2008 is adjourned to June 28, 2010 at 10:00 a.m. for the purpose of a status hearing.

DATED at Toronto this 12th day of January, 2010.

"David L. Knight"

Borealis International Inc. et al.

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

BOREALIS INTERNATIONAL INC., SYNERGY

GROUP (2000) INC., INTEGRATEDBUSINESS

CONCEPTS INC., CANAVISTA CORPORATE

SERVICES INC., CANAVISTA FINANCIAL

CENTER INC., SHANE SMITH, ANDREW LLOYD,

PAUL LLOYD, VINCE VILLANTI, LARRY HALIDAY,

JEAN BREAU, JOY STATHAM, DAVID PRENTICE,

LEN ZIELKE, JOHN STEPHAN, RAY MURPHY,

ALEXANDER POOLE, DEREK GRIGOR,

EARL SWITENKY, MICHELLE DICKERSON,

DEREK DUPONT, BARTOSZ EKIERT,

ROSS MACFARLANE, BRIAN NERDAHL,

HUGO PITTOORS AND LARRY TRAVIS

ORDER

WHEREAS on January 7, 2010, counsel for the Respondent Jean Breau, Andrew Matheson of McCarthy Tétrault LLP, brought a motion for leave to be removed as counsel for Mr. Breau, pursuant to section 1.7.4 of the Rules of Procedure,

IT IS ORDERED THAT:

1. Andrew Matheson of McCarthy Tétrault LLP is removed as counsel of record for the Respondent Jean Breau.

DATED at Toronto this 7th day of January, 2010

"Patrick J. LeSage"

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 5 -- Rules and Policies

Notice of National Instrument 55-104 Insider Reporting Requirements and Exemptions and Related Companion Policy 55-104CP and Repeal of Related Predecessor Instruments

NOTICE OF NATIONAL INSTRUMENT 55-104

INSIDER REPORTING REQUIREMENTS AND EXEMPTIONS

AND RELATED COMPANION POLICY 55-104CP

AND

REPEAL OF RELATED PREDECESSOR INSTRUMENTS

Introduction

We, the Canadian Securities Administrators (CSA), are adopting a new insider reporting regime set out in:

• National Instrument 55-104 Insider Reporting Requirements and Exemptions (the New Instrument); and

• Companion Policy 55-104CP Insider Reporting Requirements and Exemptions (the New Policy) (together, the New Materials).

We are also repealing or withdrawing the following predecessor instruments and policies:{1}

• National Instrument 55-101 Insider Reporting Exemptions (NI 55-101);

• Companion Policy 55-101CP to National Instrument 55-101 Insider Reporting Exemptions (55-101CP);

• Multilateral Instrument 55-103 Insider Reporting for Certain Derivative Transactions (Equity Monetization) (MI 55-103);

• Companion Policy 55-103CP to Multilateral Instrument 55-103 Insider Reporting for Certain Derivative Transactions (Equity Monetization) (55-103CP); and

• In British Columbia, BCI 55-506 Exemption from insider reporting requirements for certain derivative transactions (BCI 55-506) (collectively, the Current Materials).

We are also making related consequential amendments to:

• Multilateral Instrument 11-102 Passport System;

• National Instrument 14-101 Definitions; and

• National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues (NI 62-103) (together, the Consequential Amendments).

Some jurisdictions are also making other local amendments. You will find those local amendments in the version of Appendix G published in those local jurisdictions.

Additional information about the adoption processes for some jurisdictions is described in Appendix H published in that jurisdiction.

In some jurisdictions, Ministerial approval is required for these changes. Except in Ontario, provided all necessary approvals are obtained, the New Materials and Consequential Amendments will come into force on April 30, 2010 and the Current Materials will be repealed or withdrawn on this date. In Ontario, the New Materials and Consequential Amendments will come into force and the Current Materials will be repealed or withdrawn on the later of the following: (a) April 30, 2010; and (b) the date certain amendments to the Securities Act (Ontario) are proclaimed into force. Please see Appendix H published in Ontario for more information.

1. Substance and Purpose of the New Materials

The New Instrument sets out the main insider reporting requirements and exemptions from those requirements for insiders of reporting issuers, except in Ontario. In Ontario, the main insider reporting requirements will remain in the Securities Act (Ontario). Despite this difference, the substance of the requirements for insider reporting will be the same across the CSA jurisdictions.

The New Instrument consolidates the main insider reporting requirements and exemptions in a single national instrument. This will make it easier for issuers and insiders to understand their obligations and to help promote timely and effective compliance. The New Instrument also reflects changes to the insider reporting regime that we think will improve its effectiveness. Specifically, the New Instrument will, when compared to the current insider reporting regime,

• significantly reduce the number of persons required to file insider reports;

• after a six-month transition period, accelerate the filing requirement from 10 calendar days to five calendar days;

• simplify and make more consistent the reporting requirements for stock-based compensation arrangements; and

• facilitate insider reporting of stock-based compensation arrangements by allowing issuers to file an "issuer grant report" in a similar manner to the current "issuer event report".

The New Policy provides guidance as to how we would interpret or apply certain provisions of the New Instrument.

In connection with this initiative, CSA staff will also be amending CSA Staff Notice 55-308 Questions on Insider Reporting, CSA Staff Notice 55-310 Questions and Answers on the System for Electronic Disclosure by Insiders (SEDI) and CSA Staff Notice 55-312 Insider reporting guidelines for certain derivative transactions (equity monetization) and withdrawing CSA Staff Notice 55-314 Use of the terms "senior officer", "officer", and "insider" in National Instrument 55-101 Insider Reporting Exemptions.

2. Prior publications

The CSA previously requested comment about some of the proposals reflected in the New Materials on two occasions. In October 2006, we published a Notice and Request for Comment relating to amendments to NI 55-101. As part of that Notice, we outlined at a high level proposals for future amendments to Canadian insider reporting requirements, including amendments that would consolidate the insider reporting requirements in a single instrument, refocus the insider reporting requirements on a smaller, core group of insiders, and accelerate the filing deadlines. We referred to these proposals as the "Phase 2 amendments".

On December 18, 2008, we published the New Materials and Consequential Amendments for comment (the December 2008 Materials). The Notice and Request for Comment published on December 18, 2008 contains further background on the Phase 2 amendments.

3. Summary of Written Comments Received by the CSA

The comment period for the December 2008 Materials expired on March 19, 2009. We received written submissions from 27 commenters. We considered the comments received and thank all the commenters. The names of the commenters are contained in Appendix B of this notice and a summary of their comments, together with our responses, are contained in Appendix C of this notice.

4. Summary of Changes to the December 2008 Materials

After considering the comments received, we made some revisions to the December 2008 Materials that are reflected in the New Materials and Consequential Amendments. As these changes are not material, we are not republishing the New Materials or Consequential Amendments for a further comment period.

See Appendix A for a summary of key changes made to the December 2008 Materials.

5. Amendments to local rules and concurrent legislative actions

CSA members of some jurisdictions are publishing a separate local notice regarding amendments to certain local rules. These amendments include changes to local exemptions or the repeal of local exemptions that are no longer considered necessary or appropriate.

Local consequential amendments are located in Appendix G published in each jurisdiction where required. Other information required by a local jurisdiction in order to adopt the New Instrument are in Appendix H which will only be published in that jurisdiction. In addition, these notices may also include information relating to proposed proclamation dates for amendments to securities legislation that were made as part of the Highly Harmonized Securities Legislation initiative in 2006.

6. Impact on investors

The New Instrument will benefit investors by:

• focusing the insider reporting requirement on a core group of insiders with the greatest access to material undisclosed information and the greatest influence over the reporting issuer;

• making more consistent the reporting requirements for stock-based compensation arrangements; and

• after a six month transition period, accelerating the filing deadline from 10 calendar days to five calendar days, which will make this important information available to the market sooner.

7. Where to find more information

The Notice also contains the following appendices:

1. Appendix A -- Summary of key changes made to the December 2008 Materials

2. Appendix B -- List of commenters

3. Appendix C -- Summary of comments and CSA responses

4. Appendix D -- New Instrument

5. Appendix E -- New Policy

6. Appendix F -- Consequential and other amendments

7. Appendix G -- Local Amendments

8. Appendix H -- Local Information

The New Materials and Consequential Amendments are available on websites of CSA members, including:

www.lautorite.qc.ca

www.albertasecurities.com

www.bcsc.bc.ca

www.msc.gov.mc.ca

www.gov.ns.ca/nssc

www.nbsc-cvmnb.ca

www.osc.gov.on.ca

www.sfsc.gov.sk.ca

Questions

Please refer your questions to any of:

British Columbia Securities Commission

Alberta Securities Commission

Saskatchewan Financial Services Commission

Manitoba Securities Commission

Ontario Securities Commission

Autorité des marchés financiers

New Brunswick Securities Commission

Nova Scotia Securities Commission

January 22, 2010

{1} MI 55-103 and 55-103CP have been adopted in all jurisdictions other than British Columbia. In British Columbia, requirements similar to those contained in MI 55-103 were introduced into the Securities Act (British Columbia) in 2004. Exemptions similar to those contained in MI 55-103 were introduced in BCI 55-506.

APPENDIX A

SUMMARY OF KEY CHANGES

TO THE DECEMBER 2008 MATERIALS

New Instrument

1. Report by certain designated insiders for historical transactions (Parts 1 and 3) -- We have amended the New Instrument to narrow the class of persons required to file these reports to the CEO, CFO, COO and each director of the issuer and to require these reports to be filed on SEDI rather than SEDAR.

2. Definition of reporting insider (Part 1) -- We have moved the definition of reporting insider to subsection 1(1) of the New Instrument and amended the definition as follows:

(a) in paragraph (a), we replaced the terms "chief executive officer, the chief operating officer or the chief financial officer" with the terms "CEO, CFO or COO", which are defined to include an individual who holds these titles and any other individual who acts in a similar capacity for the issuer.

(b) in paragraph (c), we deleted the reference to "a major subsidiary".

(c) in paragraph (e) (paragraph (f) of the New Instrument), we replaced the reference to "officer" with "every CEO, CFO and COO of the management company" to narrow the class of persons at management companies who are determined to be reporting insiders. This change achieves greater consistency among the individuals at the issuer and management company level who are determined to be reporting insiders.

(d) deleting paragraph (h) [a person or company designated or determined to be an insider under subsection 1.2(1)]. These individuals and companies will only be reporting insiders if they otherwise come within the definition of "reporting insider".

(e) in paragraph (i), we deleted the reference to "major subsidiary".

3. Transition period to precede accelerated filing deadline for insider reports (Parts 2, 3 and 10) -- We have included a transition provision for the accelerated filing deadline for subsequent insider reports that will delay its introduction by six months from the effective date of the New Instrument. This transition period provides insiders and issuers time to become familiar with the reporting requirements in the New Instrument and to make necessary arrangements with third-party service providers.

4. Reliance on Reported Outstanding Shares (Part 1) -- We have added a new provision to Part 1 of the New Instrument based on section 2.1 of NI 62-103.

5. Issuer Grant Report (Part 6) -- We have amended the New Instrument to permit issuers to file the issuer grant report on SEDI rather than SEDAR.

6. Exemption for "specified dispositions" in connection with issuer grants (Part 6) -- We amended the New Instrument to include in Part 6 a similar exemption for "specified dispositions" to the one in Part 5.

7. Reporting exemption (nil report) (Part 9) -- We amended section 9.4 to clarify that the reporting exemption is not available to a reporting insider that is a significant shareholder based on post-conversion beneficial ownership.

8. Exemption for certain agreements, arrangements or understandings (Part 9) -- We amended section 9.7 to include an exemption analogous to the exemption in paragraph 2.2(a) of MI 55-103 and Part 3 of BCI 55-506.

New Policy

The New Policy contains expanded guidance on various topics including:

1. The term reporting insider (section 1.4);

2. Persons and companies designated or determined to be insiders (section 1.6);

3. The concept of reporting insider, including guidance relating to the interpretation of the basket criteria in paragraph (i) of the definition of "reporting insider" and the meaning of "significant influence" (section 3.1);

4. When ownership passes for the purposes of the insider reporting requirement (section 3.2);

5. The meaning of "control or direction" (section 3.3); and

6. Contravention of insider reporting requirements (section 10.1).

Consequential Amendments

We have made the following changes to the proposed consequential amendments that were part of the December 2008 Materials:

1. Form 51-102F5 Information Circular of National Instrument 51-102 Continuous Disclosure Obligations -- We have withdrawn the proposed requirement for an issuer to disclose whether insiders have been subject to late filings fees at this time. We may re-introduce the proposal with modification in the future at which time it would be subject to a further public comment process.

2. National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues -- We revised the proposed amendment so that an eligible institutional investor is exempt from the insider reporting requirement in the New Instrument -- including the requirements relating to related financial instruments and agreements, arrangements and understandings contemplated in Part 4 of the New Instrument -- if that eligible institutional investor includes similar disclosure in its early warning filings under NI 62-103.

APPENDIX B

LIST OF COMMENTERS

APPENDIX C

SUMMARY OF COMMENTS AND CSA RESPONSES

National Instrument 55-104 Insider Reporting Requirements and Exemptions

and

National Policy 55-104CP Insider Reporting Requirements and Exemptions

We received 27 comment letters in response to the request for comment. We thank the commenters for their comments.

List of commenters

The comment letters are available at www.osc.gov.on.ca.

In the following summary, we refer to the authors of a comment letter as "the commenter" regardless of the number of authors.

Summary of Comments and Responses

NI 55-104 Insider Reporting Requirements and Exemptions (NI 55-104 or the Instrument)

and

55-104CP Insider Reporting Requirements and Exemptions (55-104CP or the Policy)