Carol S. Perry

The applicants, an issuer and its wholly-owned subsidiary acting as plan trustee, applied for an exemption from the issuer bid and insider reporting requirements of the Securities Act.

The trustee was appointed to administer an employee share purchase plan, acquiring and disposing of common shares on the open market based on participant instructions.

The Ontario Securities Commission granted the requested exemptions, subject to conditions ensuring the applicants exercise no independent investment judgment or voting control over the shares.

Nortel Networks Limited applied for an exemption from the dealer registration and prospectus requirements under the Securities Act for trades in units of proprietary pooled mutual funds made to members of its defined contribution pension and savings plans.

The Ontario Securities Commission granted the exemption, subject to conditions, allowing the funds to operate similarly to Capital Accumulation Plans despite some plans not technically qualifying as such and the fund-of-fund structure not fully complying with National Instrument 81-102.

Nortel Networks Limited applied for exemptive relief from the dealer registration and prospectus requirements under the Securities Act for trades in units of proprietary pooled mutual funds to members of its defined contribution pension and savings plans.

The Ontario Securities Commission granted the relief, varying a prior order to permit certain fund-of-fund investments, subject to conditions ensuring compliance with the spirit and intent of the capital accumulation plan exemption.

The applicants applied to the Ontario Securities Commission for exemptive relief from the dealer registration and prospectus requirements under the Securities Act.

The relief was sought in connection with an exchange offer of common shares for subordinated notes, which would otherwise constitute an indirect issuer bid.

The Commission granted the requested relief, subject to conditions including compliance with issuer bid requirements, and also granted relief for the first trade of the acquired common shares and confidentiality of the application materials.

The Filer applied for exemptive relief under section 147 of the Securities Act to extend the lapse date for the distribution of securities of two mutual funds under their simplified prospectuses.

The extension was requested to permit continued distribution until the funds were merged into other mutual funds managed by the Filer, avoiding the cost of filing a renewal prospectus for funds that would soon be terminated.

The Ontario Securities Commission granted the requested relief.

The applicant sought exemptive relief on behalf of several mutual funds from the conflict of interest investment restrictions and reporting requirements under the Securities Act.

The relief was required to permit the funds to invest in underlying commodity pools where the funds might become substantial security holders, or where related parties might hold significant interests or share common officers and directors.

The Ontario Securities Commission granted the requested exemption, provided the investments comply with section 2.5 of National Instrument 81-102 as modified by a prior decision.

The Ontario Securities Commission held a hearing to consider whether the respondent, a mutual fund salesperson, breached the Securities Act and acted contrary to the public interest by recommending an aggressive leveraging strategy to his clients.

The Commission found that the respondent failed to comply with the know-your-client and suitability obligations under OSC Rule 31-505 and failed to deal fairly, honestly, and in good faith with his clients.

The respondent recommended excessive leveraging that was entirely unsuitable given the clients' financial circumstances, risk tolerance, and investment objectives.

However, the Commission dismissed the allegation that the respondent gave undertakings relating to the future value of the investments in breach of section 38(2) of the Act.

A sanctions hearing was ordered to follow.

The Applicant, a mutual funds salesperson, sought a hearing and review of a Director's decision refusing to transfer his registration to a new employer.

The Applicant had been terminated for cause by his previous employer, a bank, for misappropriating Air Miles coupons for his own and his wife's benefit over a five-year period.

The Commission conducted a hearing de novo and found that the Applicant's conduct demonstrated a standard of business conduct below that required of a securities industry professional.

The Commission concluded that the Applicant lacked the trustworthiness and integrity required of a registrant and denied the request to transfer his registration.

The applicants, minority shareholders of Sterling Centrecorp Inc., applied to the Ontario Securities Commission for an order under sections 104 and 127 of the Securities Act.

They sought to exclude the votes of certain shareholders who had signed support agreements from the 'majority of the minority' approval required for a going private transaction under OSC Rule 61-501, arguing these shareholders were 'joint actors' with the acquiring insiders.

The Commission found that one major shareholder, a former member of the acquisition group, was a joint actor and ordered his votes excluded.

However, the Commission concluded that the other supporting shareholders were not joint actors merely by virtue of signing the support agreements.

As the transaction still achieved the requisite majority of the minority approval even after excluding the joint actor's votes, the Commission declined to cease trade the transaction or require a new shareholder meeting.

Following a hearing on the merits where the respondents were found to have violated registration requirements under the Securities Act by selling convertible debentures without being registered, the Ontario Securities Commission held a sanctions and costs hearing.

The Commission found that the respondents, acting as de facto directors, raised over $7.8 million from investors and took over $2.5 million in undisclosed management draws.

To protect the public interest and deter future misconduct, the Commission ordered permanent cease trade orders, permanent bans on acting as directors or officers, disgorgement of the management draws totaling $2.56 million, administrative penalties of $50,000 each, reprimands, and costs of $38,782.

Staff of the Ontario Securities Commission brought a motion to remove counsel for the respondent, Deborah Weinstein, on the basis of a conflict of interest.

Counsel had previously represented six outside directors of the same company during the investigation phase, and Staff anticipated calling these directors as witnesses.

The Commission found that a potential conflict of interest existed because counsel might have to cross-examine his former clients.

However, balancing the public interest in the administration of justice with the respondent's right to counsel of choice, the Commission ordered a compromise: counsel could remain on the record provided the respondent retained independent counsel to conduct any cross-examination of the former clients, with strict screening measures in place.

The Ontario Securities Commission convened a hearing to consider a settlement agreement between Staff and Eugene N. Melnyk regarding allegations of failing to file insider trading reports and failing to disclose his relationship with offshore trusts that traded heavily in Biovail shares.

The Commission approved the settlement, which included a $750,000 administrative penalty, $250,000 in costs, a one-year ban on acting as a director of Biovail, and a reprimand, finding the sanctions sufficient for specific and general deterrence.

The Ontario Securities Commission held a hearing to determine whether Momentas Corporation and its founders, Howard Rash and Alexander Funt, violated the Securities Act by trading securities without registration.

Momentas raised over $7.8 million from the sale of convertible debentures using an in-house sales team.

The Commission found that Momentas acted as a market intermediary and could not rely on the accredited investor exemption.

Furthermore, Rash and Funt engaged in acts in furtherance of trades and, as de facto officers and directors, authorized Momentas' breaches of Ontario securities law.

A subsequent hearing was ordered to determine appropriate sanctions.

The respondents brought a motion to dismiss the proceeding against them on the basis that it was commenced outside the six-year limitation period under section 129.1 of the Securities Act.

Staff alleged a course of conduct involving unregistered trading and illegal distributions that culminated in sales to broker dealers prior to the limitation date, but argued that subsequent receipt of proceeds and certain private share transfers brought the conduct within the limitation period.

The Commission held that the subsequent events were not integral to the alleged wrongdoing and that the Statement of Allegations contained no separate allegations of wrongdoing for events after the limitation date.

The motion was granted and the proceeding dismissed.

The Applicants sought a hearing and review of a decision by the Director of the Investment Funds Branch, which approved a merger of six labour sponsored investment funds but required that the costs of the merger not be borne by the Funds.

The Applicants argued that the merger would benefit investors and that the Funds should bear the costs.

The Ontario Securities Commission confirmed the Director's decision, holding that it is generally inappropriate for merger costs to be charged to the funds, and the Applicants failed to provide compelling reasons to depart from this approach.

The respondent, a former principal of Eron Mortgage Corporation, was convicted of securities-related fraud and theft in British Columbia for his role in a massive scheme that caused $170 million in investor losses.

Staff of the Ontario Securities Commission sought permanent market prohibitions against him under s. 127 of the Securities Act, citing evidence that he intended to return to Ontario to promote a poker company upon his release from prison.

The Commission held that it had jurisdiction to make the order despite the conduct occurring in British Columbia, as an Ontario nexus is not a strict pre-condition but a factor to consider.

Given the egregious nature of the respondent's past conduct, his criminal convictions, and the reasonable apprehension of future harm to Ontario capital markets, the Commission ordered permanent trading and director/officer bans.

No costs were ordered due to the respondent's bankruptcy.

Staff of the Ontario Securities Commission brought a motion to extend a temporary cease trade order against Momentas Corporation and its principals.

Momentas had been raising capital by selling convertible debentures to accredited investors to fund its automated equity trading system and foreign currency trading.

The Commission found that Momentas was acting as a market intermediary because it employed a significant sales force to sell its own securities and used the proceeds to trade professionally for the indirect benefit of its investors.

As a market intermediary, Momentas could not rely on the accredited investor exemption and was required to be registered.

The Commission extended the temporary cease trade order pending the hearing on the merits, with limited carve-outs allowing Momentas to continue developing its trading system and to close out foreign currency positions.

The respondent, president of a reporting issuer, failed to file insider reports for 21 trades within the required 10-day period, breaching section 107(2) of the Securities Act.

Staff of the Commission and the respondent entered into a settlement agreement proposing a $5,000 administrative penalty and $3,500 in costs.

The Commission approved the settlement agreement, finding it to be in the public interest, proportionately appropriate, and a sufficient specific and general deterrent.