HSBC InvestDirect Inc. - s. 144
Headnote
Section 144 -- partial revocation of cease trade orders granted to permit trades solely for the purpose of establishing a tax loss.
Statutes Cited
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 127 and 144.
Securities Act, R.S.O. 1980, c. 466, as am., s. 123.
Policies Cited
Ontario Securities Commission Policy 57-602 Cease Trading Orders -- Applications for Partial Revocation to Permit a Securityholder to Establish a Tax Loss.
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED (the "Act")
AND
IN THE MATTER OF
HSBC INVESTDIRECT INC.
AND
ACCOUNTHOLDERS LISTED IN SCHEDULE "A"
AND
FRACMASTER LTD.
AND
THE LOEWEN GROUP INC.
AND
PALM BEACH COUNTY UTILITIES CORPORATION
ORDER
(Section 144 of the Act)
WHEREAS the securities of Fracmaster Ltd. ("Fracmaster") currently are subject to an order of the Ontario Securities Commission (the "Commission") made on June 11, 1999 (the "Fracmaster Cease Trade Order") pursuant to section 127 of the Act, ordering that trading in any securities of Fracmaster cease;
AND WHEREAS the securities of The Loewen Group Inc. ("Loewen Group") currently are subject to an order of the Commission made on September 11, 2002 (the "Loewen Group Cease Trade Order") pursuant to section 127 of the Act, ordering that trading in any securities of Loewen Group cease;
AND WHEREAS the securities of Palm Beach County Utilities Corporation ("Palm Beach") currently are subject to an order of the Commission made on August 16, 1990 (the "Palm Beach Cease Trade Order") pursuant to section 123 of the Securities Act, R.S.O. 1980, c. 466, as amended ordering that trading in any securities of Palm Beach cease;
AND WHEREAS HSBC InvestDirect Inc., formerly Merrill Lynch HSBC Canada Inc. ("HIDC") and the accountholders listed in Schedule "A" (the "Accountholders") (collectively, the "Applicants") made an application to the Commission pursuant to section 144 of the Act (the "Application") for an order varying the Fracmaster Cease Trade Order, Loewen Group Cease Trade Order and Palm Beach Cease Trade Order (collectively, the "Cease Trade Orders") in order to allow for the disposition by the Accountholders to HIDC of 61,500 securities of Fracmaster, 202,865 securities of Loewen Group and 1,100 securities of Palm Beach (collectively, the "2003 Securities") for the purpose of establishing a tax loss;
AND WHEREAS Ontario Securities Commission Policy 57-602 provides that the Commission is prepared to vary an outstanding cease trade order to permit the disposition of securities subject to the cease trade order for the purpose of establishing a tax loss where the Commission is satisfied that the disposition is being made, so far as the securityholder is concerned, solely for the purpose of that securityholder establishing a tax loss and provided that the securityholder provides the purchaser with a copy of the cease trade order and the variation order;
AND UPON considering the Application and the recommendation of the staff of the Commission;
AND UPON the Applicants having represented to the Commission that:
1. The Accountholders acquired the 2003 Securities prior to the issuance of the Cease Trade Orders;
2. HIDC, has agreed to purchase the 2003 Securities from the Accountholders, at a purchase price of $0.01 per position, for an aggregate purchase price of $0.31;
3. HIDC will purchase and hold the 2003 Securities as principal;
4. HIDC will effect the proposed dispositions of the 2003 Securities (the "Proposed Dispositions"), on behalf of the Accountholders, solely for the purpose of enabling the Accountholders to establish a tax loss in respect of such Proposed Dispositions;
5. None of the accounts of the Accountholders are managed accounts and, accordingly, written instructions have been obtained to remove the 2003 Securities from the accounts of the Accountholders;
6. HIDC has copies of the Cease Trade Orders and will be provided with a copy of this order.
7. In December 2002, certain securities of Fracmaster, certain securities of Loewen Group and certain securities of Palm Beach (collectively, the "2002 Securities") were transferred from the accounts of such Accountholders and moved to an HIDC internal defunct securities account, notwithstanding the Cease Trade Orders and without obtaining a variation order in respect thereof; and
8. Since the time of the transfers of the 2002 Securities, HIDC has introduced an automated process and revised its procedures to ensure real-time notification of cease trade orders to the trade desk of HIDC, which has lead to stricter compliance with orders.
AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;
IT IS ORDERED, pursuant to section 144 of the Act that the Cease Trade Orders be and are hereby varied in order to permit the Proposed Dispositions.
December 24, 2003.
"Cameron McInnis"
Schedule "A"