Harris Bolduc & Associates Inc. and Platinium Capital Inc.

Director's Decision

Headnote

Under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, a registered firm must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual is registered as a dealing, advising or associate advising representative of another firm registered in any jurisdiction of Canada. The individual will have sufficient time to adequately serve both firms. Conflicts of interest could arise but the firms will address material conflicts of interest in the best interest of clients. The firms have policies and procedures in place to address material conflicts of interest that may arise as a result of the dual registration in the best interest of clients. The firms are exempted from the prohibition.

Applicable Legislative Provisions

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

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

Derivatives Act (Québec) and Derivatives Regulation (Québec), respectively under ss. 86 and 11.1.

December 4, 2023

COURTESY TRANSLATION

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 HARRIS BOLDUC & ASSOCIATES INC. ("HBA") AND PLATINIUM CAPITAL INC. ("Platinium") (the "Filers")

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the "Decision Maker") has received from the Filers an application for a decision under the securities legislation of the Jurisdictions (the "Legislation") for an exemption from the limitation set out in section 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations ("NI 31-103"), pursuant to section 15.1 of NI 31-103, to permit Daniel Fréreault (the "Representative") to be registered as an advising representative and to be a director and shareholder of HBA while acting as an advising representative, derivatives advising representative, chief compliance officer and ultimate designated person, as well as being a director, shareholder and officer of Platinium (the "Exemption Sought").

The Principal Regulator has also received from the Filers a request under the derivatives legislation of Québec for an exemption from the prohibition set out in section 4.1(1)(b) of NI 31-103, which applies pursuant to section 11.1 of the Derivatives Regulation (Québec), CQLR, c. I-14.01, in accordance with section 86 of the Derivatives Act (Québec), CQLR, c. I-14.01, to allow the Representative to be registered as a derivatives advising representative of HBA while being an advising representative, derivatives advising representative, chief compliance officer, ultimate designated person, officer, partner and director of another registered firm (the "Exemption Sought for Derivatives").

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

(a) the Autorité des marchés financiers is the principal regulator of the Filers for this application;

(b) the Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in British Columbia and New Brunswick;

(c) the decision regarding the Exemption Sought is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario; and

(d) the decision regarding the Exemption Sought for Derivatives is the decision of the principal regulator.

Interpretation

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

Representations

This decision is based on the following representations of fact represented by the Filers:

  1. HBA is a corporation incorporated under the Canada Business Corporations Act, with its head office located in La Prairie, Québec. It is registered as a portfolio manager in the provinces of British Columbia, New Brunswick, Ontario and Québec and as a derivatives portfolio manager in Québec.
  2. Platinium is a corporation incorporated under the Business Corporations Act (Québec), with its head office located in Laval, Québec. Platinium is a wholly-owned subsidiary of HBA and is registered in the province of Québec as a portfolio manager and derivatives portfolio manager.
  3. Both Filers offer discretionary portfolio management services, and their target clientele is mainly private clients with substantial financial resources.
  4. Following the acquisition of Platinium by HBA at the end of 2022, the Filers intended to complete the surrender of Platinium's registration on or about June 30, 2023. However, for various business reasons, it was deemed desirable by management of the Filers that Platinium's registration and the Representative would be retained in the current form for a sufficient period of time to allow the transfer of Platinium's clients to HBA to be completed in an orderly manner and to finalize their considerations regarding Platinium's use, valuation or surrender of registration thereafter. After further discussions, the Filers have agreed that Platinium would surrender its registration and launch its dissolution by the end of 2023. Most clients of Platinium have transferred over to HBA and the opening of their accounts with that Filer was processed by one of its duly registered representatives. As a result, the Filers request that the Exemption Sought and the Exemption Sought for Derivatives be granted on a temporary basis for that period of time in order to enable the Filers to complete the current client transfer and to launch the surrender of Platinium's registration.
  5. Platinium clients who transition from Platinium to HBA will continue to initially receive the same portfolio management services and be charged by HBA the same fees as when they were clients of Platinium. HBA undertakes that within a 12-month period from the Exemption Sought and Exemption Sought for Derivatives being granted, HBA will have harmonized its fee schedules in compliance with requirement to address material conflicts of interest in the best interest of clients.
  6. Each of Platinium's client has been or will be advised by the Filers acting jointly of the comparative benefits and advantages of each Filer and specifically will be provided with disclosure in compliance with subsections 13.4(5) and 13.4(6) of NI 31-103 related to the material conflict of interest arising from the financial interest for the Representative to encourage clients to become clients of HBA prior to making such decision.
  7. The Representative is currently registered in Québec only with Platinium as an advising representative and derivatives advising representative. He is also the ultimate designated person and chief compliance officer of Platinium. The Representative seeks to be registered as an advising representative of HBA in Québec, Ontario, New Brunswick and British Columbia and as a derivatives advising representative.
  8. Other than with respect to the subject matter of this decision, neither Filer is in default of any requirement of securities or derivatives legislation in any of the jurisdictions of Canada.
  9. Other than with respect to the subject matter of this decision, the Representative is not in default of any requirement of securities or derivatives legislation in any of the jurisdictions of Canada.
  10. Other than as represented above under 5, the Exemption Sought and the Exemption Sought for Derivatives do not give rise to any conflicts of interest in the conduct of the business of the two Filers or in their relationships with their respective clients. The Filers and the Representative have and will continue to comply with their conflicts obligations as required pursuant to NI 31-103.
  11. Each Filer's policies and procedures manual contains detailed provisions for dealing with conflicts of interest internally and with third parties, including their respective clienteles. The Filers each have adequate policies and procedures in place to address material conflicts of interest that may arise as a result of the dual registration of the Representative in the best interest of clients.
  12. The Filers require the Representative to be dually registered with both Platinium and HBA for a prescribed period of time in order to facilitate the orderly transition of clients from Platinium to HBA. The Representative's dual registration will permit the continued services to clients until Platinium surrenders its registration. The Exemption Sought and the Exemption Sought for Derivatives are time-limited.
  13. If the Exemption Sought and the Exemption Sought for Derivatives are granted, the Representative will register as an advising representative and a derivatives advising representative of HBA, while maintaining his registration as an advising representative and derivatives advising representative of Platinium for an interim period.
  14. The Filers expect that the dual registration of the Representative will create some additional work for the Representative but are confident that the Representative will have sufficient time to adequately serve both Filers and his clients.
  15. The Representative will be subject to supervision by, and the applicable compliance requirements of, both Filers.
  16. Each of the Filers' respective ultimate designated person and chief compliance officer will ensure that the Representative has sufficient time and resources to adequately serve each Filer and its clients.
  17. The relationship between the Filers and the fact that the Representative is dually registered with both of them will be fully disclosed in writing to clients and prospective clients of each of them that deal with the Representative.
  18. In the absence of the Exemption Sought and the Exemption Sought for Derivatives, the Filers would be prohibited from permitting the Representative to be registered as an advising representative and derivatives advising representative of each Filer, even though the Filers have controls and compliance procedures in place to deal with such advising activities.
  19. The Representative will act in the best interest of all clients of each Filer and will deal fairly, honestly and in good faith with clients.

Decision

Exemption Sought

Each of the Decision Makers in respect of the Exemption Sought is satisfied that the decision meets the test set out in the Legislation.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted, subject to the conditions below:

i. The Representative is subject to supervision by, and the applicable compliance requirements of, both Filers;

ii. The chief compliance officer and ultimate designated person of each Filer ensures that the Representative has sufficient time and resources to adequately service each Filer and its respective clients;

iii. The Filers each have adequate policies and procedures in place to address material conflicts of interest that may arise as a result of the dual registration of the Representative in the best interest of clients;

iv. The relationship between the Filers and the fact that the Representative is dually registered with both of them is fully disclosed in writing to clients and prospective clients of each of them that deal with the Representative;

v. HBA confirming to the principal regulator in writing within 12 months of the Exemption Sought being granted that the undertaking set out in representation 5 above has been complied with; and

vi. The Exemption Sought expires on the earlier of the date on which Platinium's registration is revoked or 12 months from the date of this decision.

Exemption Sought for Derivatives

The principal regulator in respect of the Exemption Sought for Derivatives is satisfied that the decision meets the test set out in the derivatives legislation of Québec.

The decision of the principal regulator is that the Exemption Sought for Derivatives is granted, subject to the same conditions as the Exemption Sought.

French version signed by:

"Éric Jacob"
Superintendent, Client Services and Distribution Oversight
Autorité des marchés financiers

OSC File #: 2023/0357