Ontario Securities Commission Bulletin

Issue 33/32 - August 13, 2010

Ont. Sec. Bull. Issue 33/32

Table of Contents

Chapter 1 - Notices / News Releases

Notices

• Current Proceedings before the Ontario Securities Commission

Notices of Hearing

• Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon) -- ss. 127, 127.1

Notices from the Office of the Secretary

• Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon)

• Norshield Asset Management (Canada) Ltd. et al.

• Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon)

• Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon)

• Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon)

Chapter 2 - Decisions, Orders and Rulings

Decisions

• Strongco Income Fund -- s. 1(10)

• Underworld Resources Inc. -- s. 1(10)

• Paramount RXP Acquisition Corp. (formerly Redcliffe Exploration Inc.) -- s. 1(10)

• Meliadine Holdings Inc. -- s. 1(10)

• World Color Press Inc. -- s. 1(10)

• Jones Financial Companies, L.L.L.P.

• AlphaPro Management Inc. and Horizons AlphaPro Fiera Tactical Bond ETF

• NexGen Financial Limited Partnership

• Elliott & Page Limited

• CIBC Asset Management Inc. et al.

• RBC Asset Management Inc. and Phillips, Hager & North Investment Management Ltd.

• Nexans

Orders

• BCE Inc.

• Norshield Asset Management (Canada) Ltd. et al. -- ss. 127, 127.1

• Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon)

• Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon) -- ss. 127, 127.1

• Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon)

• Zaruma Resources Inc. -- s. 144

Chapter 3 - Reasons: Decisions, Orders and Rulings

OSC Decisions, Orders and Rulings

• Norshield Asset Management (Canada) Ltd. et al. -- ss. 127, 127.1

Chapter 4 - Cease Trading Orders

• Temporary, Permanent & Rescinding Issuer Cease Trading Orders

• Temporary, Permanent & Rescinding Management Cease Trading Orders

• Outstanding Management & Insider Cease Trading Orders

Chapter 8 - Notice of Exempt Financings

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

Chapter 11 - IPOs, New Issues and Secondary Financings

Chapter 12 - Registrations

• Registrants

Chapter 13 - SROs, Marketplaces and Clearing Agencies

SROs

• Proposed Amendments to MFDA Rule 3.1.1 (Capital -- Minimum Levels) and MFDA Form 1 -- Financial Questionnaire and Report

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Chapter 1 -- Notices / News Releases

Current Proceedings Before The Ontario Securities Commission

August 13, 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

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

Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon) -- 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

ROBERT JOSEPH VANIER

(a.k.a. CARL JOSEPH GAGNON)

NOTICE OF HEARING

(Section 127 and 127.1)

TAKE NOTICE that the Ontario Securities Commission (the "Commission") will hold a hearing pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act"), at the offices of the Commission located at 20 Queen Street West, Toronto, 17th Floor, on August 9, 2010 at 10:00 am or as soon thereafter as the hearing can be held;

AND TAKE NOTICE that the purpose of the hearing is for the Commission to consider whether it is in the public interest to approve a settlement agreement entered into between Staff of the Commission and the Respondent, and to consider a motion for an order that the proceeding be held in camera;

BY REASON OF the allegations set out in the Statement of Allegations of Staff of the Commission dated March 29, 2010 and such additional allegations as counsel may advise and the Commission may permit;

AND TAKE FURTHER NOTICE that any party to the proceeding may be represented by counsel, if that party attends or submits evidence at the hearing;

AND TAKE FURTHER NOTICE that upon the 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 proceeding.

DATED at Toronto this 6th day of August, 2010.

Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon)

FOR IMMEDIATE RELEASE

August 6, 2010

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

ROBERT JOSEPH VANIER

(a.k.a. CARL JOSEPH GAGNON)

TORONTO -- The Office of the Secretary issued a Notice of Hearing for a hearing to consider whether it is in the public interest to approve a settlement agreement entered into by Staff of the Commission and Robert Joseph Vanier and to consider a motion for an order that the proceeding be held in camera.

The hearing will be held on Monday, August 9, 2010 in Hearing Room B on the 17th floor of the Commission's offices located at 20 Queen Street West, Toronto.

A copy of the Notice of Hearing dated August 6, 2010 is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Norshield Asset Management (Canada) Ltd. et al.

FOR IMMEDIATE RELEASE

August 9, 2010

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

NORSHIELD ASSET MANAGEMENT

(CANADA) LTD., OLYMPUS UNITED GROUP INC.,

JOHN XANTHOUDAKIS, DALE SMITH AND

PETER KEFALAS

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

A copy of the Reasons and Decision on Sanctions and Costs and the Order dated August 6, 2010 are available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon)

FOR IMMEDIATE RELEASE

August 9, 2010

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

ROBERT JOSEPH VANIER

(a.k.a. CARL JOSEPH GAGNON)

TORONTO -- Following a hearing held today, the Commission issued an Order which provides that the Hearing Dates are vacated.

A copy of the Order dated August 9, 2010 is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon)

FOR IMMEDIATE RELEASE

August 9, 2010

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

ROBERT JOSEPH VANIER

(a.k.a. CARL JOSEPH GAGNON)

TORONTO -- Following a hearing held today, the Commission issued an Order approving the Settlement Agreement reached between Staff of the Commission and Robert Joseph Vanier.

A copy of the Order dated August 9, 2010 is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon)

FOR IMMEDIATE RELEASE

August 9, 2010

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

ROBERT JOSEPH VANIER

(a.k.a. CARL JOSEPH GAGNON)

TORONTO -- Following a hearing held today, the Commission issued an Order in the above named matter which provides that (a) the time for service and filing of the Notice of Motion dated August 5, 2010, the Settlement Agreement and all materials filed for the purposes of the Settlement Hearing is abridged; (b) the Settlement Hearing will be heard in camera; (c) the Settlement Agreement, all materials filed for the Settlement Hearing, and all transcripts arising from the Settlement Hearing are sealed for a period of four (4) months from the date of this Order; (d) the requirement to post the Settlement Agreement and any materials filed for the Settlement Hearing is delayed for a period of four (4) months from the date of this Order; and (e) any reprimand of the Respondent may be issued in absentia.

A copy of the Order dated August 9, 2010 is available at www.osc.gov.on.ca.

For media inquiries:

For investor inquiries:

Chapter 2 -- Decisions, Orders and Rulings

Strongco Income Fund -- 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).

August 5, 2010

Attention: Karen Slater

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.

Underworld Resources Inc. -- 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).

August 5, 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.

Paramount RXP Acquisition Corp. (formerly Redcliffe Exploration Inc.) -- 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).

Citation: Paramount RXP Acquisition Corp., Re, 2010 ABASC 356

August 5. 2010

Attention: Lesley Kim

Dear Madam:

The Applicant has applied to the local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions for a decision under the securities legislation (the Legislation) of the Jurisdictions 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 and that the Applicant's status as a reporting issuer is revoked.

Meliadine Holdings Inc. -- 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).

Citation: Meliadine Holdings Inc., Re, 2010 ABASC 350

August 3, 2010

Attention: Jonathan Ip

Dear Sir:

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.

World Color Press 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).

August 5, 2010

Attention: Andrew Schiesl

Dear Sir:

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's status as a reporting issuer is revoked.

Jones Financial Companies, L.L.L.P.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from the prospectus requirement for certain trades made in connection with an employee limited partnership interest purchase plan -- the issuer cannot rely on the employee exemption in section 2.24 of National Instrument 45-106 -- Prospectus and Registration Exemptions as the securities are not being offered to employees but to former employees -- Canadian participants will receive disclosure documents -- the issuer is subject to the supervision of the local securities regulator -- Canadian participants will not be induced to participate in the offering by expectation of employment -- no market for the securities of the issuer in Canada -- number of Canadian participants is de minimis -- relief granted.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 74(1).

National Instrument 45-106 Prospectus and Registration Exemptions, s. 2.24.

August 6, 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

THE JONES FINANCIAL COMPANIES, L.L.L.P.

(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) for an exemption from the prospectus requirements contained in the Legislation so that such requirements do not apply to the issuance of limited partnership interests of the Filer to two former employees of Edward Jones (Edward Jones Canada), a limited partnership organized under the laws of the Province of Ontario that is directly or indirectly wholly-owned by the Filer, pursuant to the Filer's 2010 Employee Limited Partnership Interest Purchase Plan (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 (the Principal Regulator) for this application; and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in the Province of British Columbia (the Non-Principal Jurisdiction).

Interpretation

Terms defined in MI 11-102 and National Instrument 14-101 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 registered limited liability limited partnership organized under the laws of the State of Missouri.

2. The Filer is a holding company with no direct operations. Its principal operating subsidiaries are Edward D. Jones & Co., L.P. (Edward Jones), a Missouri limited partnership, and Edward Jones Canada.

3. Edward Jones is a registered broker-dealer in the United States (U.S.) that engages in the retail brokerage business. Edward Jones Canada carries on a securities business in Canada and is registered as an investment dealer under the Legislation and the securities legislation of the Province of British Columbia.

4. Neither the Filer nor Edward Jones Canada is, or has any current intention of becoming, a reporting issuer in any jurisdiction of Canada. Neither the Filer nor Edward Jones Canada is in default under the Legislation or under the securities legislation of the Province of British Columbia.

5. The Filer proposes to offer an aggregate of up to 275,000 units of limited partnership interests in its partnership (the Interests) pursuant to a registration statement of the Filer on Form S-1 (the Registration Statement) under the U.S. Securities Act of 1933 filed with the U.S. Securities and Exchange Commission on July 2, 2010. The Interests will be issued pursuant to the Filer's 2010 Employee Limited Partnership Interest Purchase Plan (the Plan). The Plan is intended to provide an investment opportunity to certain current and former employees of the Filer's subsidiaries and certain general partners of the Filer (the Participants) and, also, to increase the Filer's capital through Participants' contributions. Pursuant to the Plan, Participants are granted awards that represent an opportunity to acquire Interests.

6. The purchase price of each full Interest will be US$1,000 payable by the Participant at the time the Interests are purchased, with a minimum purchase of five Interests, or US$5,000.

7. The Plan will become effective January 1, 2011, or, if later, the date that the Registration Statement is declared effective by the U.S. Securities and Exchange Commission. The offer will continue in effect until December 31, 2010, unless extended by the managing partner of the Filer. The Filer may amend the Plan at any time either retroactively or prospectively and may terminate or suspend the Plan or any performance award granted under the Plan at any time for any reason.

8. There is no market for the Interests and none of the limited partners of the Filer (Limited Partners) may sell, pledge, exchange, transfer or assign any Interest without the consent of the managing partner of the Filer, which is not expected to be given. Because the Interests are non-transferable, no public market in the Interests will develop.

9. The rights and obligations of the Limited Partners are governed by the Filer's partnership agreement, as amended from time to time, a copy of which will be attached to the Registration Statement. None of the Limited Partners may vote or otherwise participate in the management of the business of the Filer.

10. The price at which the Interests will be offered (US$1,000 per Interest) represents the book value of each Interest and has been arbitrarily determined. Each Limited Partner will be entitled to a 71/2% guaranteed annual payment on such book value (US$1,000 per Interest). Each Limited Partner must accept redemption of his or her Interest(s) at such book value and accept the return of his or her capital contribution(s) plus any accrued and unpaid 71/2% guaranteed annual payments and relinquish all rights as one of the Limited Partners (a) upon his or her death, (b) immediately upon notice of his or her voluntary withdrawal, or (c) within 30 days of receipt of a notice to withdraw from the Filer's managing partner or the holders of 50% or more of the Filer's general partners' capital (a Mandatory Withdrawal Notice). The decision to issue a Mandatory Withdrawal Notice is within the absolute discretion of the Filer's managing partner. No Limited Partner has any rights to retain his or her Interest.

11. Interests will be offered to employees and former employees of subsidiaries of the Filer resident in the U.S. under the Registration Statement. Interests will also be offered to certain employees of Edward Jones Canada resident in Canada (the Canadian Employees) pursuant to the exemption from the prospectus requirement of the Legislation provided by Section 2.24 of National Instrument 45-106 -- Prospectus and Registration Exemptions (the 45-106 Exemption).

12. The offering of Interests in Canada will be made solely by the Filer, without the participation of any dealer, underwriter or selling agent.

13. The Filer also wishes to offer Interests to one former employee of Edward Jones Canada resident in the Jurisdiction and one former employee of Edward Jones Canada resident in the Province of British Columbia (together, the Canadian Former Employees). Because each of these individuals is no longer an employee of Edward Jones Canada, the 45-106 Exemption is not available in respect of distributions of Interests to such individuals. As such, the granting of the Exemption Sought is necessary in order to allow the two Canadian Former Employees to participate in the Plan.

14. Participation in the offering by the Canadian Former Employees will be on a voluntary basis and such persons will not be induced to purchase Interests by expectation of employment.

15. None of the Filer, Edward Jones Canada or any of their employees, agents or representatives will provide investment advice to the Canadian Former Employees with respect to an investment in the Interests.

16. Each of the Canadian Former Employees will receive a copy of the Registration Statement together with a supplement that describes the relevant Canadian income tax consequences. In addition, upon request each Canadian Former Employee may receive copies of all documents incorporated by reference into the Registration Statement, including the Filer's Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

17. The distributions of Interests to the two Canadian Former Employees are isolated transactions.

Decision

The Principal Regulator is satisfied that the decision meets the test set out in the Legislation for the relevant regulator or securities regulatory authority to make the decision.

The decision of the Principal Regulator is that the Exemption Sought is granted.

AlphaPro Management Inc. and Horizons AlphaPro Fiera Tactical Bond ETF

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from subsection 2.1(1) and paragraphs 2.5(2)(a), (b) and (c) of NI 81-102 to permit an exchange traded commodity pool to enter into a forward agreement providing exposure to the portfolio of a reference fund comprised of underlying exchange traded mutual funds established in Canada or the U.S. and trading on Canadian or U.S. stock exchanges -- Exchange traded commodity pool employing three-tier structure contrary to multi-layering restriction in paragraph 2.5(2)(b) -- Reference fund and underlying exchange traded mutual funds may not be subject to NI 81-101 and NI 81-102, nor qualified for distribution in the same jurisdictions as the exchange traded commodity pool, contrary to paragraphs 2.5(2)(a) and (c) of NI 81-102 -- Exchange traded commodity pool prohibited by subsection 2.1(1) from being 100% exposed to the portfolio of the reference fund through the forward agreement -- Units of the reference fund sold only to the counterparty under the forward agreement on an exempt basis -- Majority of underlying exchange traded mutual funds consisting of exchange traded mutual funds established in Canada or the U.S. that issue IPUs traded on a Canadian or U.S. stock exchange -- No more than 10% of the exchange traded commodity pool's net asset value, in aggregate, will be exposed to underlying exchange traded mutual funds, other than those that issue IPUs, whose securities are not qualified for distribution in the same jurisdictions as the exchange traded commodity pool -- National Instrument 81-102 Mutual Funds.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 2.1(1), 2.5(2)(a), (b) and (c), 19.1.

August 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

ALPHAPRO MANAGEMENT INC.

(the Filer)

AND

IN THE MATTER OF

THE HORIZONS ALPHAPRO FIERA TACTICAL BOND ETF

(the Fund ETF)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Horizons AlphaPro Fiera Tactical Bond Fund (the Fund), which is expected to convert into the Fund ETF, for a decision under the securities legislation of the Jurisdiction (the Legislation) granting exemptive relief, pursuant to section 19.1 of National Instrument 81-102 Mutual Funds (NI 81-102), from the requirements of subsection 2.1(1) and paragraphs 2.5(2)(a), (b) and (c) of NI 81-102 in order to permit the Fund ETF to enter into one or more forward purchase and sale agreements (the Forward Agreement) which provides exposure to the portfolio of the Tactical Global Bond ETF Fund (the Reference Fund) which is comprised of exchange traded mutual funds that have been established in North America and trade on North American stock exchanges (each an Underlying ETF) (the Exemption Sought).

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

1. the Ontario Securities Commission is the principal regulator for this application; and;

2. the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (collectively, with Ontario, the Jurisdictions).

Interpretation

Terms defined in NI 81-102, National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

The Filer

1. The Filer is a corporation incorporated under the laws of Canada and acts as the trustee and manager of the Fund.

2. The Filer will also act as the trustee and manager of the Fund ETF.

The Fund

3. The Fund is a closed-end fund that is a mutual fund trust organized under the laws of Ontario, and is a reporting issuer under the laws of all of the Jurisdictions.

4. The Fund is currently not subject to NI 81-102 or National Instrument 81-104 Commodity Pools (NI 81-104).

5. Class A units and Class F units of the Fund are qualified for distribution in each of the Jurisdictions pursuant to an amended and restated long form prospectus dated July 2, 2009.

6. Class A units of the Fund are listed on the Toronto Stock Exchange (the TSX).

7. The investment objectives of the Fund are to provide its unitholders with: (i) a stable stream of tax-efficient monthly distributions; and (ii) the opportunity for capital appreciation through exposure to a tactical asset allocation strategy.

8. JovInvestment Management Inc. (JovInvestment), an affiliate of the Filer, is the portfolio manager of the Fund. JovInvestment is registered as a portfolio manager, commodity trading manager and commodity trading counsel in Ontario.

9. The Fund seeks to achieve its investment objectives through exposure to an actively managed portfolio consisting primarily of the Underlying ETFs, providing exposure to global fixed income markets, including government treasury securities, corporate bonds and high yield debt securities. This exposure is achieved through the Forward Agreement which provides 100% exposure to the portfolio of the Reference Fund, which holds the securities of the Underlying ETFs. Consequently, the returns to the Fund and its unitholders are based upon the return of the portfolio of the Reference Fund by virtue of the Forward Agreement with one or more counterparties (collectively, the Counterparty).

10. The Fund's exposure to the portfolio of the Reference Fund through the Forward Agreement may be increased to a maximum of 133% of the unleveraged assets of the Reference Fund (tested daily) by adding leveraged exposure to the Forward Agreement as may be determined by JovInvestment from time to time, and in accordance with the Fund's investment strategy (i.e., equivalent to leverage of approximately 1.33:1).

11. Pursuant to the Forward Agreement, the Fund has invested its net proceeds in a basket of common shares of Canadian public companies (the Common Share Basket).

12. The Counterparty has agreed to purchase the Common Share Basket from the Fund for an amount based on the redemption proceeds that will be paid by the Reference Fund, which holds the securities of the Underlying ETFs, to holders of an applicable number of units of the Reference Fund less amounts related to any leverage used under the Forward Agreement.

13. The Fund is expected to convert into the Fund ETF after June 30, 2010, upon meeting the conversion test specified in its prospectus.

The Reference Fund and the Underlying ETFs

14. The Reference Fund is an open-end mutual fund that is a mutual fund trust organized under the laws of Ontario. It is a non-offering reporting issuer in Ontario and Québec by virtue of a non-offering long form prospectus dated June 29, 2009.

15. The Filer is the trustee and manager of the Reference Fund, and JovInvestment is the portfolio manager of the Reference Fund.

16. Fiera Capital Inc. (Fiera), has been retained by JovInvestment, as the sub-advisor of the Reference Fund. Fiera is registered as a portfolio manager, commodity trading manager and as an exempt market dealer in Ontario.

17. Fiera, as sub-advisor, analyzes and selects from a universe of more than 80 Underlying ETFs in order to assemble and manage the Reference Fund's portfolio. By investing primarily in the Underlying ETFs, Fiera seeks to provide investment diversification which reduces the single issuer risk typically associated with a traditional fixed income portfolio on a cost-effective basis

18. The Reference Fund was created for the purpose of carrying out the common investment objectives and strategy of the Fund and Fund ETF. It is intended as a mechanism whereby the Fund and Fund ETF can through the Forward Agreement gain exposure to the value of the securities of the Underlying ETFs held in the Reference Fund's portfolio.

19. Units of the Reference Fund have only been, and will only be, offered to the Counterparty on an exempt basis.

20. The Reference Fund is not subject to NI 81-102 as it has not, and will not, offer its units to the public in any of the Jurisdictions.

21. After the Fund converts to the Fund ETF, the Reference Fund will continue to be a reporting issuer in Ontario and Québec subject to the continuous disclosure requirements of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106).

22. The Reference Fund's investment objectives are to maximize total returns for holders of its units. It achieves its investment objectives by acquiring and holding an actively managed portfolio consisting primarily of the Underlying ETFs, providing exposure to global fixed income markets, including government treasury securities, corporate bonds and high yield debt securities. The Underlying ETFs consist largely of exchange-traded mutual funds that issue index participation units (IPUs), but may also include inverse exchange traded funds, as well as other types of exchange traded funds that are established, and trade on a stock exchange, in North America.

23. Each Underlying ETF will have filed either a prospectus or a registration statement with the applicable securities regulatory authority governing its operation in Canada or the United States, as applicable, and will comply with the laws of that jurisdiction.

24. Each Underlying ETF will generally have a market capitalization of not less than $100 million or a 30-day average trading volume of not less than $5 million per day at the time the Reference Fund purchases its securities.

25. None of the Underlying ETFs in the Reference Fund's portfolio that issue units that are not IPUs will invest more than 10% of its net assets in other mutual funds.

26. The Underlying ETFs in the Reference Fund's portfolio are not subject to National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101). Those Underlying ETFs that have qualified their securities for distribution in the Jurisdictions are subject to NI 81-102. All other Underlying ETFs are not subject to NI 81-102.

The Fund ETF

27. Following conversion, the Class A units and Class F units of the Fund will be converted into Class E units of the Fund ETF. As at the date of this decision, the Filer has filed a preliminary long form prospectus dated June 22, 2010 with each of the Jurisdictions to qualify the continuous offering of Class E units of the Fund ETF.

28. The Fund ETF will be a commodity pool, as such term is defined in Section 1.1(1) of NI 81-104, in that the Fund ETF will adopt fundamental investment objectives that permit the Fund ETF to use or invest in financial instruments in a manner that is not permitted under NI 81-102. The Fund ETF will otherwise be required to comply with applicable requirements of NI 81-102, including the fund-on-fund requirements of section 2.5 of NI 81-102.

29. The Filer will be the trustee and manager of the Fund ETF, and JovInvestment will be the portfolio manager of the Fund ETF.

30. Class E units of the Fund ETF will be issued and sold on a continuous basis and will be listed on the TSX.

31. The investment objectives, investment strategy and investment restrictions of the Fund ETF will be the same as the Fund, except as may be necessary to comply with applicable law, including NI 81-102.

32. In the absence of the Exemption Sought, the Fund ETF would not be permitted to invest through the Forward Agreement in the Reference Fund because:

(a) as the Reference Fund holds more than 10% of the market value of its net assets in securities of the Underlying ETFs, the Fund ETF's indirect investment in the Reference Fund would be contrary to the multi-layering restriction in paragraph 2.5(2)(b) of NI 81-102; and

(b) the Reference Fund is not subject to NI 81-102 and its securities are not qualified for distribution in the Jurisdictions, and similarly, the Underlying ETFs in the Reference Fund's portfolio are not subject to NI 81-101, may not in all cases be subject to NI 81-102, and their securities may not be qualified for sale in one or more of the Jurisdictions, contrary to the requirements of paragraphs 2.5(2)(a) and (c) and subsection 2.1(1) of NI 81-102.

Decision

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

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

(a) The exposure of the Fund ETF to the portfolio of the Reference Fund, which is generally comprised of the securities of the Underlying ETFs, is in accordance with the fundamental investment objectives of the Fund ETF;

(b) The Reference Fund operates in accordance with the requirements of NI 81-102 other than the requirements of paragraphs 2.5(2)(a) and (c) of NI 81-102 as necessary to enable its investments in securities of the Underlying ETFs;

(c) The Reference Fund remains a reporting issuer in Ontario and Québec subject to the requirements of NI 81-106;

(d) No securities of the Reference Fund are distributed in Canada other than to the Counterparty under the Forward Agreement;

(e) The Underlying ETFs are established, and trade on a stock exchange, in Canada or the United States; and

(f) The Underlying ETFs in the Reference Fund's portfolio whose securities are not qualified for distribution in the Jurisdictions, excluding those Underlying ETFs that issue IPUs, do not in the aggregate represent more than 10% of the Fund ETF's net asset value.

NexGen Financial Limited Partnership

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from sections 2.5(2)(a) and (c) of National Instrument 81-102 Mutual Funds to permit mutual funds to invest up to 10% of net assets in leveraged ETFs, inverse ETFs, gold ETFs and leveraged gold ETFs traded on Canadian or US stock exchanges, subject to certain conditions.

Applicable Legislative Provisions

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

August 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

NEXGEN FINANCIAL LIMITED PARTNERSHIP

(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) for an exemption (the ETF Exemption) relieving the existing and future mutual funds managed by the Filer or an affiliate of the Filer that are subject to National Instrument 81-102 Mutual Funds (NI 81-102), other than money market funds as defined in NI 81-102 (the Existing Funds and the Future Funds, respectively, together, the Funds and individually, a Fund), from the prohibitions contained in paragraphs 2.5(2)(a) and (c) of NI 81-102, to permit each Fund to purchase and hold securities of

(i) exchange-traded funds (ETFs) that seek to provide daily results that replicate the daily performance of a specified widely-quoted market index (the ETF's Underlying Index) by a multiple of 200% (Leveraged Bull ETFs) or an inverse multiple of 200% (Leveraged Bear ETFs, which together with Leveraged Bull ETFs are referred to collectively in this decision as Leveraged ETFs);

(ii) ETFs that seek to provide daily results that replicate the daily performance of their Underlying Index by an inverse multiple of 100% (Inverse ETFs);

(iii) ETFs that seek to replicate the performance of gold or the value of a specified derivative the underlying interest of which is gold on an unlevered basis (Gold ETFs); and

(iv) ETFs that seek to provide daily results that replicate the daily performance of gold or the value of a specified derivative the underlying interest of which is gold on an unlevered basis (the ETF's Underlying Gold Interest), by a multiple of 200% (Leveraged Gold ETFs)

(Leveraged ETFs, Inverse ETFs, Gold ETFs, and Leveraged Gold ETFs are referred to collectively in this decision as the Underlying ETFs).

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

1. the Ontario Securities Commission is the Principal Regulator for this application; and

2. 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, Quebec, Newfoundland and Labrador and Northwest Territories (collectively with the Jurisdiction, the Jurisdictions).

INTERPRETATION

Defined terms contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decision unless otherwise defined.

REPRESENTATIONS

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

The Filer and the Funds

1. The Filer is a limited partnership formed under the laws of the Province of Ontario having its head office in Toronto, Ontario.

2. The Filer or an affiliate of the Filer is the manager of each of the Existing Funds, and will be the manager of each of the Future Funds. The Filer or an affiliate of the Filer is the portfolio manager of, or has appointed a portfolio manager for, each of the Existing Funds, and will be the portfolio manager of, or will appoint a portfolio manager for, each of the Future Funds.

3. Each Existing Fund is, and each Future Fund will be: (a) an open-ended mutual fund established under the laws of Canada or a province or territory of Canada, (b) a reporting issuer under the laws of some or all of the provinces and territories of Canada, and (c) governed by the provisions of NI 81-102.

4. Securities of each Existing Fund are, and securities of each Future Fund will be, qualified for distribution in some or all of the provinces and territories of Canada under a simplified prospectus and annual information form prepared in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) and filed with and receipted by the securities regulators in the applicable jurisdiction(s).

5. Neither the Filer nor any of the Existing Funds is in default of securities legislation in the Jurisdictions.

The Underlying ETFs

6. Each Leveraged ETF will be rebalanced daily to ensure that its performance and exposure to its Underlying Index will not exceed +/-200% of the corresponding daily performance of its Underlying Index.

7. Each Inverse ETF will be rebalanced daily to ensure that its performance and exposure to its Underlying Index will not exceed -100% of the corresponding daily performance of its Underlying Index.

8. Each Leveraged Gold ETF will be rebalanced daily to ensure that its performance and exposure to its Underlying Gold Interest will not exceed +200% of the corresponding daily performance of its Underlying Gold Interest.

Investment in IPUs and the Underlying ETFs

9. Each Existing Fund is, and each Future Fund will be, permitted, in accordance with its investment objectives and investment strategies, to invest in ETFs.

10. In addition to investing in securities of ETFs that are "index participation units" as defined in NI 81-102 (IPUs), the Funds propose to invest in the Underlying ETFs, whose securities are not IPUs.

11. The amount of the loss that can result from an investment by a Fund in an Underlying ETF will be limited to the amount invested by the Fund in securities of the Underlying ETF.

12. Each Fund will only purchase gold, permitted gold certificates and specified derivatives with such underlying interests (including Gold ETFs and Leveraged Gold ETFs), if immediately after the purchase, no more than 10% of the net assets of the Fund, taken at market value at the time of the purchase, would consist of such assets in aggregate.

13. The Underlying ETFs are attractive investments for the Funds, as they provide an efficient and cost-effective means of achieving diversification and exposure.

14. An investment by a Fund in securities of an Underlying ETF will represent the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Fund.

15. Absent the ETF Exemption, an investment by a Fund in an Underlying ETF that is a mutual fund would be prohibited by paragraphs 2.5(2)(a) and (c) of NI 81-102 because:

(a) none of the Underlying ETFs are or will be subject to NI 81-101;

(b) some of the Underlying ETFs are not, or will not be, subject to NI 81-102; and

(c) some of the Underlying ETFs may not be qualified for distribution in each jurisdiction in which the Funds are or will be qualified for distribution.

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 ETF Exemption is granted provided that:

(a) the investment by a Fund in securities of an Underlying ETF is in accordance with the fundamental investment objectives of the Fund;

(b) a Fund does not short sell securities of an Underlying ETF;

(c) the securities of the Underlying ETFs are traded on a stock exchange in Canada or the United States;

(d) the securities of the Underlying ETFs are treated as specified derivatives for the purposes of Part 2 of NI 81-102;

(e) a Fund does not purchase securities of an Underlying ETF if, immediately after the purchase, more than 10% of the net assets of the Fund in aggregate, taken at market value at the time of the purchase, would consist of securities of Underlying ETFs;

(f) a Fund does not enter into any transaction if, immediately after the transaction, more than 20% of the net assets of the Fund, taken at market value at the time of the transaction, would consist of, in aggregate, securities of Underlying ETFs and all securities sold short by the Fund; and

(g) the prospectus of each Fund discloses, or will disclose the next time it is renewed after the date hereof, (i) in the Investment Strategy section of the prospectus, the fact that the Fund has obtained relief to invest in the Underlying ETFs together with an explanation of what each Underlying ETF is, and (ii) the risks associated with investments in the Underlying ETFs.

Elliott & Page Limited

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from sections 2.5(2)(a) and (c) of National Instrument 81-102 Mutual Funds to permit mutual funds to invest up to 10% of net assets in leveraged ETFs, inverse ETFs, gold ETFs and leveraged gold ETFs traded on Canadian or US stock exchanges, subject to certain conditions.

Applicable Legislative Provisions

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

August 6, 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

ELLIOTT & PAGE LIMITED

(the Manager)

AND

IN THE MATTER OF

THE MUTUAL FUNDS NOW (the Existing Funds)

OR IN THE FUTURE (the Future Funds, together

with the Existing Funds, the Funds) MANAGED

BY THE MANAGER OR AN AFFILIATE OR A

SUCCESSOR OF THE MANAGER THAT ARE

SUBJECT TO NATIONAL INSTRUMENT 81-102

MUTUAL FUNDS (NI 81-102), OTHER THAN

"MONEY MARKET FUNDS" AS DEFINED

IN NI 81-102

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Manager for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) granting an exemption (the ETF Exemption) relieving the Funds from the prohibitions contained in paragraphs 2.5(2)(a) and (c) of NI 81-102 to permit each Fund to purchase and hold securities of:

(a) exchange-traded funds (ETFs) that seek to provide daily results that replicate the daily performance of a specified widely-quoted market index (the ETF's Underlying Index) by a multiple of 200% (Leveraged Bull ETFs) or an inverse multiple of 200% (Leveraged Bear ETFs, which together with Leveraged Bull ETFs are referred to collectively in this decision as Leveraged ETFs);

(b) ETFs that seek to provide daily results that replicate the daily performance of their Underlying Index by an inverse multiple of 100% (Inverse ETFs);

(c) ETFs that seek to replicate the performance of gold or the value of a specified derivative the underlying interest of which is gold on an unlevered basis (Gold ETFs); and

(d) ETFs that seek to provide daily results that replicate the daily performance of gold or the value of a specified derivative the underlying interest of which is gold on an unlevered basis (the ETF's Underlying Gold Interest) by a multiple of 200% (Leveraged Gold ETFs).

Leveraged ETFs, Inverse ETFs, Gold ETFs, and Leveraged Gold ETFs are referred to collectively in this decision as the Underlying ETFs.

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

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

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

Interpretation

Defined terms contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decision unless otherwise defined.

Representations

This decision is based on the following facts represented by the Manager on its own behalf and on behalf of the Funds:

The Manager and the Funds

1. The Manager is a corporation governed under the Business Corporations Act (Ontario) and has its head office located in Toronto, Ontario.

2. The Manager is registered in the categories of commodity trading manager, exempt market dealer, mutual fund dealer and portfolio manager.

3. The Manager or an affiliate or a successor of the Manager is or will be the manager of each of the Funds.

4. Each Fund is, or will be, a mutual fund organized and governed under the laws of a jurisdiction of Canada, is, or will be, a reporting issuer under the laws of some or all of the provinces and territories of Canada and is, or will be, governed by the provisions of NI 81-102.

5. Securities of each Fund are, or will be, qualified for distribution in some or all of the provinces and territories of Canada under a simplified prospectus and annual information form prepared in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) filed with and receipted by the securities regulators in the applicable jurisdiction(s).

6. Neither the Manager nor any of the Existing Funds is in default of securities legislation in any of the provinces and territories of Canada.

The Underlying ETFs

7. Each Leveraged ETF will be rebalanced daily to ensure that its performance and exposure to its Underlying Index will not exceed +/-200% of the corresponding daily performance of its Underlying Index.

8. Each Inverse ETF will be rebalanced daily to ensure that its performance and exposure to its Underlying Index will not exceed -100% of the corresponding daily performance of its Underlying Index.

9. Each Leveraged Gold ETF will be rebalanced daily to ensure that its performance and exposure to its Underlying Gold Interest will not exceed +200% of the corresponding daily performance of its Underlying Gold Interest.

10. The securities of the Underlying ETFs are traded on a stock exchange in Canada or the United States.

Investment in IPUs and the Underlying ETFs

11. Each Existing Fund is, and each Future Fund will be, permitted, in accordance with its investment objectives and investment strategies, to invest in ETFs.

12. In addition to investing in securities of ETFs that qualify as index participation units (IPUs), as defined in NI 81-102, the Funds propose to have the ability to invest in the Underlying ETFs, whose securities are not IPUs.

13. The amount of the loss that can result from an investment by a Fund in an Underlying ETF will be limited to the amount invested by the Fund in securities of the Underlying ETF.

14. Each Fund will only purchase gold, permitted gold certificates and specified derivatives with such underlying interests (including Gold ETFs and Leveraged Gold ETFs), if immediately after the purchase, no more than 10% of the net assets of the Fund, taken at market value at the time of the purchase, would consist of such assets in aggregate.

15. The Underlying ETFs are attractive investments for the Funds, as they provide an efficient and cost-effective means of achieving diversification and exposure.

16. But for the ETF Exemption, paragraph 2.5(2)(a) would prohibit a Fund from purchasing or holding a security of an Underlying ETF, because the Underlying ETFs are not subject to both NI 81-102 and NI 81-101.

17. But for the ETF Exemption, paragraph 2.5(2)(c) would prohibit a Fund from purchasing or holding securities of some Underlying ETFs, because some Underlying ETFs will not be qualified for distribution in the local jurisdiction.

18. An investment by a Fund in securities of an Underlying ETF will represent the business judgement of responsible persons uninfluenced by considerations other than the best interests of the Fund.

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 ETF Exemption is granted provided that:

(a) the investment by a Fund in securities of an Underlying ETF is in accordance with the fundamental investment objectives of the Fund;

(b) a Fund does not short sell securities of an Underlying ETF;

(c) the securities of the Underlying ETFs are traded on a stock exchange in Canada or the United States;

(d) the securities of the Underlying ETFs are treated as specified derivatives for the purposes of Part 2 of NI 81-102;

(e) a Fund does not purchase securities of an Underlying ETF if, immediately after the purchase, more than 10% of the net assets of the Fund in aggregate, taken at market value at the time of the purchase, would consist of securities of the Underlying ETFs;

(f) a Fund does not enter into any transaction if, immediately after the transaction, more than 20% of the net assets of the Fund, taken at market value at the time of the transaction, would consist of, in aggregate, securities of Underlying ETFs and all securities sold short by the Fund; and

(g) the prospectus of each Fund discloses, or will disclose the next time it is renewed after the date of this decision, (i) in the Investment Strategy section of the prospectus, the fact that the Fund has obtained relief to invest in the Underlying ETFs together with an explanation of what each Underlying ETF is, and (ii) the risks associated with investments in the Underlying ETFs.

CIBC Asset Management Inc. et al.

Headnote

National Policy 11-203 Process for Exemption Relief Applications in Multiple Jurisdictions -- relief from section 4.1 of NI 81-102 for dealer-managed mutual funds to invest in distributions of debt securities for which dealer-manager acts as underwriter during distribution period or 60 day period following distribution -- debt securities will not have "approved rating" by "credit rating organization" as required by subsection 4.1(4) -- limited supply of new debt offerings have approved ratings, and trend is expected to continue -- dominant position of related dealers in debt underwriting limits funds' ability to acquire debt securities for the funds -- all purchases must be consistent with fund investment objectives and subject to approval of independent review committee -- debt offerings must have at least one underwriter in addition to related dealer, at least one arm's length purchaser purchasing at least 5% of the offerings -- related funds can collectively purchase no more than 20% of offering and must pay no more than lowest price paid by arm's length purchaser(s) -- funds must not be money market fund funds and cannot purchase asset backed commercial paper pursuant to relief.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 4.1, 19.1.

July 30, 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

CIBC ASSET MANAGEMENT INC.,

CIBC GLOBAL ASSET MANAGEMENT INC.,

NATIONAL BANK SECURITIES INC.,

PHILLIPS, HAGER & NORTH INVESTMENT

MANAGEMENT LTD., RBC ASSET MANAGEMENT

INC. AND TD ASSET MANAGEMENT INC.

(collectively, the Filers)

AND

IN THE MATTER OF

THE MUTUAL FUNDS TO WHICH

NATIONAL INSTRUMENT 81-102 (NI 81-102)

APPLIES AND OF WHICH ONE OF THE FILERS

OR AN AFFILIATE OR ASSOCIATE OF ONE OF

THE FILERS IS NOW OR IN THE FUTURE

THE MANAGER AND/OR A PORTFOLIO ADVISER

(each, a Fund and, collectively, the Funds)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers, in respect of the Filers, any associate or affiliate of the Filers, and each Fund for a decision under the securities legislation of the Jurisdiction (the Legislation) for relief (the Requested Relief) from the prohibition in section 4.1(1) of NI 81-102 (the Investment Prohibition) to permit the investment by the Funds in debt securities of an issuer during the period of the distribution (the Distribution) or during the period of 60 days after the Distribution (the 60-Day Period), notwithstanding, in respect of each of the Filers, the involvement of the Filer or one of the Filer's associates or affiliates as an underwriter in the Distribution and notwithstanding that the debt securities do not have an approved rating by an approved credit rating organization as contemplated by section 4.1(4)(b) of NI 81-102.

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

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

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

Interpretation

Terms defined in MI 11-102, National Instrument 14-101 Definitions, NI 81-102 and National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) have the same meaning if used in this decision, unless otherwise defined. For greater certainty, the term "approved rating", as used in section 4.1(4)(b) of NI 81-102, has the meaning given to such term in National Instrument 44-101 Short Form Prospectus Distributions. In addition, in this decision the following terms have the following meanings:

(a) "Advised Funds" means, collectively, the Funds which are advised but not managed by one of the Filers or any of their affiliates or associates, and to which NI 81-102 applies;

(b) "Managed Funds" means, collectively, the Funds which are managed, and may be advised, by one of the Filers or any of their affiliates or associates, and to which NI 81-102 applies.

Representations

This decision is based on the following facts represented by the Filers in respect of the Filers and the Funds:

1. Each of the Funds is or will be a mutual fund established under the laws of one of the Jurisdiction or one of the Non-Principal Jurisdictions.

2. None of the Funds are or will be a "money market fund" as defined in NI 81-102.

3. The securities of the Funds, other than National Bank Protected Canadian Bond Fund, National Bank Protected Retirement Balanced Fund, National Bank Protected Growth Balanced Fund, National Bank Protected Canadian Equity Fund and National Bank Protected Global Fund (collectively, the Protected Funds), are or will be offered for sale pursuant to a prospectus filed in one or more of the Jurisdiction and the Non-Principal Jurisdictions. The Protected Funds are required to file an annual information form pursuant to Section 9.2 of National Instrument 81-106 Investment Fund Continuous Disclosure but whose securities are not currently qualified for distribution. Each of the Funds is or will be a dealer managed mutual fund that is or will be a reporting issuer in one or more of the Jurisdiction and the Non-Principal Jurisdictions.

4. Each of the Funds has or will have an independent review committee (IRC) appointed under NI 81-107.

5. One of the Filers or an associate or affiliate of one of the Filers is or will be the manager of the Managed Funds. One of the Filers or an associate or affiliate of one of the Filers may be a portfolio adviser of the Managed Funds.

6. One of the Filers or an associate or affiliate of one of the Filers is or will be a portfolio adviser of the Advised Funds. None of the Filers or any associate or affiliate of the Filers is or will be the manager of an Advised Fund.

7. None of the Filers and the Managed Funds are in default of securities legislation in the Jurisdiction or any of the Non-Principal Jurisdictions. To the best of the knowledge of the Filers, the Advised Funds are not in default of securities legislation in the Jurisdiction or any of the Non-Principal Jurisdictions.

8. Each of the Filers is an affiliate of one or more dealers and each Filer may become an affiliate or associate of additional dealers in the future (each, a Related Dealer and, collectively, the Related Dealers), any of which may act as an underwriter in a Distribution.

9. The Funds need the Requested Relief from the Investment Prohibition because:

(a) there is a limited supply of debt securities issued by an issuer other than the federal or a provincial government (Non-Government Debt Securities);

(b) frequently, the only source of new issues of Non-Government Debt Securities will be offerings that are, in whole or in part, underwritten by a Related Dealer; and

(c) frequently, Non-Government Debt Securities that the Filers wish to purchase for the Funds do not have an "approved rating" by an "approved credit rating organization".

10. The Filers consider that a Fund may be prejudiced if it cannot purchase during a Distribution, or in the 60-Day Period, debt securities that are consistent with its investment objective. Forgoing participation in these investment opportunities is a significant opportunity cost for the relevant Funds as they are being denied access to these securities purely as a result of the coincidental participation of a Related Dealer in the transaction and the credit rating of the security.

11. The Filers make investment decisions independently of their Related Dealers concerning Distributions in which Related Dealers act as underwriters, and this is reflected in policies and procedures approved by the IRCs of the Funds.

12. As a result, in almost all Distributions in respect of which the Requested Relief is required, the details of the Distribution and a Related Dealer's involvement as an underwriter in the particular Distribution will not be known by the Filers sufficiently long enough in advance to make an application for relief on a case-by-case basis.

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 Requested Relief from the Investment Prohibition is granted in respect of purchases of Non-Government Debt Securities by each Fund, provided that:

(a) at the time of each investment, the purchase is consistent with, or is necessary to meet, the investment objective of the Fund and represents the business judgment of the portfolio adviser of the Fund uninfluenced by considerations other than the best interests of the Fund or in fact is in the best interests of the Fund;

(b) the manager of the Fund complies with section 5.1 of NI 81-107 and the manager and IRC of the Fund comply with section 5.4 of NI 81-107 for any standing instructions the IRC provides in connection with the investment in the securities;

(c) at the time of the investment, the IRC of the Fund has approved the transaction in accordance with section 5.2(2) of NI 81-107;

(d) if the securities are acquired in the Distribution,

(i) at least one underwriter acting as underwriter in the Distribution is not a Related Dealer,

(ii) at least one purchaser who is independent and arm's length to the Fund(s) and the Related Dealers must purchase at least 5% of the securities distributed under the Distribution,

(iii) the price paid for the securities by a Fund in the Distribution shall be no higher than the lowest price paid by any of the arm's length purchasers who participate in the Distribution, and

(iv) a Fund and any related Funds for which a Filer or its affiliate or associate acts as manager and/or portfolio adviser can collectively acquire no more than 20% of the securities distributed under the Distribution in which a Related Dealer acts as underwriter;

(e) if the securities are acquired in the 60-Day Period,

(i) the ask price of the securities is readily available as provided in Commentary 7 to section 6.1 of NI 81-107,

(ii) the price paid for the securities by a Fund is not higher than the available ask price of the security, and

(iii) the purchase is subject to market integrity requirements as defined in NI 81-107;

(f) the securities acquired by the Funds pursuant to the Requested Relief cannot be asset backed commercial paper; and

(g) no later than the time a Fund files its annual financial statements, the manager of the Fund will file the particulars of each investment made by the Fund pursuant to the Requested Relief during its most recently completed financial year.

RBC Asset Management Inc. and Phillips, Hager & North Investment Management Ltd.

Headnote

National Policy 11-203, Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted from conflict of interest provisions to allow mutual funds to purchase equity securities pursuant to offerings made in the United States in which a related dealer acts as underwriter -- relief required as growing status of filer's related dealers in equity underwriting activities in the United States was limiting ability of funds to acquire securities in the United States pursuant to a distribution -- impact of this created a "market necessity" for relief -- all purchases subject to independent review committee approval and securities must be distributed pursuant to prospectus qualified in the United States or by private placement of securities of a reporting issuer in the United States.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds , ss. 4.1, 19.1.

July 30, 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

RBC ASSET MANAGEMENT INC. AND

PHILLIPS, HAGER & NORTH INVESTMENT

MANAGEMENT LTD.

(each, a Filer and, collectively, the Filers)

AND

IN THE MATTER OF

THE FUNDS

(as defined below)

DECISION

Background

The principal regulator in the Jurisdiction received an application (the Application) from the Filers on behalf of existing mutual funds and additional or future mutual funds to which National Instrument 81-102 -- Mutual Funds (NI 81-102) applies (each, a Fund and, collectively, the Funds) for which a Filer, or an affiliate of a Filer, acts as the manager or portfolio adviser for a decision (the Exemption Sought) under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting the Funds from the prohibition in Section 4.1(1) of NI 81-102 to permit the Funds to make an investment in a class of equity securities (Securities) of an issuer during the period of the distribution (the Distribution) or during the period of 60 days after the Distribution (the 60-Day Period), notwithstanding that an associate or affiliate of a Filer acts as an underwriter in the Distribution.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

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

(b) the Filers have provided notice that Section 4.7 of Multilateral Instrument 11-102 -- Passport System is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Price Edward Island, Newfoundland & Labrador, Northwest Territories, Yukon and Nunavut (the Passport Jurisdictions).

Interpretation

Terms defined in the securities legislation of Ontario and the Passport Jurisdictions (the Jurisdictions), National Instrument 14-101 -- Definitions, NI 81-102 or National Instrument 81-107 -- Independent Review Committee for Investment Funds (NI 81-107) have the same meanings in this Decision. Certain other defined terms have the meanings given to them above or below under "Representations".

Representations

1. The Filers and the Funds are not in default of securities legislation in any of the Jurisdictions.

2. Each of the Funds is, or will be, an open-ended mutual fund trust or corporation established under the laws of the Province of Ontario or another Jurisdiction.

3. Each of the Funds is, or will be, a dealer managed mutual fund that is a reporting issuer in each of the Jurisdictions.

4. A Filer, or an affiliate of a Filer, is, or will be, the manager or portfolio adviser of each of the Funds.

5. An independent review committee (the IRC) has been, or will be, appointed for each of the Funds under NI 81-107.

6. Each Filer is currently an affiliate of RBC Dominion Securities Inc. and RBC Capital Markets Corporation (each, a Related Dealer), either of which may act as an underwriter in a Distribution.

7. Each Filer and each Related Dealer is an affiliate of the Royal Bank of Canada (RBC) which is a global financial institution. RBC may also act as an underwriter in a Distribution. (RBC and each Related Dealer are, collectively, the Related Dealers.)

8. The Related Dealers currently carry on their investment banking businesses in many countries outside of Canada, but primarily in the United States.

9. The Related Dealers may, from time to time, expand their investment banking businesses such that a Filer, or an affiliate of a Filer, may become an affiliate or associate of additional dealers (also, each, a Related Dealer and, collectively with RBC, the Related Dealers), any of which may act as an underwriter in a Distribution.

10. Each Fund relying on the Exemption Sought will have an investment objective that permits it to invest in Securities of issuers that are not reporting issuers in a Jurisdiction.

11. The Filers have implemented policies and procedures and obtained the approval and standing instructions from the IRC of the Funds in order to rely on Section 4.1(4)(c) of NI 81-102 where the issuer has filed a prospectus in Canada. RBC AM has also referred this matter to its IRC in anticipation of the RBC Funds receiving exemptive relief to participate in Distributions in the United States. The RBC AM IRC voted unanimously to give its approval (subject to complying with the terms and conditions of applicable exemptive relief) to permit the RBC Funds to act in accordance with the same policies and procedures applicable to situations where Related Dealers act as an underwriter in a Distribution of an issuer who has filed a prospectus in a jurisdiction in Canada. The PHN IRC provided a similar approval.

12. Since November 1, 2007 there have been several Distributions in the United States in which a Related Dealer acted as an underwriter and in which the Funds could not purchase Securities in the Distribution or during the 60-Day Period because the Distribution was not made by a prospectus filed with one or more securities regulatory authorities or the issuers were not reporting issuers in a Jurisdiction and, accordingly, neither Section 4.1(4) of NI 81-102 nor the Decision could be relied upon.

13. The issue for the Funds continues to be significant as the Related Dealers expand their activities. It is anticipated that the Related Dealers will become increasingly active in 2010 and beyond due to the growing presence of RBC in the global equity markets, and in the United States in particular. As a result, the Funds will be restricted from a significantly larger number of underwritings in the United States. With respect to the United States, the number of Distributions that Related Dealers participated in during 2009 increased approximately 100% over the number in 2008. This increase had a direct impact on the Funds since they were restricted from investing in strategic U.S. equity issuers. In 2009, there were over 818 equity underwritings in the United States that were registered with the SEC and Related Dealers participated in 135. This represents an overall participation rate by value of 24%. However, on a monthly basis Related Dealers participated in as high as 49% of the United States equity underwritings based on value of transactions and as high as 47% of the United States equity underwritings based on number of transactions.

14. Each Filer considers that the Funds have been negatively impacted by not being able to purchase during a Distribution, or in the 60-Day Period, securities that are consistent with its investment objective. Forgoing participation in these investment opportunities represents a significant opportunity cost for the relevant Funds, as they are being denied access to investment opportunities as a result of the coincidental participation of a Related Dealer in the transaction, particularly when there is a regulatory and governance framework in place to oversee participation in similar transactions.

15. The Prohibition is detrimental for the Funds in so far as it also serves to prevent the Funds from supplementing existing positions, when issuers that the Funds may already hold securities in, are raising capital by distributing additional securities. This prevents the Funds from maintaining their strategic percentage holdings in a given issuer relevant to the overall portfolio holdings.

16. In almost all Distributions in respect of which the Exemption Sought is required, a Related Dealer's involvement as an underwriter in a particular Distribution will not be known by a Filer, or an affiliate of a Filer, sufficiently long enough in advance to make an application for relief on a case-by-case basis. In the case of the 2009 Distributions in the United States, a majority required a response within 12 hours. In the case of the remaining transactions the response time was often only one or two days, which did not permit an application either.

17. A Filer has generally, to date, been made aware of the Distribution and invited to participate on behalf of a Fund by an underwriter which is not a Related Dealer. For example, on May 8, 2009, RBC AM and the sub-advisers to the relevant Funds wished to participate in the Distribution of Wells Fargo common shares on behalf of certain Funds but, upon learning about the involvement of a Related Dealer in the underwriting, were unable to. This did not allow the Filer to add Wells Fargo to the existing positions of certain Funds in this security. As well, on May 12, 2009, RBC AM wished to participate in a Distribution of common shares of Ford Motor Company; however, RBC AM was unable to participate in the Distribution upon learning of the involvement of a Related Dealer in the underwriting even though RBC AM's intention was to supplement existing positions on behalf of certain Funds.

18. The prejudice that results for a Fund that is restricted from purchasing Securities is that the portfolio manager's discretion with respect to managing the portfolio is negatively impacted because if he/she can not make appropriate commitments or expressions of interest in respect of Securities, he/she can also not make appropriate decisions with respect to other securities of a Fund. The prejudice that results for a Fund also puts the Funds at a competitive disadvantage to almost all other Canadian funds since the Filers are among the few firms, if not the only firms, with a related party dealer that is involved on a frequent basis in these types of underwritings.

19. A Distribution in respect of which the Exemption Sought is requested will be made by means of a prospectus, or similar public offering document (a Public Offering), or by means of a private placement (a Private Placement) in the United States. The Securities issued in the Distribution will be listed on a stock exchange that is a "recognized stock exchange" within the meaning of section 248(1) of the Income Tax Act (Canada) (a Recognized Exchange).

20. A Distribution in respect of which the Exemption Sought is requested will be made by means of a Private Placement in the Jurisdictions in which the Distribution takes place.

21. Since the Funds are dealer-managed funds because of the relationship between a Filer and the Related Dealer, the Prohibition is applicable even in circumstances where a sub-advisor is exercising discretion with respect to a purchase if the sub-advisor has knowledge of the involvement of a Related Dealer.

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 is that the Exemption Sought is granted, provided that the following conditions are satisfied:

(a) the IRC of the Fund must approve the transaction in accordance with the requirements of subsection 5.2(2) of NI 81-107;

(b) the Distribution must be made by way of a Public Offering or a Private Placement in the United States;

(c) any Related Dealer that is involved in the Distribution must be regulated in respect of its underwriting activities in Canada or the United States;

(d) the Securities issued in the Distribution must be listed on a Recognized Exchange;

(e) if the Securities are acquired in the 60-Day Period, they must be acquired on a Recognized Exchange;

(f) no later than the time the Funds file their annual financial statements, the Filers file the particulars of each investment made by the Funds during their most recently completed financial year; and

(g) appropriate disclosure of the terms of the Exemption Sought is made.

Nexans

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from prospectus and dealer registration requirements in respect of certain trades in units of an employee savings fund made pursuant to a classic offering and a leveraged offering by French issuer -- Relief from prospectus and dealer registration requirements upon the redemption of units for shares of the issuer. The offering involves the use of collective employee shareholding vehicles, each a fonds communs de placement d'entreprise (FCPE) -- The Filer cannot rely on the employee prospectus exemption in section 2.24 of National Instrument 45-106 Prospectus and Registration Exemptions and the Manager cannot rely on the plan administrator exemption in section 8.16 of National Instrument 31-103 Registration Requirements and Exemptions as the shares are not being offered to Canadian employees directly by the issuer but through the FCPEs -- Canadian employees will receive disclosure documents -- The FCPEs are subject to the supervision of the French Autorité des marchés financiers -- Relief granted, subject to conditions.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53, 74(1).

National Instrument 31-103 Registration Requirements and Exemptions, s. 8.16.

National Instrument 45-102 Resale of Securities.

National Instrument 45-106 Prospectus and Registration Exemptions.

Translation

August 6, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUÉBEC AND ONTARIO

(the "Jurisdictions")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

NEXANS

(the "Filer")

DECISION

Background

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

1. an exemption from the prospectus requirements of the Legislation (the "Prospectus Relief") so that such requirements do not apply to:

(a) trades in units ("Units") of Nexans Plus 2010 B (the "Fund"), a compartment of Nexans Plus 2010, a fonds communs de placement d'entreprise or "FCPE" made pursuant to the global employee share offering of the Filer (the "Employee Share Offering") to or with Qualifying Employees (as defined below) resident in the Jurisdictions and in the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Nova Scotia (collectively, the "Offering Jurisdictions") who elect to participate in the Employee Share Offering (collectively, the "Canadian Participants");

(b) trades of ordinary shares of the Filer (the "Shares") by the Fund to Canadian Participants upon the redemption of Units at the request of Canadian Participants;

(c) the issuance of units ("Classic Units") of the Nexans Share Plan FCPE (the "Classic Fund") to holders of Units upon a transfer of the Canadian Participants' assets in the Fund to the Classic Fund at the end of the Lock-Up Period (defined below);

(d) trades of Shares by the Classic Fund to or with Canadian Participants upon the redemption of Classic Units at the request of Canadian Participants; and

2. an exemption from the dealer registration requirements of the Legislation (the "Registration Relief") so that such requirements do not apply to the Filer, the Fund, the Classic Fund, the Canadian Subsidiary (as defined below) and the Management Company (as defined below) in respect of the following:

(a) trades in Units made pursuant to the Employee Share Offering to Canadian Participants not resident in Ontario and Manitoba;

(b) trades in Shares by the Fund to Canadian Participants upon the redemption of Units at the request of the Canadian Participants;

(c) the issuance of Classic Units to Canadian Participants upon a transfer of the Canadian Participants' assets in the Fund to the Classic Fund at the end of the Lock-Up Period; and

(d) trades in Shares by the Classic Fund to the Canadian Participants upon the redemption of Classic Units at the request of the Canadian Participants.

(the Prospectus Relief and the Registration Relief collectively, the "Offering Relief").

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

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

(b) the Filer has provided notice that section 4.7(1) of Regulation 11-102 Passport System ("Regulation 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, and Nova Scotia, and

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

Interpretation

Terms defined in Regulation 14-101 respecting Definitions, Regulation 45-102 respecting Resale of Securities, Regulation 45-106 respecting Prospectus and Registration Exemptions and Regulation 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

1. The Filer is a corporation formed under the laws of France and its head office is located in France. It is not, and has no current intention of becoming, a reporting issuer under the Legislation or under the securities legislation of the other Offering Jurisdictions. The Shares are listed on Euronext Paris.

2. The Filer carries on business in Canada through Nexans Canada Inc. (the "Canadian Subsidiary", and together with the Filer and other affiliates of the Filer, the "Nexans Group"). The head office of the Canadian Subsidiary is located in Ontario.

3. The Canadian Subsidiary is controlled by the Filer and is not, and has no current intention of becoming, a reporting issuer under the Legislation or under the securities legislation of the other Offering Jurisdictions.

4. As of the date hereof and after giving effect to the Employee Share Offering, Canadian residents do not and will not beneficially own more than 10% of the Shares and do not and will not represent in number more than 10% of the total number of holders of the Shares as shown on the books of the Filer (for purposes of this representation, the calculation of Shares owned by Canadian residents after giving effect to the Employee Share Offering shall include Shares which could be received by Canadian Participants upon the redemption of Units or Classic Units held by Canadian Participants).

5. The Employee Share Offering is comprised of one subscription option which is an offering of Shares to be subscribed through the Fund (the "Leveraged Plan").

6. Only persons who are employees of a member of the Nexans Group during the subscription period for the Employee Share Offering and who meet other employment criteria (collectively, the "Qualifying Employees") will be invited to participate in the Employee Share Offering and hold Units and Classic Units.

7. The Fund and the Classic Fund are established for the purpose of implementing the Employee Share Offering. The Fund and Classic Fund are not, and have no current intention of becoming, reporting issuers under the Legislation or under the securities legislation of the other Offering Jurisdictions.

8. The Fund is a compartment of, and the Classic Fund is, a fonds communs de placement d'entreprise, or FCPE, which is a form of collective shareholding vehicle of a type commonly used in France for the conservation or custodianship of shares held by employee-investors and such collective shareholding vehicles are limited liability entities under French law. The Fund and Classic Fund are registered with and approved by the Autorité des marchés financiers in France (the "French AMF"). The Classic Fund is an existing FCPE used for previous employee share offerings implemented by the Filer.

9. Canadian Participants will subscribe for Units pursuant to the terms and conditions of the Leveraged Plan, and the Fund will then subscribe for Shares using the Employee Contribution (as defined below) and certain financing made available by Société Générale (the "Bank"), a bank governed by the laws of France.

10. Canadian Participants will be invited to participate in the Leveraged Plan of the Employee Share Offering under the following terms:

(a) The Shares will have a subscription price that is equal to the average price of the Shares on the 20 trading days preceding the date on which the subscription price is determined by the Board of Directors of the Filer (the "Reference Price"), less a 20% discount (the "Subscription Price").

(b) Canadian Participants will contribute 16.66% of the Subscription Price (expressed in Euros) to be paid by the Fund (the "Employee Contribution"). Canadian Participants will pay the equivalent of the Employee Contribution in Canadian dollars. The Fund will enter into a swap agreement (the "Swap Agreement") with the Bank. Under the terms and conditions of the Swap Agreement, the Bank will contribute the remaining 83.34% of the Subscription Price of each Share subscribed by the Fund (the "Bank Contribution").

(c) The Fund will apply the Employee Contribution and the Bank Contribution to subscribe for the Shares and the Canadian Participants will receive Units representing the subscribed Shares.

(d) Under the terms of the Swap Agreement, the Fund will remit to the Bank an amount equal to the net amounts of any dividends paid on the Shares held in the Fund.

(e) The Units will be subject to a hold period of approximately five years (the "Lock-Up Period"), subject to certain exceptions prescribed by French law (such as a release on death, long-term disability or involuntary termination of employment).

(f) The Swap Agreement provides that, at the end of the Lock-Up Period, the Fund will pay to the Bank an amount equal to the market value of the Shares (as determined under the Swap Agreement) held by the Fund, less

i. 100% of the Employee Contributions, plus

ii. an amount equal to a multiple of 3.83 of the increase, if any, above the Reference Price, of the then average price of the Shares held by the Fund, calculated on the basis of the average of 60 monthly readings of the closing prices of the Shares over the Lock-Up Period using the greater of (A) the actual closing market price on each monthly date of calculation or (B) the Reference Price (the "Appreciation Amount");

(collectively, the "Redemption Formula").

(g) If, at the end of the Lock-Up Period, the market value of the Shares held in the Fund is less than 100% of the Employee Contributions, the Bank will, under the terms and conditions of a guarantee agreement (the "Guarantee Agreement") make a contribution to the Fund to make up for any shortfall.

(h) At the end of the Lock-Up Period, a Canadian Participant may elect to request the redemption of his or her Units in consideration for cash or Shares with a value calculated pursuant to the Redemption Formula.

(i) If a Canadian Participant does not request the redemption of his or her Units at the end of the Lock-Up Period, his or her investment in the Fund will be transferred to the Classic Fund in consideration for Classic Units. Canadian Participants will be able to request the redemption of their Classic Units at any time thereafter. However, following the transfer to the Classic Fund, the Canadian Participants' investment will no longer be covered by the Swap Agreement and the Guarantee Agreement, and the value of the Classic Units will correspond to the value of the Shares on Euronext Paris.

(j) Pursuant to the terms and conditions of the Guarantee Agreement, a Canadian Participant having subscribed for Units under the Leveraged Plan may receive 100% of his or her Employee Contribution at the end of the Lock-Up Period or upon the occurrence of an early unwind resulting from the Canadian Participant exercising one of the exceptions to the Lock-Up Period. The manager of the Fund, BNP Paribas Asset Management SAS (the "Management Company"), is permitted to cancel the Swap Agreement (which will have the effect of cancelling the Guarantee Agreement) in certain strictly defined conditions where it is in the best interests of the holders of Units. The Management Company is required under French law to act in the best interests of the holders of the Units. In the event that the Management Company terminates the Swap Agreement and that such termination was not in the best interests of the holders of the Units, then such holders would have a right of action under French law against the Management Company. Under no circumstances will a Canadian Participant in the Leveraged Plan be responsible to contribute an amount greater than his or her Employee Contribution.

(k) In the event of an early unwind resulting from the Canadian Participant satisfying one of certain exceptions to the Lock-Up Period prescribed by French law and meeting the applicable criteria, a Canadian Participant may request the redemption of his or her Units for a value calculated using the Redemption Formula. The measurement of the increase above the Reference Price, if any, will be calculated using similar rules to those applied to a redemption at the end of the Lock-up Period, but the increase will be measured using the value of the Shares at the time of the early unwind instead.

11. Any dividends paid on the Shares held in the Classic Fund will be contributed to the Classic Fund and used to purchase additional Shares on Euronext Paris. To reflect this reinvestment, the value of the Classic Units will be increased.

12. The Classic Fund's portfolio will consist almost entirely of Shares of the Filer. It may also consist, from time to time, of cash resulting from dividends paid on the Shares which will be reinvested in Shares, as well as cash or cash equivalents pending investments in the Shares or held for the purposes of Classic Unit redemptions.

13. The Fund's portfolio will consist of Shares and may also include, from time to time, cash or cash equivalents pending investments in the Shares or held for the purposes of Unit redemptions. The Fund's portfolio will also include the Swap Agreement.

14. For Canadian federal income tax purposes, the Canadian Participants will likely be deemed to receive all dividends paid on the Shares financed by either the Employee Contribution or the Bank Contribution, at the time such dividends are paid to the Fund, notwithstanding the actual non-receipt of the dividends' value by the Canadian Participants. Consequently, Canadian Participants will be required to fund the tax liability associated with the dividends without recourse to the actual dividends.

15. The payment of dividends on the Shares is approved at the shareholders' meeting of the Filer. The Filer has not made any commitment to the Bank as to any minimum payment in respect of dividends.

16. To respond to the fact that, at the time of the initial investment decision relating to participation in the Leveraged Plan, Canadian Participants will be unable to quantify their potential income tax liability resulting from such participation, the Filer or the Canadian Subsidiary will indemnify each Canadian Participant in the Leveraged Plan for all tax costs to the Canadian Participants associated with the payment of dividends in excess of a specified amount of Euros per calendar year per Share during the Lock-Up Period such that, in all cases, a Canadian Participant will, at the time of the original investment decision, be able to determine his or her maximum tax liability in connection with dividends received by the Fund on his or her behalf under the Leveraged Plan.

17. At the time the Fund's obligations under the Swap Agreement are settled, the Canadian Participant will realize a capital gain (or capital loss) by virtue of having an interest in the Swap Agreement to the extent that amounts received by the Fund, on behalf of the Canadian Participant, from the Bank exceed (or are less than) amounts paid by the Fund, on behalf of the Canadian Participant to the Bank. To the extent that amounts equal to the value of the dividends on Shares that are deemed to have been received by a Canadian Participant are paid by the Fund to the Bank, such payments will reduce the amount of any capital gain (or increase the amount of any capital loss) to the Canadian Participant under the Swap Agreement. Capital losses (or gains) realized by a Canadian Participant under the Swap Agreement may generally be offset against (or reduced by) any capital gains (or losses) realized by the Canadian Participant on a disposition of the Shares, in accordance with the rules and conditions under the Income Tax Act (Canada) or comparable provincial legislation (as applicable).

18. The Management Company is a portfolio management company governed by the laws of France. The Management Company is registered with the French AMF to manage French investment funds and complies with the rules of the French AMF. The Management Company is not, and to the best of the Filer's knowledge has no current intention of becoming, a reporting issuer under the Legislation or under the securities legislation of the other Offering Jurisdictions.

19. The Management Company's portfolio management activities in connection with the Employee Share Offering, the Fund and the Classic Fund are limited to purchasing Shares from the Filer using the Employee Contribution and the Bank Contribution, selling such Shares as necessary in order to fund redemption requests, and such activities as may be necessary to give effect to the Swap Agreement.

20. The Management Company is also responsible for preparing accounting documents and publishing periodic informational documents as provided by the rules of the Fund and the Classic Fund and by the French AMF's regulations. The Management Company's activities do not affect the underlying value of the Shares.

21. Shares issued under the Employee Share Offering will be deposited in the Fund and in the Classic Fund, as applicable, through BNP Paribas Securities Services (the "Depositary"), a large French commercial bank subject to French banking legislation.

22. Under French law, the Depositary must be selected by the Management Company from among a limited number of companies identified on a list maintained by the French Minister of the Economy, Finance and Industry and its appointment must be approved by the French AMF. The Depositary carries out orders to purchase, trade and sell securities in the portfolio and takes all necessary action to allow the Fund and the Classic Fund to exercise the rights relating to the securities held in its portfolio.

23. Participation in the Employee Share Offering is voluntary, and Canadian Participants will not be induced to participate in the Employee Share Offering by expectation of employment or continued employment.

24. The total amount that may be invested by a Canadian Participant in the Employee Share Offering (including the Bank Contribution) cannot exceed 25% of his or her estimated gross annual remuneration for the 2010 calendar year.

25. The Fund is a limited liability entity and the offering documents provided to Canadian Participants will confirm that a Canadian Participant in the Leveraged Plan will not, under any circumstances, be liable to the Fund, the Bank or the Filer for amounts in excess of his or her Employee Contribution under the Leveraged Plan.

26. None of the Filer, the Management Company, the Canadian Subsidiary or any of their employees, agents or representatives will provide investment advice to Canadian Participants with respect to an investment in the Shares, the Units or the Classic Units.

27. It is anticipated that first trades of Shares by Canadian Participants will be effected through the facilities of, and in accordance with, the rules and regulations of Euronext Paris.

28. The Filer will retain a securities dealer registered as an investment dealer (the "Registrant") under the securities legislation of Ontario and Manitoba to provide advisory services to Canadian Participants resident in those provinces who wish to subscribe under the Leveraged Plan and to make a determination, in accordance with industry practices, as to whether an investment in the Leveraged Plan is suitable for each such Canadian Participant based on his or her particular financial circumstances.

29. Canadian Participants will receive an information package in the English or French language, at their choice, which will include a summary of the terms and conditions of the Employee Share Offering and a description of the relevant Canadian income tax considerations relating to subscribing for and holding the Units and redeeming Units at the end of the Lock-Up Period. The information package will also include a risk statement which will describe certain risks associated with an investment in Units pursuant to the Leveraged Plan, and a tax calculation document which will illustrate the general Canadian federal income tax consequences of participating in the Leveraged Plan.

30. Canadian Participants may also consult the Filer's annual reports posted on the Filer's website and will have access to the continuous disclosure materials relating to the Filer that are furnished to the Filer's shareholders generally. In addition, upon request, a copy of the Fund's and Classic Fund's rules (which are analogous to company by-laws) and the French Document de Référence filed by the Filer with the French AMF will be available to Canadian Participants.

31. Canadian Participants will receive a statement indicating the number of Units they hold under the Leveraged Plan and the value of each Unit at least once a year.

32. There are approximately 538 Qualifying Employees in Canada residing in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec and Nova Scotia who represent, in the aggregate, less than 3% of the number of employees in the Nexans Group worldwide.

33. The Filer and the Canadian Subsidiary are not in default under the Legislation or under the securities legislation of the other Offering Jurisdictions. To the best of the Filer's knowledge, the Management Company is not in default under the Legislation or under the securities legislation of the other Offering Jurisdictions.

Decision

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

The decision of the Decision Makers under the Legislation is that the Offering Relief is granted provided that the first trade in Shares acquired by Canadian Participants pursuant to this Decision in a Jurisdiction is deemed a distribution or a primary distribution to the public under the Legislation of such Jurisdiction, unless the following conditions are met:

1. the issuer of the security

a) was not a reporting issuer in any jurisdiction of Canada at the distribution date, or

b) is not a reporting issuer in any jurisdiction of Canada at the date of the trade;

2. at the distribution date, after giving effect to the issue of the security and any other securities of the same class or series that were issued at the same time as, or as part of the same distribution as, the security, residents of Canada

a) did not own, directly or indirectly, more than 10% of the outstanding securities of the class or series, and

b) did not represent in number more than 10% of the total number of owners, directly or indirectly, of securities of the class or series; and

3. the first trade is made

a) through the facilities of an exchange, or a market, outside of Canada, or

b) to a person or company outside of Canada.

BCE Inc.

Headnote

Clause 104(2)(c) -- Issuer bid -- relief from issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act -- Issuer proposes to purchase, at a discounted purchase price, up to 2,666,666 of its common shares from one of its shareholders and/or such shareholder's affiliates -- due to discounted purchase price, proposed purchases cannot be made through TSX trading system -- but for the fact that the proposed purchases cannot be made through the TSX trading system, the Issuer could otherwise acquire the subject shares in reliance upon the issuer bid exemption available under section 101.2 of the Act and in accordance with the TSX rules governing normal course issuer bid purchases -- no adverse economic impact on or prejudice to issuer or public shareholders -- proposed purchases exempt from issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act, subject to conditions, including that the issuer not purchase more than one-third of the maximum number of shares to be purchased under its normal course issuer bid by way of off-exchange block purchases.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 94 to 94.8, 97 to 98.7, 104(2)(c).

IN THE MATTER OF

THE SECURITIES ACT,

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

(the "Act")

AND

IN THE MATTER OF

BCE INC.

ORDER

UPON the application (the "Application") of BCE Inc. (the "Issuer") to the Ontario Securities Commission (the "Commission") for an order pursuant to clause 104(2)(c) of the Act exempting the Issuer from the requirements of sections 94 to 94.8 and 97 to 98.7 of the Act (the "Issuer Bid Requirements") in respect of the proposed purchases by the Issuer of up to 2,666,666 (collectively, the "Subject Shares") of its common shares (the "Common Shares") in one or more trades from The Toronto-Dominion Bank and/or its affiliates (collectively, the "Selling Shareholder");

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON the Issuer having represented to the Commission that:

1. The Issuer is a corporation governed by the Canada Business Corporations Act.

2. The head office and registered office of the Issuer are located at 1 Carrefour Alexander-Graham-Bell, Building A, 8th Floor, Verdun, Québec H3E 3B3.

3. The Issuer is a reporting issuer in each of the provinces of Canada and the Common Shares of the Issuer are listed for trading on the Toronto Stock Exchange ("TSX") and the New York Stock Exchange under the symbol "BCE". The Issuer is not in default of any requirement of the securities legislation in the jurisdictions in which it is a reporting issuer.

4. The authorized common share capital of the Issuer consists of an unlimited number of Common Shares, of which approximately 759,045,570 were issued and outstanding as of June 30, 2010.

5. The corporate headquarters of the Selling Shareholder are located in the Province of Ontario.

6. The Selling Shareholder has advised the Issuer that it does not directly or indirectly own more than 5% of the issued and outstanding Common Shares.

7. The Selling Shareholder has advised the Issuer that it is the beneficial owner of at least 2,667,000 Common Shares.

8. The Selling Shareholder is at arm's length to the Issuer and is not an "insider" of the Issuer or "associate" of an "insider" of the Issuer, or an "associate" or "affiliate" of the Issuer, as such terms are defined in the Act. The Selling Shareholder is an "accredited investor" within the meaning of National Instrument 45-106 Prospectus and Registration Exemptions.

9. On December 29, 2009, the Issuer commenced a normal course issuer bid (its "Normal Course Issuer Bid") for up to 20,000,000 Common Shares (subject to a maximum aggregate purchase price of $500 million) through the facilities of the TSX in accordance with sections 628 to 629.3 of Part VI of the TSX Company Manual (the "TSX NCIB Rules"). As at June 30, 2010, 8,534,000 Common Shares have been purchased under the Issuer's Normal Course Issuer Bid.

10. The Issuer and the Selling Shareholder have entered into an agreement of purchase and sale (the "Agreement") pursuant to which the Issuer has agreed, subject to regulatory approval, to acquire the Subject Shares from the Selling Shareholder by one or more purchases each occurring prior to July 29, 2010 (each such purchase, a "Proposed Purchase") for a purchase price (the "Purchase Price") that will be determined pursuant to the Agreement. The Purchase Price will be at a discount to the prevailing market price and below the bid-ask price for the Issuer's Common Shares at the time of each Proposed Purchase.

11. The Subject Shares acquired under each Proposed Purchase will constitute a "block" as that term is defined in section 628 of the TSX NCIB Rules.

12. The purchase of the Subject Shares by the Issuer pursuant to the Agreement will constitute an "issuer bid" for purposes of the Act, to which the applicable Issuer Bid Requirements would apply.

13. Because the Purchase Price will be at a discount to the prevailing market price and below the bid-ask price for the Issuer's Common Shares at the time of each Proposed Purchase, each Proposed Purchase cannot be made through the TSX trading system and, therefore, will not occur "through the facilities" of the TSX. As a result, the Issuer will be unable to acquire the Subject Shares from the Selling Shareholder in reliance upon the exemption from the Issuer Bid Requirements that is available pursuant to section 101.2(1) of the Act.

14. But for the fact that the Purchase Price will be at a discount to the prevailing market price and below the bid-ask price for the Issuer's Common Shares at the time of each Proposed Purchase, the Issuer could otherwise acquire the Subject Shares as a "block purchase" (a "Block Purchase") in accordance with the block purchase exception in section 629(l)7 of the TSX NCIB Rules and the exemption from the Issuer Bid Requirements that is available pursuant to section 101.2(1) of the Act. The notice of intention to make a normal course issuer bid filed with the TSX by the Issuer contemplates that purchases under the bid may be made by such other means as may be permitted by the TSX, including by private agreements pursuant to an issuer bid exemption order issued by a securities regulatory authority.

15. For each Proposed Purchase, the Issuer will be able to acquire the Subject Shares from the Selling Shareholder without the Issuer being subject to the dealer registration requirements of the Act.

16. The Issuer is of the view that it will be able to purchase the Subject Shares at a lower price than the price at which it would be able to purchase the Shares under the Bid through the facilities of the TSX and the Issuer is of the view that this is an appropriate use of the Issuer's funds.

17. The purchase of the Subject Shares will not adversely affect the Issuer or the rights of any of the Issuer's securityholders and it will not materially affect the control of the Issuer. The Proposed Purchases will be carried out with a minimum of cost to the Issuer.

18. To the best of the Issuer's knowledge, as of June 30, 2010, the "public float" for the Common Shares represented more than 99% of all issued and outstanding Common Shares for purposes of the TSX NCIB Rules.

19. The market for the Common Shares is a "liquid market" within the meaning of section 1.2 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.

20. Other than the Purchase Price, no additional fee or other consideration will be paid in connection with the Proposed Purchases.

21. At the time that the Agreement was entered into by the Issuer and the Selling Shareholder, neither the Issuer nor the Selling Shareholder were aware of any undisclosed "material change" or any undisclosed "material fact" in respect of the Issuer (each as defined in the Act).

22. The Selling Shareholder owns the Subject Shares and the Subject Shares were not acquired in anticipation of resale pursuant to the Proposed Purchases.

AND UPON the Commission being satisfied to do so would not be prejudicial to the public interest;

IT IS ORDERED pursuant to clause 104(2)(c) of the Act that the Issuer be exempt from the Issuer Bid Requirements in connection with each Proposed Purchase, provided that:

(a) the Proposed Purchases will be taken into account by the Issuer when calculating the maximum annual aggregate limit that is imposed upon the Issuer's Normal Course Issuer Bid in accordance with the TSX NCIB Rules;

(b) the Issuer will refrain from conducting a Block Purchase in accordance with the TSX NCIB Rules during the calendar week that it completes each Proposed Purchase and may not make any further purchases under its Normal Course Issuer Bid for the remainder of that calendar day;

(c) the Purchase Price is not higher than the last "independent trade" (as that term is used in paragraph 629(l)1 of the TSX NCIB Rules) of a board lot of Common Shares immediately prior to the execution of each Proposed Purchase;

(d) the Issuer will otherwise acquire any additional Common Shares pursuant to its Normal Course Issuer Bid and in accordance with the TSX NCIB Rules, including by means of open market transactions and by other means as may be permitted by the TSX, including private agreements under an issuer bid exemption issued by a securities regulatory authority;

(e) immediately following each Proposed Purchase of the Subject Shares from the Selling Shareholder, the Issuer will report the purchase of the Subject Shares to the TSX;

(f) at the time that the Agreement was entered into by the Issuer and the Selling Shareholder, neither the Issuer nor the Selling Shareholder were aware of any undisclosed "material change" or any undisclosed "material fact" in respect of the Issuer (each as defined in the Act); and

(g) the Issuer will issue a press release in connection with the Proposed Purchases.

DATED at Toronto this 20th day of July, 2010.

Norshield Asset Management (Canada) Ltd. et al. -- 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

NORSHIELD ASSET MANAGEMENT (CANADA) LTD.,

OLYMPUS UNITED GROUP INC., JOHN XANTHOUDAKIS,

DALE SMITH AND PETER KEFALAS

ORDER FOR SANCTIONS AND COSTS

(Sections 127 and 127.1 of the Act)

WHEREAS the proceeding in this matter was commenced by a Statement of Allegations and Notice of Hearing dated October 11, 2006;

AND WHEREAS following a hearing, a decision on the merits was issued on March 8, 2010;

AND WHEREAS following a subsequent hearing, a decision on sanctions and costs was issued on August 6, 2010;

AND WHEREAS the Commission is of the opinion that it is in the public interest to make the following orders;

IT IS ORDERED that:

1. With respect to Norshield Asset Management (Canada) Ltd. ("NAM") and Olympus United Group Inc. ("Olympus United Group"):

(a) pursuant to clause 1 of subsection 127(1) of the Securities Act, R.S.O. 1990, c. S.5 (the "Act"), the registration under the Act of each of NAM and Olympus United Group is terminated;

(b) pursuant to clause 1 of subsection 127(1) of the Act, each of NAM and Olympus United Group is permanently prohibited from becoming registered under the Act;

(c) pursuant to clause 2 of subsection 127(1) of the Act, each of NAM and Olympus United Group shall cease trading in securities permanently; and

(d) pursuant to clause 3 of subsection 127(1) of the Act, any exemptions contained in Ontario securities law do not apply to each of NAM and Olympus United Group permanently.

2. With respect to John Xanthoudakis and Dale Smith:

(a) pursuant to clause 1 of subsection 127(1) of the Act, Mr. Xanthoudakis's registration under the Act is terminated;

(b) pursuant to clause 1 of subsection 127(1) of the Act, each of Mr. Xanthoudakis and Mr. Smith is permanently prohibited from becoming registered under the Act;

(c) pursuant to clause 2 of subsection 127(1) of the Act, each of Mr. Xanthoudakis and Mr. Smith shall cease trading in securities permanently, except that Mr. Xanthoudakis and Mr. Smith may trade in securities for the account of their registered retirement savings plans and/or registered retirement income funds (as defined in the Income Tax Act (Canada)) in which they and/or their spouses have sole legal and beneficial ownership, provided that, as the order applies to each of them as individuals:

(i) the securities traded are listed and posted for trading on the Toronto Stock Exchange, the New York Stock Exchange or NASDAQ (or their successor exchanges) or are issued by a mutual fund which is a reporting issuer;

(ii) he does not own legally or beneficially (in the aggregate, together with his spouse) more than one percent of the outstanding securities of the class or series of the class in question; and

(iii) he carries out any permitted trading through a registered dealer (which dealer must be given a copy of this order) and through accounts opened in his name only;

(d) pursuant to clause 3 of subsection 127(1) of the Act, any exemptions contained in Ontario securities law do not apply to each of Mr. Xanthoudakis and Mr. Smith permanently;

(e) pursuant to clause 6 of subsection 127(1) of the Act, each of Mr. Xanthoudakis and Mr. Smith is reprimanded;

(f) pursuant to clause 7 of subsection 127(1) of the Act, each of Mr. Xanthoudakis and Mr. Smith is ordered to resign all positions held as a director or officer of an issuer;

(g) pursuant to clause 8 of subsection 127(1) of the Act, each of Mr. Xanthoudakis and Mr. Smith is permanently prohibited from becoming or acting as a director or officer of any issuer; and

(h) pursuant to clause 9 of subsection 127(1) of the Act, each of Mr. Xanthoudakis and Mr. Smith is required to pay the following administrative penalties, for allocation to or for the benefit of third parties, in accordance with subsection 3.4(2)(b) of the Act:

(i) $1,000,000 in respect of their breaches of section 2.1 of OSC Rule 31-505 which required that they deal fairly, honestly and in good faith with investors;

(ii) $1,000,000 in respect of their breaches of section 19 of the Act and section 113 of Ontario Regulation 1015, which require that books and records of NAM and Olympus United Group be maintained; and

(iii) $125,000 for misleading Staff, contrary to subsection 122(1)(a) of the Act; and

(i) pursuant to section 127.1 of the Act, Mr. Xanthoudakis and Mr. Smith shall jointly and severally pay to the Commission, the Commission's costs of the investigation and hearing of this matter in the amount of $295,000.

3. With respect to Mr. Kefalas:

(a) pursuant to clause 1 of subsection 127(1) of the Act, Mr. Kefalas is prohibited from becoming registered under the Act for a period of two years;

(b) pursuant to clause 1 of subsection 127(1) of the Act, a term and condition of supervision is imposed on Mr. Kefalas's registration for a period of two years should he seek to be registered after the prohibition period referred to above; and

(c) pursuant to clause 8.2 of subsection 127(1) of the Act, Mr. Kefalas is prohibited from becoming or acting as a director or officer of a registrant for a period of two years.

Dated at Toronto this 6th day of August, 2010.

"David L. Knight"

"Margot C. Howard"

Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon)

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

ROBERT JOSEPH VANIER

(a.k.a. CARL JOSEPH GAGNON)

ORDER

WHEREAS on March 29, 2010, the Ontario Securities Commission (the "Commission") issued a Notice of Hearing pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act"), accompanied by a Statement of Allegations issued by Staff of the Commission ("Staff") with respect to Robert Joseph Vanier (the "Respondent");

AND WHEREAS on April 8, 2010, this matter was adjourned to April 9, 2010;

AND WHEREAS on April 9, 2010, this matter was adjourned to April 12, 2010;

AND WHEREAS on April 12, 2010 this matter was adjourned to May 10, 2010;

AND WHEREAS on May 10, 2010 the Commission ordered that the matter be set down for a hearing on the merits to commence August 10, 2010, through August 13, 2010, inclusive (the "Hearing Dates");

AND WHEREAS Staff of the Commission ("Staff") and the Respondent signed a settlement agreement dated August 5, 2010 (the "Settlement Agreement");

AND WHEREAS Commission issued an order approving the Settlement Agreement on August 9, 2010;

AND WHEREAS the Commission considers it to be in the public interest;

IT IS ORDERED THAT that the Hearing Dates are vacated.

DATED at Toronto this 9th day of August, 2010

"Carol S. Perry"

Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon) -- 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

ROBERT JOSEPH VANIER

(a.k.a. CARL JOSEPH GAGNON)

ORDER

(sections 127 and 127.1)

WHEREAS on August 6, 2010, the Commission issued a Notice of Hearing pursuant to section 127 and 127.1 of the Securities Act, R.S.O. 1990 c. S.5 as amended (the "Act"), to consider whether it was in the public interest to approve a settlement agreement entered into between the Robert Joseph Vanier (the "Respondent" or "Vanier") and Staff of the Commission ("Staff");

AND WHEREAS the Vanier entered into a Settlement Agreement with Staff dated August 5, 2010 (the "Settlement Agreement") in which he agreed to a settlement of the proceedings commenced by the Notice of Hearing dated March 29, 2010, subject to the approval of the Commission;

AND UPON reviewing the Settlement Agreement and Staff's Statement of Allegations dated March 29, 2010, and upon reading the submissions from counsel for Staff, and upon hearing submissions from counsel for Staff and counsel for Vanier;

AND WHEREAS Vanier acknowledges that the facts set out in Part III of the Settlement Agreement constituted a breach of sections 56(1), 122(1)(b) and 129.2 of the Act and conduct contrary to the public interest under the Act;

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

IT IS HEREBY ORDERED THAT:

(a) the Settlement Agreement between Vanier and Staff is approved;

(b) Vanier shall cease trading in and acquisitions of any securities for a period of thirteen (13) years commencing thirty (30) days after the date of this order, with the exception that Vanier be permitted to trade in and acquire securities within a single account for a registered retirement savings plan (as defined in the Income Tax Act (Canada)) in which he has sole legal and beneficial ownership and interest, provided that:

(i) the securities are listed and posted for trading on the Toronto Stock Exchange, the New York Stock Exchange or NASDAQ (or their successor exchanges) or are issued by a mutual fund which is a reporting issuer;

(ii) Vanier does not own legally or beneficially more than one percent of the outstanding securities of the class or series of the class in question; and

(iii) Vanier must carry out any permitted trading through a registered dealer and through one account opened in his name only and must close any other accounts;

(c) any exemptions in Ontario securities law do not apply to Vanier for a period of thirteen (13) years commencing thirty (30) days after the date of this order;

(d) Vanier is hereby reprimanded;

(e) Vanier resign any positions that he holds as a director or officer of an issuer, registrant, or investment fund manager within thirty (30) days of the date of this order;

(f) Vanier is prohibited from becoming or acting as an officer or director of an issuer, registrant or investment fund manager permanently commencing thirty (30) days after the date of this order;

(g) Vanier is prohibited from becoming or acting as a registrant, investment fund manager or promoter permanently; and

(h) Vanier agrees to pay costs of the investigation in the amount of $10,000 to the Commission.

Dated this 9th day of August, 2010.

"Carol S. Perry"

Robert Joseph Vanier (a.k.a. Carl Joseph Gagnon)

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

ROBERT JOSEPH VANIER

(a.k.a. CARL JOSEPH GAGNON)

ORDER

WHEREAS on March 29, 2010, the Ontario Securities Commission (the "Commission") issued a Notice of Hearing pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act"), accompanied by a Statement of Allegations issued by Staff of the Commission ("Staff") with respect to Robert Joseph Vanier (the "Respondent");

AND WHEREAS the Respondent entered into a Settlement Agreement with Staff dated August 5, 2010 (the "Settlement Agreement") in which he agreed to a settlement of the proceedings commenced by Notice of Hearing dated March 29, 2010, subject to the approval of the Commission;

AND WHEREAS the Commission held a hearing to consider whether it was in the public interest to approve the Settlement Hearing on August 9, 2010 (the "Settlement Hearing");

AND WHEREAS Staff brought a preliminary motion for certain procedural relief at the Settlement Hearing;

AND UPON reviewing the Settlement Agreement and the Statement of Allegations, and upon reading written submissions from counsel for Staff, and upon hearing submissions;

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

IT IS HEREBY ORDERED THAT:

(a) the time for service and filing of the Notice of Motion dated August 5, 2010, the Settlement Agreement and all materials filed for the purposes of the Settlement Hearing is abridged;

(b) the Settlement Hearing will be heard in camera;

(c) the Settlement Agreement, all materials filed for the Settlement Hearing, and all transcripts arising from the Settlement Hearing are sealed for a period of four (4) months from the date of this Order;

(d) the requirement to post the Settlement Agreement and any materials filed for the Settlement Hearing is delayed for a period of four (4) months from the date of this Order; and

(e) any reprimand of the Respondent may be issued in absentia.

DATED at Toronto this 9th day of August, 2010

"Carol S. Perry"

Zaruma Resources Inc. -- s. 144

Headnote

Application by an issuer for a revocation of a cease trade order issued by the Commission -- cease trade order issued because the issuer had failed to file certain continuous disclosure materials required by Ontario securities law -- defaults subsequently remedied by bringing continuous disclosure filings up-to-date -- cease trade order revoked.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 127, 144.

IN THE MATTER OF

THE SECURITIES ACT,

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

(the Act)

AND

IN THE MATTER OF

ZARUMA RESOURCES INC.

ORDER

(Section 144)

WHEREAS the securities of Zaruma Resources Inc. (the Filer) are currently subject to a cease trade order made by the Director on May 25, 2010 under paragraph 2 of subsection 127(1) of the Act, directing that all trading in and acquisitions of the securities of the Filer, whether direct or indirect, cease until the order is revoked by the Director (the Ontario Cease Trade Order);

AND WHEREAS the Filer has applied to the Ontario Securities Commission (the Commission) pursuant to section 144 of the Act (the Application) for a revocation of the Ontario Cease Trade Order;

AND UPON the Filer representing to the Commission that:

1. The Filer was continued under the Yukon Business Corporations Act and is a valid and subsisting corporation under the laws of the Yukon Territory.

2. The Filer is a reporting issuer under the securities legislation of Alberta, British Columbia and Ontario. It is not a reporting issuer in any other jurisdiction in Canada.

3. The registered office of the Filer is located at 12th Floor, 20 Toronto Street, Toronto, Ontario, M5C 2B8.

4. The Ontario Cease Trade Order was issued as a result of the failure of the Filer to file with the Commission annual audited financial statements in respect of the year ended December 31, 2009, together with the management's discussion and analysis related thereto, and certification of the foregoing filings as required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filing (collectively, the "Annual Financial Statement Material") within the prescribed time as required by the Act.

5. The Filer was not able to meet its continuous disclosure requirements due to a delay in the completion of the audit of the Annual Financial Statement Material.

6. The Annual Financial Statement Material has now been filed with the Commission, and has been distributed to all registered and beneficial shareholders of the Filer who have requested such material.

7. The Filer is also subject to a cease trade order issued by the British Columbia Securities Commission on May 18, 2010 (the BC Order). The Filer is concurrently making application to the British Columbia Securities Commission for revocation of the BC Order.

8. The Filer's SEDAR and SEDI profiles are up-to-date.

9. The Filer had its annual meeting of shareholders on July 19, 2010.

10. Other than the Ontario Cease Trade Order and the BC Order, the Filer is not in default of any of the requirements of the Act, or the rules and regulations made pursuant thereto.

11. The Filer is up-to-date with all of its other continuous disclosure obligations and has paid any outstanding participation fees, filing fees and late fees associated with those obligations owing to the Commission in connection with the disclosure documents referred to in paragraph 4 above and has filed all of the forms associated with such payments.

12. The Filer has not changed its business since the date of the Ontario Cease Trade Order.

13. Effective June 14, 2010, Daniel John Major was appointed as a director of the Filer. Other than this appointment, the Filer has had no changes to its directors since the date of the Ontario Cease Trade Order.

14. Upon the issuance of this Order, the Filer will issue a press release announcing the revocation of the Ontario Cease Trade Order of the Filer. The Filer will concurrently file the press release and material change report on SEDAR.

AND WHEREAS considering the Application and the recommendation of the staff of the Commission;

AND WHEREAS the Director being satisfied that it would not be prejudicial to the public interest;

IT IS ORDERED pursuant to section 144 of the Act that the Ontario Cease Trade Order is revoked.

DATED this 10th day of August, 2010.

Chapter 3 -- Reasons: Decisions, Orders and Rulings

Norshield Asset Management (Canada) Ltd. et al. -- 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

NORSHIELD ASSET MANAGEMENT (CANADA) LTD.,

OLYMPUS UNITED GROUP INC., JOHN XANTHOUDAKIS,

DALE SMITH AND PETER KEFALAS

REASONS AND DECISION ON SANCTIONS AND COSTS

(Sections 127 and 127.1 of the Act)

REASONS AND DECISION ON SANCTIONS AND COSTS

I. BACKGROUND

[1] This was a bifurcated hearing before the Ontario Securities Commission (the "Commission") pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act"), to consider whether it is in the public interest to make an order with respect to sanctions and costs against Norshield Asset Management (Canada) Ltd. ("NAM"), Olympus United Group Inc. ("Olympus United Group"), John Xanthoudakis, Dale Smith and Peter Kefalas (collectively, the "Respondents").

[2] The Respondents were involved in an investment structure, referred to as the "Norshield Investment Structure", that resulted in the loss of most of the $159 million invested by 1,900 Canadian retail investors. Additional funds were raised from institutional investors at other levels of the Norshield Investment Structure.

[3] The hearing on the merits was heard over 16 days from October 27 to December 11, 2008, and on May 5 and 6, 2009.

[4] The Reasons and Decision for the hearing on the merits were issued on March 8, 2010 in Re Norshield Asset Management (2010), 33 O.S.C.B. 2139 (the "Merits Decision"), and a hearing was subsequently held on April 20, 2010 to consider submissions from Staff of the Commission ("Staff") and the Respondents regarding sanctions and costs (the "Sanctions and Costs Hearing").

[5] At the Sanctions and Costs Hearing, we heard from four witnesses called to testify by Staff, who gave evidence on how they were personally impacted by the failure of the Norshield Investment Structure.

[6] Following the Sanctions and Costs Hearing, we received additional written submissions from Staff and Mr. Xanthoudakis and Mr. Smith with regards to the availability of administrative penalties for a breach of the duty to deal fairly, honestly and in good faith with clients, pursuant to subsections 2.1(1) and (2) of OSC Rule 31-505.

[7] We find that it is in the public interest to order that the Respondents be subject to sanctions, as set out in the order we have issued along with these reasons and decision. We impose these sanctions for the reasons that follow.

II. THE MERITS DECISION

A. Our Findings on Staff's Allegations

[8] In the Merits Decision, the panel made the following findings:

(i) NAM, Olympus United, Mr. Xanthoudakis and Mr. Smith failed to deal fairly, honestly and in good faith with investors, contrary to subsections 2.1(1) and (2) of OSC Rule 31-505 -- Conditions of Registration;

(ii) NAM and Olympus United Group failed to keep and maintain proper books and records in relation to the Norshield Investment Structure, contrary to section 19 of the Act and section 113 of Ontario Regulation 1015 of the Act;

(iii) as a consequence of their positions of seniority and responsibility and in their positions as officers and directors of NAM and Olympus United Group, Mr. Xanthoudakis and Mr. Smith authorized, permitted and acquiesced in the breaches of Ontario securities laws in (i) and (ii), above;

(iv) Mr. Xanthoudakis and Mr. Smith knowingly made statements and provided evidence and information to Staff that was materially misleading and failed to state facts which were required to be stated in an effort to hide violations of Ontario securities laws, contrary to clause (a) of subsection 122(1) of the Act; and

(v) Mr. Xanthoudakis, Mr. Smith and Mr. Kefalas engaged in a course of conduct that was abusive to and compromised the integrity of Ontario's capital markets and was contrary to the public interest.

(Merits Decision at para. 334.)

B. The Flow of Funds through the Norshield Investment Structure

[9] The Norshield Investment Structure was a multi-jurisdictional corporate structure that was designed to raise and manage retail and institutional funds. Retail investors were generally issued shares in Olympus United Funds Corporation ("Olympus United Funds"), which were issued pursuant to a series of offering memoranda for shares of Olympus United Funds marketed by Olympus United Group. Additional funds were raised from retail and institutional investors at another level in the Norshield Investment Structure. NAM provided portfolio management services to Olympus United Funds. Mr. Xanthoudakis and Mr. Smith held positions as officers and directors of many of the entities in the Norshield Investment Structure, including NAM and Olympus United Group, and the Merits Decision panel found that they were the directing minds of the overall Norshield Investment Structure.

[10] As described to investors in Olympus United Funds, they were to be provided access to a portfolio of hedge fund managers which they would have had difficulty accessing individually due to the minimum investment requirements of each hedge fund manager. In reality, investors' funds were not substantially allocated to a portfolio of hedge fund managers, as had been communicated to them.

[11] Instead, funds were eventually invested in Mosaic Composite (U.S.) Inc. ("Mosaic Composite"), a corporation which notionally divided its assets into "hedged assets" and "non-hedged assets". The hedged assets included an option purchased from the Royal Bank of Canada that increased or decreased in value based on the value of the underlying hedge fund portfolios (the "SOHO Option"). The bulk of the remaining assets were invested in a portfolio of equity investments through four Bahamian funds (the "Channel Funds").

[12] As summarized at paragraph 22 of the Merits Decision,

Ultimately, the value of the investments in the Channel Funds and the other assets fell far short of the funds invested in them and there is little residual value remaining for retail and institutional investors. The task of surfacing value has been complicated by missing or incomplete records, multiple jurisdictions, competing claims and intercorporate transfers.

III. SANCTIONS AND COSTS REQUESTED BY STAFF

A. Sanctions

Specific Sanctions Requested

[13] Staff is requesting that the following sanctions be ordered against the Respondents.

[14] With respect to NAM and Olympus United Group, Staff request:

(a) pursuant to clause 1 of subsection 127(1) of the Act, an order that the registration under the Act of each of NAM and Olympus United Group be terminated;

(b) pursuant to clause 1 of subsection 127(1) of the Act, an order that each of NAM and Olympus United Group be permanently prohibited from becoming registered under the Act;

(c) pursuant to clause 2 of subsection 127(1) of the Act, an order that each of NAM and Olympus United Group cease trading in securities permanently; and

(d) pursuant to clause 3 of subsection 127(1) of the Act, an order that any exemptions contained in Ontario securities law do not apply to each of NAM and Olympus United Group permanently.

[15] With respect to Mr. Xanthoudakis and Mr. Smith, Staff request:

(a) pursuant to clause 1 of subsection 127(1) of the Act, an order that Mr. Xanthoudakis's registration under the Act be terminated;

(b) pursuant to clause 1 of subsection 127(1) of the Act, an order that each of Mr. Xanthoudakis and Mr. Smith be permanently prohibited from becoming registered under the Act;

(c) pursuant to clause 2 of subsection 127(1) of the Act, an order that each of Mr. Xanthoudakis and Mr. Smith cease trading in securities permanently;

(d) pursuant to clause 3 of subsection 127(1) of the Act, an order that any exemptions contained in Ontario securities law do not apply to each of Mr. Xanthoudakis and Mr. Smith permanently;

(e) pursuant to clause 6 of subsection 127(1) of the Act, an order reprimanding each of Mr. Xanthoudakis and Mr. Smith;

(f) pursuant to clause 7 of subsection 127(1) of the Act, an order that each of Mr. Xanthoudakis and Mr. Smith resign all positions that they hold as a director or officer of an issuer;

(g) pursuant to clause 8 of subsection 127(1) of the Act, an order that each of Mr. Xanthoudakis and Mr. Smith be permanently prohibited from becoming or acting as a director or officer of any issuer; and

(h) pursuant to clause 9 of subsection 127(1) of the Act, an order requiring each of Mr. Xanthoudakis and Mr. Smith to pay the following administrative penalties, for allocation to or for the benefit of third parties:

• $1,000,000 in respect of their breaches of section 2.1 of OSC Rule 31-505 which required that they deal fairly, honestly and in good faith with investors;

• $1,000,000 in respect of their breaches of section 19 of the Act and section 113 of Ontario Regulation 1015, which required that books and records of NAM and Olympus United Group be maintained; and

• $250,000 for misleading Staff, contrary to subsection 122(1)(a) of the Act.

[16] With respect to Mr. Kefalas, Staff request:

(a) pursuant to clause 1 of subsection 127(1) of the Act, an order that Mr. Kefalas be prohibited from becoming registered under the Act for a period of 3 years;

(b) pursuant to clause 1 of subsection 127(1) of the Act, an order that a term and condition of supervision be imposed on Mr. Kefalas's registration for a period of 3 years should he seek to be registered after the prohibition period referred to above; and

(c) pursuant to clause 8.2 of subsection 127(1) of the Act, an order that Mr. Kefalas be prohibited from becoming or acting as a director or officer of a registrant for a period of 3 years.

[17] In support of these requests, Staff called four investor witnesses who testified about how they were personally impacted.

Factors to Consider when Determining the Appropriate Sanctions

[18] Staff submit that the allegations against Mr. Xanthoudakis and Mr. Smith, as proven, are extremely serious:

Xanthoudakis and Smith failed to account for investors' funds despite their positions of seniority within the Norshield Investment Structure. More particularly, Xanthoudakis and Smith participated in transactions which artificially inflated the NAVs reported to investors. By this conduct, investors were mislead into believing that their funds were invested in a structure that had value and liquidity, of which it had neither, at least in 2004 and 2005. Further, Xanthoudakis and Smith participated in transactions which preferred the interests of certain investors over others. Conduct of this nature is unlawful, improper and a violation of their positions of authority within the Norshield Investment Structure. Last, Xanthoudakis and Smith misled Staff about the true structure of the Norshield investments during the regulatory on-site review of the Corporate Respondents' business in an effort to hide their unlawful conduct.

(Sanctions Submissions of Staff, dated April 19, 2010 at paragraph 16.)

[19] Staff submit that NAM, Olympus United Group, Mr. Xanthoudakis and Mr. Smith acted dishonestly, treated investors unfairly, contributed to the losses experienced by investors and misled Staff. This conduct, they submit, is particularly egregious; the nature and scale of their misconduct warrant higher administrative penalties and trading, registration, and director and officer bans.

[20] Staff submit that the roles held by Mr. Kefalas as Compliance Officer and Ultimate Responsible Person are crucial to the proper regulation of the capital markets, and Mr. Kefalas's failure to properly discharge his responsibilities resulted in harm to investors and to the capital markets.

[21] Citing the Commission's recent decision in Re Rowan (2009), 33 O.S.C.B. 91 ("Rowan") at para. 145, Staff submit that as registrants, the Respondents are expected to have a higher level of awareness of securities law requirements and the importance of those requirements to the capital markets. As such, Staff submit that the Respondents' breaches of Ontario securities law should be treated as significantly more serious than if they had not been registered.

[22] Staff submit that we should consider the scale of the Respondents' unlawful activity when assessing appropriate sanctions. They submit that the nearly entire loss of $159 million invested by close to 2,000 investors, most of whom were Ontario residents, and the period of time over which the misconduct occurred indicate that significant sanctions should be ordered.

[23] With respect to Mr. Kefalas, Staff submit that severe sanctions are warranted given the magnitude of loss suffered by investors and the gate-keeping function of a Compliance Officer or Ultimate Responsible Person.

[24] Staff also draw our attention to the fact that neither Mr. Xanthoudakis nor Mr. Smith have demonstrated any recognition of the seriousness of their improprieties.

[25] Staff submit that an order permanently removing NAM, Olympus United Group, Mr. Xanthoudakis and Mr. Smith from the marketplace and significant administrative penalties would be proportionate to the Respondents' conduct and would have a deterrent effect on the Respondents and like-minded individuals.

[26] Staff contend that an administrative penalty would be appropriate since the Respondents are registrants and the scope of their misconduct is broad. They submit that the administrative penalty should have sufficient magnitude to effectively deter similar behaviour by the Respondents and others.

[27] Staff referred to Cartaway Resources Corp., [2004] 1 S.C.R. 672 ("Cartaway") at para. 5, in which the Supreme Court of Canada agreed with the penalty imposed by the British Columbia Securities Commission on respondents who had leadership roles, stating that their "deceitful conduct and leadership roles justified the imposition of a higher penalty than that imposed on their confederates." An order that the maximum penalty of $100,000 be paid was upheld by the court.

[28] Staff also cited the Commission's decision in Re Limelight Entertainment Inc. (2008), 31 O.S.C.B. 12030 ("Limelight"), where administrative penalties of $175,000 and $200,000 were ordered against two respondents who were directing minds. These respondents were also jointly and severally liable to disgorge $2.75 million to the Commission. This order was made after consideration of factors including the amount raised from investors, the egregious conduct of the respondents in causing harm to investors and the marketplace, the loss of the entire amount of investments and misleading statements made to Staff by the respondents. (Limelight, supra at para. 33). The panel noted that the quantum of administrative penalties ordered would have been higher had the disgorgement order not been made.

[29] Staff urge us to consider mitigating factors when assessing what sanctions would be appropriate for Mr. Kefalas. These mitigating factors include Mr. Kefalas's belief that NAM's legal counsel was the person responsible for compliance in practice and that he was never asked to practically fulfill any ongoing compliance function by NAM.

[30] At the Sanctions and Costs Hearing, Staff requested that any administrative penalties ordered be allocated to the receiver for NAM, for the benefit of investors in the Norshield Investment Structure.

B. Costs

[31] Staff also request an order pursuant to subsection 127.1 of the Act that Mr. Xanthoudakis and Mr. Smith shall jointly and severally pay to the Commission $295,000 in costs. Staff does not request an order of costs with respect to the other Respondents.

[32] The total costs incurred for this proceeding is calculated to be $998,320, which includes work done by investigation and litigation Staff. Staff are claiming costs of $414,077.50, which reflects the hours claimed for two litigators' preparation for the hearing, and some costs associated with a Staff investigator's investigation and preparation for the hearing. This total is adjusted down in Staff's final claim for costs to reflect the fact that only five of the seven allegations were made out against the Respondents. Hence, Staff's request that $295,000 be paid.

IV. THE POSITIONS OF THE RESPONDENTS

[33] NAM is currently in receivership. Both NAM and Olympus United Group were unrepresented at the Sanctions and Costs hearing. We received no submissions from these Respondents.

A. Mr. Xanthoudakis and Mr. Smith

Trading, Registration and other Restrictions

[34] Mr. Xanthoudakis and Mr. Smith submit that the conduct addressed in this proceeding does not correlate to the cease trading and personal exemption remedies requested by Staff. They suggest that the sanctions relating to bans on trading and exclusions from exemptions are not appropriate in the circumstances.

[35] In contrast, they submit that restrictions on their registration and their ability to be or act as directors or officers of issuers relate to the conduct at issue.

Administrative Penalties

[36] Mr. Xanthoudakis and Mr. Smith submit that in addition to the general public interest requirement for any order made under subsection 127(1), an order that a respondent pay an administrative penalty requires that the respondent breached Ontario securities law.

[37] They agree with Staff's submission that a breach of section 19 of the Act, relating to books and records requirements, is a breach of Ontario securities law. However, they submit that a breach of section 19 should not warrant a penalty in the magnitude of $1,000,000.

[38] Mr. Xanthoudakis and Mr. Smith also agree that a finding that they misled Staff during the on-site compliance review would be a breach of Ontario securities law. They submit that this finding in the Merits Decision was based on an omission to discuss the Channel Funds, rather than a positive misstatement. They suggest that the seriousness of this breach can be distinguished from cases where respondents have made statements that are misleading.

[39] Mr. Xanthoudakis and Mr. Smith submit that we should consider mitigating circumstances when deciding whether an administrative penalty is appropriate and, if so, the quantum of that penalty. They submit that the Respondents were in crisis mode at the time of the on-site compliance review and Mr. Xanthoudakis believed he was going to have a follow-up interview with Staff during the next couple weeks, where there could have been further disclosure of his knowledge of the investment structure.

[40] Mr. Xanthoudakis and Mr. Smith do not agree that a breach of OSC Rule 31-505 constitutes a breach of Ontario securities law that could lead to an administrative penalty. They submit that it is less than clear whether a breach of the general duty that "A registered dealer or advisor shall deal fairly, honestly and in good faith with its clients" amounts to a failure to comply with Ontario securities law.

[41] They submit that the definition of "regulations", which constitutes Ontario securities law under the Act, includes rules unless the context otherwise indicates. Looking at the context, they submit that rules such as section 2.1 of OSC Rule 31-505 which make a very general statement can be distinguished from rules that specifically articulate a particular obligation in a way that is more discernable and concrete. This issue is addressed more fully in paragraphs 51 to 71, below.

[42] Regarding the amount of any administrative penalty, counsel for Mr. Xanthoudakis and Mr. Smith submits that Cartaway dealt with an entirely different set of circumstances than are at issue in this proceeding; the two individuals earned $5.1 million in personal trading profits relating to trades in securities of the issuer in that proceeding, whereas, in this case, there were no findings that either Mr. Xanthoudakis or Mr. Smith personally profited. They submit that Cartaway does not provide any guidance with respect to the quantum of administrative penalty that should be ordered.

[43] Mr. Xanthoudakis and Mr. Smith also distinguish Limelight from this proceeding, and submit that it is difficult to find any points of similarity between that case and this one.

[44] In reply to Staff's statement that they have not shown any remorse or recognized the seriousness of their improprieties, Mr. Xanthoudakis and Mr. Smith submit that they were entitled to defend themselves in regard to the allegations brought against them, and that little weight should be placed on how they have responded to this proceeding, including their choice not to testify. At the Sanctions and Costs Hearing, counsel for Mr. Xanthoudakis and Mr. Smith stated:

In my submission that is a rather unfair point to make in that I think it is well understood that in our legal system that responding to and defending a proceeding brought against you is something that one is entitled to do and that, in the course of doing that, standing up at the outset and admitting wrongdoing is generally not a recommended legal strategy in responding and, therefore, I would simply ask that little weight be placed to how Mr. Xanthoudakis and Mr. Smith have responded to this proceeding.

(Public Hearing Transcript, April 20, 2010 at page 61, lines 13 to 23.)

He also noted that Mr. Xanthoudakis expressed sorrow for investors' losses in a letter he wrote to some investors in May 2006.

B. Mr. Kefalas

[45] Mr. Kefalas made oral submissions regarding mitigating factors for any sanctions ordered against him.

[46] Although he was registered as the Ultimate Responsible Person and Compliance Officer for NAM, Mr. Kefalas takes the position that he was never more than a figurehead, and stated at the Sanctions and Costs Hearing that he never believed he actually held those roles. Rather, he submits that Karine Simoes held the dual role of in-house counsel and head of compliance for NAM. He claims his submissions in this respect are supported by evidence heard at the hearing on the merits from witnesses who were employed in the Norshield Investment Structure and testified that issues related to compliance were directed to Ms. Simoes.

[47] Mr. Kefalas admits that he is culpable for signing documents that he did not read, but he claims he did this because he trusted that other responsible individuals were performing their jobs up to appropriate standards. He submits that he never deliberately acted against the public interest.

[48] Mr. Kefalas submits that a three-year ban on trading and acquiring securities and acting as a director or an officer of an issuer is too harsh given his more limited role in the investment structure.

[49] Regardless of how long he is banned from participating in the industry, he claims his professional reputation has been irreparably tarnished. He has had significant difficulty obtaining employment since this matter began, and has not been employed in the industry since early 2008. Efforts to start a business with a former colleague have also come to naught.

[50] He submits that he represents no threat to the public and that he has shown the Commission respect and has fully cooperated throughout the entire process.

V. ANALYSIS

A. Can an administrative penalty be imposed for breaches of subsections 2.1(1) and (2) of OSC Rule 31-505?

1. Staff's Submissions

[51] Staff submit that section 2.1 of OSC Rule 31-505 forms a part of Ontario securities law and therefore, administrative penalties may be imposed when it is breached.

[52] Staff refer us to Rowan, where the Commission imposed administrative penalties for a breach of OSC Rule 31-505, and submit that this decision is authoritative on the issue of whether OSC Rule 31-505 forms part of Ontario securities law.

[53] Staff further submit that section 2.1 of OSC Rule 31-505 clearly sets out, in a discernable and concrete manner, the obligation of registrants in dealing with their clients, a cornerstone of securities regulation and an obligation which registrants should expect to be subject to sanctions for non-compliance.

[54] Staff submit that the context of OSC Rule 31-505 supports the presumption that it forms part of the regulations and therefore part of Ontario securities law. They submit that there is nothing in its context to indicate otherwise, and the Commission may make an order requiring Mr. Xanthoudakis and Mr. Smith to pay an administrative penalty pursuant to subsection 127(1)9.

2. Mr. Xanthoudakis's and Mr. Smith's Submissions

[55] Mr. Xanthoudakis and Mr. Smith submit that subsection 127(1)9, which permits the Commission to order administrative penalties, should be applied narrowly. They submit that the imposition of sanctions under subsection 127(1)9 only invokes the Commission's public interest power to the extent that, if an articulated breach of Ontario securities law is found, the Commission must make an additional determination that it would be in the public interest to impose an administrative penalty.

[56] In response to Staff's submissions, they submit that the decision in Rowan does not interpret the meaning of "regulations" in the definition of "Ontario securities law" for the purposes of subsection 127(1)9 of the Act, and that it does not identify which instrument each respondent was found to have breached in order to support the orders for administrative penalties. Mr. Xanthoudakis and Mr. Smith also note that this decision is currently on appeal to the Divisional Court.

[57] Mr. Xanthoudakis and Mr. Smith submit that OSC Rule 31-505, and particularly Part 2 of that rule, which contains subsections 2.1(1) and (2), should not be considered part of Ontario securities law for the purposes of subsection 127(1)9. They claim that Part 2 does not disclose any specific obligations or provide any meaningful context to the rule. Rather, they submit that subsections 2.1(1) and (2) recite a general principle, which is akin to a statement of the public interest, and which was intended to inform the interpretation of the more specific conditions of registration for a dealer or adviser outlined in Part 1 of OSC Rule 31-505. They suggest that a finding of a breach of section 2.1 of OSC Rule 31-505 would be akin to a finding of conduct contrary to the public interest without a specific breach of the Act or other provision of Ontario securities law, which would not be sufficient to impose an administrative penalty.

[58] They submit that at least Part 2 of OSC Rule 31-505 is likely a rule which "the context" indicates is not a substantive provision of Ontario securities law. They submit that a breach of this rule, entitled "Conditions of Registration", should result in consequences for the registration status of the respondent, rather than constitute a standard of Ontario securities law which could result in a fine.

3. Analysis and Conclusion

[59] Administrative penalties may only be ordered in circumstances where there has been a breach of Ontario securities law, as set out in clause 9 of subsection 127(1) of the Act:

127. (1) Orders in the public interest -- The Commission may make one or more of the following orders if in its opinion it is in the public interest to make the order or orders:

...

9. If a person or company has not complied with Ontario securities law, an order requiring the person or company to pay an administrative penalty of not more than $1 million for each failure to comply.

[60] Cases where there has been a breach of Ontario securities law can be distinguished from cases where findings have been made in the public interest without a particular breach of Ontario securities law. The administrative penalty sanction is meant to apply to the former cases, where a breach of Ontario securities law has been found. This is discussed in the Final Report of the Five Year Review Committee, which recommended that administrative penalties be added to the Act:

As is the case for securities regulators in the other Canadian jurisdictions referred to above, we recommended that the Commission's ability to impose an administrative fine should be exercisable only where there has been a contravention of Ontario securities law and it is in the public interest to impose such a fine. We are aware that there are other remedies available to the Commission which do not require there to have been a contravention of securities legislation but rather, simply a finding that the conduct is contrary to the public interest (for example, the revocation of registration). However, we recognize that the imposition of an administrative fine may be viewed as a different kind of a remedy from the others currently listed in section 127 of the Act and that principles of natural justice are better served by tying the imposition of an administrative fine to a demonstrated breach of Ontario securities law. The Government of Ontario adopted this recommendation in the 2002 Amendments.

(Ontario, Ministry of Finance, Five Year Review Committee Final Report -- Reviewing the Securities Act (Ontario), (Toronto: Queen's Printer for Ontario, 2003) at 215.)

[61] Subsection 1(1) of the Act contains the following definitions regarding what is included in "Ontario securities law":

"Ontario securities law" means,

(a) this Act,

(b) the regulations, and

(c) in respect of a person or company, a decision of the Commission or a Director to which the person or company is subject;

"regulations" means the regulations made under this Act and, unless the context otherwise indicates, includes the rules;

"rules" means,

(a) the rules made under section 143, and

(b) orders, rulings and policies listed in the Schedule;

[62] Under section 143, the Commission has the authority to make rules relating to the registration and conduct of registrants. Specifically, clause 2 of subsection 143(1) (as it read at the relevant time) provides the Commission with the following rule-making powers:

143. (1) Rules -- The Commission may make rules in respect of the following matters:

...

2. Prescribing categories or sub-categories of registrants, classifying registrants into categories or sub-categories and prescribing the conditions of registration or other requirements for registrants or any category or sub-category, including,

i. standards of practice and business conduct of registrants in dealing with their customers and clients and prospective customers and clients,

ii. requirements that are advisable for the prevention or regulation of conflicts of interest, ...{1}

[63] Unless the context otherwise indicates, rules made by the Commission pursuant to section 143 of the Act are included in the definition of "regulations" and form part of "Ontario securities law".

[64] The issue of the Commission's policy and rule-making power was addressed by the Court of Appeal in Ainsley Financial Corp. v. Ontario Securities Commission (1994), 21 O.R. (3d) 104 (C.A.) ("Ainsley"). The Court of Appeal distinguished non-mandatory guidelines from mandatory pronouncements having the same effect as a statutory instrument, and noted that at that time, the Commission did not have the statutory authority to issue a mandatory provision with the effect of law (Ainsley, supra at paras. 15-16).

[65] Following Ainsley, section 143 was enacted, providing the Commission with the authority to make mandatory rules relating to enumerated heads of power. The Final Report of the Ontario Task Force on Securities Regulation (1994), 17 O.S.C.B. 3208 (the "Daniels Report"), recommended that the Ontario Legislature confer this express rule-making power on the Commission and stated that "[such] a power would permit the Commission to adopt rules having the force and effect of law" (Daniels Report, supra at 3211).

[66] OSC Rule 31-505 is a rule made under section 143. It prescribes requirements regarding standards of practice and business conduct for registrants when dealing with clients. Subsections 2.1(1) and (2) of OSC Rule 31-505 state:

2.1 General Duties --

(1) A registered dealer or adviser shall deal fairly, honestly and in good faith with its clients.

(2) A registered salesperson, officer or partner of a registered dealer or a registered officer or partner of a registered advisor shall deal fairly, honestly and in good faith with his or her clients.

[67] The question to be determined is whether subsection 2.1(1) and subsection 2.1(2) of OSC Rule 31-505 fall under the definition of "regulations", and are therefore part of Ontario securities law.

[68] Subsections 2.1(1) and (2) of OSC Rule 31-505 dictate that particular registrants shall deal fairly, honestly and in good faith with their clients. This is a mandatory pronouncement requiring specific behaviour.

[69] Staff submit that section 2.1 of OSC Rule 31-505 is consistent with the wording of other provisions of the Act prescribing standards of practice and business conduct of registrants and other market participants. They refer specifically to subsection 32(1) and section 116 of the Act. However, we note that subsection 32(1) was not law until 2009. The version of section 116 in force at the time of the events at issue contains an obligation for mutual fund managers to deal honestly, in good faith and in the best interests of the mutual fund. Although both sections of the Act may be consistent with subsections 2.1(1) and (2) of OSC Rule 31-505, we do not find it necessary to consider the purposes of subsection 32(1) and section 116 of the Act when determining whether OSC Rule 31-505 forms part of Ontario securities law which the Respondents were required to comply with during the period in question.

[70] We find that there is nothing in the context of OSC Rule 31-505, including subsections 2.1(1) and (2), to indicate that it was not meant to be included in the definition of "regulations" under the Act. Subsections 2.1(1) and (2) are not policy statements, which set out general statements of principle or practice. Rather, subsections 2.1(1) and (2) of OSC Rule 31-505 prescribe mandatory requirements for registrants to deal fairly, honestly and in good faith with clients.

[71] Subsections 2.1(1) and (2) of OSC Rule 31-505 are therefore "regulations", as defined in the Act, and form part of Ontario securities law. As such, it is open to the Commission to impose administrative penalties for their breach, if they are found to be in the public interest.

B. Overview of the Law on Sanctions

[72] The Commission does not impose sanctions to punish past conduct. Rather, we must act in accordance with our dual mandate of (i) investor protection, and (ii) fostering fair and efficient capital markets and confidence in capital markets. Sanctions must therefore be for the purpose of preventing and restraining future conduct that may be harmful to investors or the capital markets. The Commission's role in ordering sanctions is outlined in Re Mithras Management Ltd.:

... the role of this Commission is to protect the public interest by removing from the capital markets -- wholly or partially, permanently or temporarily, as the circumstances may warrant -- those whose conduct in the past leads us to conclude that their conduct in the future may well be detrimental to the integrity of those capital markets. We are not here to punish past conduct; that is the role of the courts, particularly under section 118 [now 122] of the Act. We are here to restrain, as best we can, future conduct that is likely to be prejudicial to the public interest in having capital markets that are both fair and efficient. In so doing we must, of necessity, look to past conduct as a guide to what we believe a person's future conduct might reasonably be expected to be; we are not prescient, after all.

(Re Mithras Management Ltd. (1990), 13 O.S.C.B. 1600 at pp. 1610-1611)

[73] The Commission should consider relevant factors when determining whether sanctions are appropriate, including:

(a) the seriousness of the conduct and the breaches of the Act;

(b) the respondent's experience in the marketplace;

(c) the level of the respondent's activity in the marketplace;

(d) whether or not there has been any recognition of the seriousness of the improprieties;

(e) whether or not the sanctions imposed may serve to deter not only those involved in the matter being considered, but any like-minded people, from engaging in similar abuses of the capital markets;

(f) the size of any profit or loss avoided from the illegal conduct;

(g) the size of any financial sanction or voluntary payment;

(h) the effect any sanction may have on the livelihood of a respondent;

(i) the restraint any sanction may have on the ability of a respondent to participate without check in the capital markets;

(j) the reputation and prestige of the respondent;

(k) the remorse of the respondent;

(l) the shame, or financial pain, that any sanction would reasonably cause to the respondent; and

(m) any mitigating factors.

(Re M.C.J.C. Holdings Inc. (2002), 25 O.S.C.B. 1133 at para. 26 and Re Belteco Holdings Inc. (1998), 21 O.S.C.B. 7743 at paras. 25-26.)

[74] As noted in (e), above, we should consider both the specific and general deterrent effects of a sanctions order. Sanctions should not only deter the particular respondents from engaging in similar acts in the future, but should have a more general deterrent effect on other market participants. As stated by the Supreme Court of Canada in Cartaway, supra at para. 62:

It may well be that the regulation of market behaviour only works effectively when securities commissions impose ex post sanctions that deter forward-looking market participants from engaging in similar wrongdoing. That is a matter that falls squarely within the expertise of securities commissions, which have a special responsibility in protecting the public from being defrauded and preserving confidence in our capital markets.

[75] Specifically, if it is in the public interest, we may order sanctions restricting or banning respondents from participating in the Ontario capital markets. The Supreme Court of Canada has stated that:

... the purpose of an order under s. 127 is to restrain future conduct that is likely to be prejudicial to the public interest in fair and efficient capital markets. The role of the OSC under s. 127 is to protect the public interest by removing from the capital markets those whose past conduct is so abusive as to warrant apprehension of future conduct detrimental to the integrity of the capital markets.

(Committee for the Equal Treatment of Asbestos Minority Shareholders v. Ontario (Securities Commission), [2001] 2 S.C.R. 132 at para. 43.)

[76] Ultimately, any sanctions imposed must be proportionate to the circumstances and conduct of each particular Respondent (Re M.C.J.C. Holdings Inc. (2002), 25 O.S.C.B. 1133 at para. 10 and Re Rowan, supra at para. 103).

C. What are the appropriate sanctions against the Respondents?

1. Factors Applicable to NAM, Olympus United, Mr. Xanthoudakis and Mr. Smith

[77] In determining the appropriate sanctions for each of these Respondents, we consider the following factors to be particularly relevant to this matter.

The Seriousness of the Allegations as Proved

[78] The Merits Decision panel found that NAM, Olympus United Group, Mr. Xanthoudakis and Mr. Smith failed to deal fairly, honestly and in good faith with investors in a number of respects:

(a) Mr. Xanthoudakis and Mr. Smith knew that the net asset values ("NAVs") for funds in the Norshield Investment Structure were artificially inflated in 2004 and 2005;

(b) they were involved in various paper transactions which served to inflate the NAVs in 2004 and 2005;

(c) NAM, Olympus United Group, Mr. Xanthoudakis and Mr. Smith also engaged in transactions that essentially preferred the redemption requests of some investors over others; and

(d) they were generally unable to account for investors' funds.

(Merits Decision at paras. 209-210 and 231-237.)

[79] The duty to deal fairly, honestly and in good faith goes to the heart of what securities regulation is about and a breach of this obligation is especially serious. Mr. Xanthoudakis and Mr. Smith were the directing minds of the Norshield Investment Structure which marketed to investors an investment in a portfolio of hedge fund managers, when in fact they knew the funds were substantially being invested indirectly in corporate securities. The Merits Decision panel found that they continued to sell funds when, among other things, the NAVs were misstated. These Respondents' conduct seriously undermines the public's confidence in the capital markets and allowed a situation which led to the significant investment losses of numerous investors.

[80] Mr. Xanthoudakis and Mr. Smith submit that OSC Rule 31-505 is not intended to regulate investment funds, since it is directed at the duties of registered securities dealers in relation to dealings with their clients. However, we note that Mr. Xanthoudakis's and Mr. Smith's registrations under the Act were as registered officers of NAM, a registered adviser in the categories of extra-provincial adviser and investment counsel and portfolio manager, and as registered officers of Olympus United Group, a registered dealer in the categories of mutual fund dealer and limited market dealer. OSC Rule 31-505 clearly has direct application to Mr. Xanthoudakis and Mr. Smith, as reflected in the findings in the Merits Decision.

[81] The Merits Decision panel found that these Respondents should have been able to provide more information about the activities and assets of Mosaic Composite and the Channel Funds. These companies were found to be so fundamental to the investment structure that explanations and documentation should have been available. The Merits Decision panel found that NAM and Olympus United Group did not provide, and therefore presumably did not have, up-to-date records of subscriptions and redemptions, sufficient supporting documents for the NAV calculations, documentation regarding in-kind investments, documents regarding unexplained payments in excess of $150 million from two entities in the Norshield Investment Structure, copies of agreements regarding the investment structure and other relevant documents.

[82] The seriousness of a breach of securities law depends on the context and the consequences of that breach. An inability to properly account for funds undermines confidence in the market. This was not merely a technical breach; the Merits Decision panel found there was a fundamental failure to account for funds on a widespread basis. Proper record-keeping is fundamental to discharging one's obligations when accepting money from others. Without adequate records, accountability for management of funds cannot be achieved. We view breaches of this nature as being very serious.

[83] The Merits Decision panel found that Mr. Xanthoudakis and Mr. Smith materially misled Staff during their investigation by failing to inform them of the involvement of the Channel Funds in the investment structure. Misleading Staff in their investigation is a serious breach of the Act.

The Respondents' Experience in the Marketplace

[84] All the Respondents were registered with the Commission. In a recent decision, the Commission found that:

As a registrant, the President of a registered broker and investment dealer, and a director and member of an audit committee of a reporting issuer, Rowan was expected to have a higher level of awareness of the insider reporting regime and its importance to the capital markets. Rowan's breaches of Ontario securities law are therefore significantly more serious than those previously considered.

(Rowan, supra at para. 145.)

[85] Although the allegations in Rowan are different than in this case, the Commission's finding is applicable. The Respondents were expected to be aware of their duties as registrants and of record keeping requirements.

[86] The Supreme Court addressed this factor in an appeal of a British Columbia Securities Commission decision where the respondents were registrants in that province. The court found that: "They took unfair advantage of their positions as registrants, and engaged in conduct that seriously undermined the public confidence in the fairness of the capital markets." (Cartaway, supra at para. 18).

[87] Mr. Xanthoudakis and Mr. Smith failed drastically to meet the standards of a registrant entrusted to manage investors' funds, which is clearly evident from the findings in the Merits Decision.

[88] Given their experience, the Respondents were or should have been more aware of their duties.

Deterrence

[89] Any sanctions imposed should be sufficient to effectively deter the Respondents and like-minded people from engaging in similar abuses of the Ontario capital markets.

[90] In Limelight, supra at para. 67, the Commission described the deterrent purpose of administrative penalties:

The purpose of an administrative penalty is to deter the particular respondents from engaging in the same or similar conduct in the future and to send a clear deterrent message to other market participants that the conduct in question will not be tolerated in Ontario capital markets.

[91] Sanctions in this case should not be so minimal as to be a minor cost of doing business. They should be sufficient to send the message that breaching the duty to deal fairly, honestly and in good faith with clients, failing to keep and maintain proper books and records, and misleading Staff will not be tolerated in the Ontario capital markets.

Impact on Investors and the Market as a Whole

[92] We heard evidence from four investors on how they were impacted by the failure of the Norshield Investment Structure. Our role is not to punish the Respondents for their conduct, nor to right any wrongs suffered by investors by providing them with restitution. However, their testimony can be considered in determining the seriousness of the Respondents' breaches. As well, the impact of these breaches on investors is a factor to consider when assessing which sanctions are appropriate.

[93] We accept the evidence of the investor witnesses that, as a result of their investments in Olympus United Funds, they suffered financial losses that will impact their lifestyles and that their confidence in the capital markets has been undermined.

The Respondents' Level of Participation in the Marketplace

[94] Close to 2,000 retail investors lost most of the $159 million invested in the Norshield Investment Structure. Institutional investors who invested at other levels of the structure were also impacted. Losses such as these by a large number of investors are bound to have a significant impact on confidence in the marketplace.

Other Mitigating Factors

[95] We accept that NAM was in "crisis mode" at the time of Staff's on-site investigation and that Mr. Xanthoudakis believed that there would be a follow-up interview with Staff. We have taken these circumstances into account when determining the appropriate sanctions.

2. Factors Applicable to Mr. Kefalas

The Seriousness of the Allegations, as Proved

[96] The Merits Decision panel concluded that Mr. Kefalas accepted certain responsibilities when he registered with the Commission as a Compliance Officer and Ultimate Responsible person. Mr. Kefalas's failure to fulfill his responsibilities constituted conduct that was contrary to the public interest.

[97] These positions exist to help ensure that investors are treated properly. It is not acceptable to say documents were signed without reading them or being aware of their implications. A registrant cannot assume the title of Compliance Officer or Ultimate Responsible Person and merely trust that others will do the work required pursuant to that registration.

Mr. Kefalas's Experience in the Marketplace

[98] Mr. Kefalas was registered with the Commission with regard to his work with NAM since May 2000. Regardless of how active a role Mr. Kefalas actually had in overseeing NAM's compliance, he was registered as the Compliance Officer and Ultimate Responsible Person. Mr. Kefalas should have been aware of his duties as a registrant.

Mitigating Factors

[99] We consider that the impact this proceeding has had on Mr. Kefalas's ability to obtain employment, his lesser role in the Norshield Investment Structure, his belief that he was not actually responsible for monitoring compliance, and his expressed remorse are all mitigating factors. Any sanctions imposed will be determined with consideration given to these circumstances.

3. Prohibitions on Participation in the Capital Markets

[100] Sanctions ordered should protect Ontario investors by restraining the Respondents' future market participation and conduct.

[101] In all the circumstances, we have concluded that it is in the public interest for us to make the following orders:

(a) an order that the registration of each of NAM, Olympus United Group and Mr. Xanthoudakis be terminated;

(b) an order that each of NAM, Olympus United Group, Mr. Xanthoudakis and Mr. Smith be permanently prohibited from becoming registered under the Act;

(c) an order that each of NAM, Olympus United Group, Mr. Xanthoudakis and Mr. Smith be permanently prohibited from trading in securities, except that Mr. Xanthoudakis and Mr. Smith may trade in securities for the account of their registered retirement savings plans and/or registered retirement income funds (as defined in the Income Tax Act (Canada)) in which they and/or their spouses have sole legal and beneficial ownership, provided that, as the order applies to each of them as individuals:

(i) the securities traded are listed and posted for trading on the Toronto Stock Exchange, the New York Stock Exchange or NASDAQ (or their successor exchanges) or are issued by a mutual fund which is a reporting issuer;

(ii) he does not own legally or beneficially (in the aggregate, together with his spouse) more than one percent of the outstanding securities of the class or series of the class in question; and

(iii) he carries out any permitted trading through a registered dealer (which dealer must be given a copy of this order) and through accounts opened in his name only;

(d) an order that exemptions contained in Ontario securities law do not apply to each of NAM, Olympus United Group, Mr. Xanthoudakis and Mr. Smith permanently;

(e) an order reprimanding each of Mr. Xanthoudakis and Mr. Smith;

(f) an order that each of Mr. Xanthoudakis and Mr. Smith resign all positions held as a director or officer of an issuer;

(g) an order that each of Mr. Xanthoudakis and Mr. Smith be prohibited permanently from becoming or acting as a director or officer of any issuer;

(h) an order that Mr. Kefalas be prohibited from becoming registered under the Act for two years;

(i) an order that a term and condition of close supervision be imposed on Mr. Kefalas's registration for a period of two years if he should seek to become registered after the prohibition period referred to above; and

(j) an order that Mr. Kefalas be prohibited from becoming or acting as a director or officer of a registrant for a period of two years.

[102] These sanctions are appropriate and proportionate to the misconduct and entirely consistent with the Commission's duty to impose sanctions that provide general and specific deterrence to market participants.

4. Administrative Penalties

[103] We find that Mr. Xanthoudakis's and Mr. Smith's conduct warrants substantial administrative penalties. Mr. Xanthoudakis and Mr. Smith were involved in activities intended to mislead investors and to favour certain investors. Multiple breaches of the Act, as found in the Merits Decision, will have serious consequences.

[104] We accept Mr. Xanthoudakis's and Mr. Smith's submission that little weight should be placed on how they have responded to this proceeding, including their choice not to testify. They were entitled to defend themselves against the allegations before them, and we do not consider their lack of stated remorse under these circumstances to be a factor to be weighed against them.

[105] A breach of the duty to deal fairly, honestly and in good faith with clients is exceptionally serious and goes to the heart of the protection securities regulation is meant to provide to investors. As we have discussed above, proper record-keeping is a fundamental requirement for the management of funds. We therefore find that severe administrative penalties are warranted for these two breaches of Ontario securities law.

[106] Misleading Staff and failing to state facts that should have been stated in Staff's investigation is also a very serious breach of Ontario securities law, which calls for substantial administrative penalties. However, we take into account the facts that NAM was in crisis mode at the time of Staff's investigation, and that Mr. Xanthoudakis was under the impression he would be interviewed by Staff on another occasion as mitigating factors.

[107] Even considering these mitigating factors, failing to inform Staff of an important component of the investment structure warrants a significant administrative penalty.

[108] Mr. Xanthoudakis and Mr. Smith were found to have breached their duties to deal fairly, honestly and in good faith in multiple respects:

(a) they knew that the NAVs for funds in the Norshield Investment Structure were artificially inflated in 2004 and 2005;

(b) they were involved in various paper transactions, which served to inflate the NAVs in 2005 and 2005;

(c) they engaged in transactions that essentially preferred the redemption requests of some investors over others; and

(d) they were unable to account for investors' funds.

[109] As noted previously, the activities that led to the breaches occurred over a long period of time and investors were consistently and continually treated unfairly. Although some of their unlawful activity commenced prior to April 7, 2003, when the administrative penalty provision came into force, the inappropriate conduct that occurred subsequent to that date was repeated and warrants a significant administrative penalty. The Respondents were involved in numerous transactions, which treated investors unfairly in many ways. Without taking Mr. Xanthoudakis's and Mr. Smith's conduct prior to April 7, 2003 into account, we find that the administrative penalty discussed below for their breaches of their duties to deal fairly, honestly and in good faith is appropriate and necessary to provide an individual and general deterrent in order to protect the integrity of the capital markets and confidence in them.

[110] Their failure to keep and maintain proper records was widespread and, as noted above, went beyond merely a technical breach.

[111] These last two breaches of Ontario securities law by Mr. Xanthoudakis and Mr. Smith demand very high administrative penalties.

[112] There was no finding in the Merits Decision that Mr. Xanthoudakis and Mr. Smith benefitted financially from their improper conduct. However, this does not mitigate the seriousness of the breaches, nor the consequences to numerous investors of their ongoing conduct.

[113] Given the seriousness of these breaches, as discussed above, considering the loss of almost all of the $159 million invested by close to 2,000 retail investors, and to deter future wrongdoing, we conclude that it is in the public interest to order that Mr. Xanthoudakis and Mr. Smith each pay the following administrative penalties for allocation to, or for the benefit of third parties in accordance with subsection 3.4(2)(b) of the Act:

(a) $1,000,000 in respect of their breaches of section 2.1 of Rule 31-505;

(b) $1,000,000 in respect of their breaches of section 19 of the Act and section 113 of Regulation 1015; and

(c) $125,000 for misleading Staff, contrary to subsection 122(1)(a) of the Act.

[114] We find it appropriate to order that the administrative penalties be designated for allocation to and for the benefit of third parties, in accordance with subsection 3.4(2)(b) of the Act. Although Staff suggested that the funds be allocated to the Receiver for distribution to investors at the Sanctions and Costs Hearing, we leave it to the Commission to determine at a future date the question of the allocation of these funds.

VI. COSTS

[115] Staff seek an order that Mr. Xanthoudakis and Mr. Smith pay costs of $295,000 on a joint and several basis. They do not seek an order of costs against Mr. Kefalas, and note that he had less of a role in the matters at issue than Mr. Xanthoudakis and Mr. Smith.

[116] Mr. Xanthoudakis and Mr. Smith did not challenge the reasonableness or appropriateness of the costs requested by Staff.

[117] Section 127.1 of the Act grants the Commission the power to order that a person or company pay the costs related to an investigation and a hearing that are incurred by or on behalf of the Commission if the following criteria are met:

(a) the Commission is satisfied that the person or company has not complied with, or is not complying with, Ontario securities law; or

(b) the Commission considers that the person or company has not acted in the public interest.

[118] Based on the Merits Decision, it is clear that Mr. Xanthoudakis and Mr. Smith both failed to comply with Ontario securities law and acted contrary to the public interest. We must consider whether a costs order is appropriate in the circumstances by addressing additional factors, including:

(a) the importance of early notice of an intention to seek costs;

(b) the seriousness of the allegations and the conduct of the parties;

(c) the presence or absence of abuse of process by any respondent;

(d) the conduct of any respondent as it affects investigative and hearing costs; and

(e) the reasonableness of the costs requested by Staff.

(Re Ochnik (2006), 29 O.S.C.B. 5917 at para. 29.)

[119] In Rowan, supra at paragraph 239, the Commission reduced the costs payable by the respondents, on the basis that only half of the allegations against them were made out. In this case, Staff have factored the fact that two of the six allegations were not made out against the Respondents into their request for costs.

[120] We accept that the amount claimed by Staff represents only a portion of the investigation and hearing costs related to this proceeding, as set out in Staff's bill of costs and written submissions. The $295,000 sought does not represent all the costs incurred by Staff, even after the total amount is scaled down to reflect the fact that two of the allegations brought against the Respondents were dismissed.

[121] We conclude that as a result of their breaches of Ontario securities law and conduct contrary to the public interest, Mr. Xanthoudakis and Mr. Smith shall pay costs of this proceeding in the amount of $295,000, on a joint and several basis.

VII. CONCLUSION

[122] For the reasons discussed above, we conclude that making the sanctions and costs orders described above are in the public interest and are proportionate to the Respondents' respective culpability and conduct in the circumstances. Accordingly, we issue the order issued along with these reasons and decision.

[123] This order reflects the seriousness of the securities law violations that occurred in this matter, and imposes sanctions that will not only deter the Respondents but also like-minded people from engaging in future conduct that violates securities law.

DATED at Toronto this 6th day of August, 2010.

"David L. Knight"

"Margot C. Howard"

{1} As part of amendments to the Act made in September 2009, the wording of clause 2 of subsection 143(1), which provides specific rule-making powers to the Commission, was changed.

Chapter 4 -- Cease Trading Orders

Temporary, Permanent & Rescinding Issuer Cease Trading Orders

Temporary, Permanent & Rescinding Management Cease Trading Orders

THERE ARE NO ITEMS FOR THIS WEEK.

Outstanding Management & Insider Cease Trading Orders

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

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