Mulvihill Capital Management Inc. - MRRS Decision

Headnote

Mutual Reliance Review Systemfor Exemptive Relief Applications - mutual fund dealer exemptedfrom the legislative requirements that it file an applicationto become a member of the Mutual Fund Dealers Association ofCanada (the "MFDA") and become a member of the MFDA- mutual fund dealer subject to certain terms and conditionsof registration.

Applicable Statute

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

Applicable Ontario Rule

Rule 31-506 SRO Membership -Mutual Fund Dealers, ss. 2.1, 3.1 and 5.1.

Applicable Published Document

Letter sent to the InvestmentFunds Institute of Canada and the Investment Counsel Associationof Canada, December 6, 2000, (2000) 23 OSCB 8467.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,

SASKATCHEWAN, MANITOBA AND

ONTARIO

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

MULVIHILL CAPITAL MANAGEMENTINC.

MRRS DECISION DOCUMENT

WHEREAS the local securitiesregulatory authority or regulator (the "Decision Maker")in each of the provinces of British Columbia, Alberta, Saskatchewan,Manitoba and Ontario (the "Jurisdictions") has receivedan application (the "Application") from MulvihillCapital Management Inc. (the "Registrant") for a decision(a "Decision") pursuant to the securities legislationof the Jurisdictions (the "Legislation") that theRegistrant not be required to file an application to becomea member of the Mutual Fund Dealers Association of Canada (the"MFDA") and to become a member of the MFDA.

AND WHEREAS pursuantto the Mutual Reliance Review System for Exemptive Relief Applications(the "System"), the Ontario Securities Commissionis the principal regulator for this application.

AND WHEREAS it has beenrepresented by the Registrant to the Decision Makers that:

1. the Registrant is registeredas a dealer in the category of "mutual fund dealer"or its equivalent and as an adviser in the categories of "investmentcounsel" and "portfolio manager" or their equivalentsin each of the Jurisdictions;

2. the Registrant is alsoregistered with the Ontario Securities Commission as a limitedmarket dealer;

3. the Registrant is the portfolioadviser, and an affiliate is the manager, of a number of mutualfunds that it or an affiliate have established, which aresold to the public either pursuant to a simplified prospectusor on an exempt basis, and it or an affiliate will be themanager of any other funds that it or an affiliate may establishin the future;

4. the Registrant's activitiesas a mutual fund dealer currently represent and will continueto represent activities that are incidental to its principalbusiness activities;

5. the Registrant has agreedto the imposition of the terms and conditions on the Registrant'sregistration as a mutual fund dealer set out in the attachedSchedule "A", which outlines the activities theRegistrant has agreed to adhere to in connection with itsapplication for this Decision;

6. any person or company thatis not currently a mutual fund client of the Registrant onthe date of this Decision, will, before they are acceptedas a mutual fund client of the Registrant, receive prominentwritten notice from the Registrant that:

The Registrant is notcurrently a member, and does not intend to become a memberof the Mutual Fund Dealers Association; consequently,clients of the Registrant will not have available to theminvestor protection benefits that would otherwise derivefrom membership of the Registrant in the MFDA, includingcoverage under any investor protection plan for clientsof members of the MFDA;

7. upon the next general mailingto its mutual fund clients and in any event before October31, 2002, the Registrant shall provide to all of its mutualfund clients the written notice referred to in paragraph 6,above;

AND WHEREAS pursuantto the System this MRRS Decision Document evidences the decisionof each Decision Maker (collectively, "Decision");

AND WHEREAS each of theDecision Makers is satisfied that the test contained in theLegislation that provides the Decision Maker with the jurisdictionto make the Decision has been met;

IT IS THE DECISION ofthe Decision Makers pursuant to the Legislation that, effectiveMay 23, 2001 in Ontario, effective May 31, 2001 in Saskatchewan,effective July 1, 2001 in Manitoba, effective July 8, 2002 inBritish Columbia and July 5, 2002 in Alberta, the Registrantnot be required to file an application to become a member ofthe MFDA and to become a member of the MFDA;

PROVIDED THAT the Registrantcomplies with the terms and conditions on its registration underthe Legislation as a mutual fund dealer set out in the attachedSchedule "A".

July 9, 2002.

"David M. Gilkes"

Schedule "A"

TERMS AND CONDITIONS OF REGISTRATION

OF

MULVIHILL CAPITAL MANAGEMENTINC.

AS A MUTUAL FUND DEALER

Definitions

1. For the purposes hereof,unless the context otherwise requires:

(a) "Act" means,in Ontario, the Securities Act, R.S.O. 1990, c.S5,as amended; in Manitoba, the Securities Act, R.S.M.1988, c.S50, as amended; in Saskatchewan, the The SecuritiesAct, 1988, S.S. 1988, c.S-42.2, as amended; in Alberta,the Securities Act, R.S.A. 2000, c. S-4, as amended;and, in British Columbia, the Securities Act, R.S.B.C.1996, c. 418, as amended;

(b) "Adviser"means an adviser as defined in the Act;

(c) "Client Name Trade"means, for the Registrant, a trade to, or on behalf of,a person or company, in securities of a mutual fund, thatis managed by the Registrant or an affiliate of the Registrant,where, immediately before the trade, the person or companyis shown on the records of the mutual fund or of an othermutual fund managed by the Registrant or an affiliate ofthe Registrant as the holder of securities of such mutualfund, and the trade consists of:

(A) a purchase, by theperson or company, through the Registrant, of securitiesof the mutual fund; or

(B) a redemption, by theperson or company, through the Registrant, of securitiesof the mutual fund;

and where, the person orcompany:

(C) is a client of theRegistrant that was not solicited by the Registrant; or

(D) was an existing clientof the Registrant on the Effective Date;

(d) "Effective Date"means May 23, 2001;

(e) "Employee",for the Registrant, means:

(A) an employee of theRegistrant;

(B) an employee of anaffiliated entity of the Registrant; or

(C) an individual thatis engaged to provide, on a bona fide basis, consulting,technical, management or other services to the Registrantor to an affiliated entity of the Registrant, under awritten contract between the Registrant or the affiliatedentity and the individual or a consultant company or consultantpartnership of the individual, and, in the reasonableopinion of the Registrant, the individual spends or willspend a significant amount of time and attention on theaffairs and business of the Registrant or an affiliatedentity of the Registrant;

(f) "Employee",for a Service Provider, means an employee of the ServiceProvider or an affiliated entity of the Service Provider,provided that, at the relevant time, in the reasonable opinionof the Registrant, the employee spends or will spend, asignificant amount of time and attention on the affairsand business of:

(A) the Registrant oran affiliated entity of the Registrant; or

(B) a mutual fund managedby the Registrant or an affiliated entity of the Registrant;

(g) "Executive",for the Registrant, means a director, officer or partnerof the Registrant or of an affiliated entity of the Registrant;

(h) "Executive",for a Service Provider, means a director, officer or partnerof the Service Provider or of an affiliated entity of theService Provider;

(i) "Exempt Trade",for the Registrant, means:

(i) in Ontario, Manitoba,Saskatchewan, British Columbia and Alberta a trade insecurities of a mutual fund that is made between a personor company and an underwriter acting as purchaser or betweenor among underwriters;

(ii) in Ontario, a tradein securities of a mutual fund for which the Registrantwould have available to it an exemption from the registrationrequirements of the Act if the Registrant were not a "marketintermediary" as such term is defined in section204 of the Ontario Regulation;

(iii) in Manitoba, Saskatchewan,British Columbia and Alberta, a trade in securities ofa mutual fund for which the Registrant would have availableto it an exemption from the registration requirementsof the Act; or

(iv) a trade in securitiesof a mutual fund for which the Registrant has receiveda discretionary exemption from the registration requirementsof the Act;

(j) "Fund-on-Fund Trade",means a trade that consists of:

(i) a purchase, throughthe Registrant, of securities of a mutual fund that ismade by another mutual fund;

(ii) a purchase, throughthe Registrant, of securities of a mutual fund that ismade by a person or company where the person or company,an affiliated entity of the person or company, or an otherperson or company is, or will become, the counterpartyin a specified derivative or swap with another mutualfund; or

(iii) a sale, throughthe Registrant, of securities of a mutual fund that ismade by another mutual fund where the party purchasingthe securities is:

(A) a mutual fund managedby the Registrant or an affiliated entity of the Registrant;or

(B) a person or companythat acquired the securities where the person or company,an affiliated entity of the person or company, or another person or company is, or was, the counterpartyin a specified derivative or swap with another mutualfund; and

where, in each case, atleast one of the referenced mutual funds is a mutual fundthat is managed by either the Registrant or an affiliatedentity of the Registrant;

(k) "In FurtheranceTrade" means, for the Registrant, a trade by the Registrantthat consists of any act, advertisement, or solicitation,directly or indirectly in furtherance of an other tradein securities of a mutual fund, where the other trade consistsof:

(i) a purchase or saleof securities of a mutual fund that is managed by theRegistrant or an affiliated entity of the Registrant;or

(ii) a purchase or saleof securities of a mutual fund where the Registrant actsas the principal distributor of the mutual fund;

and where, in each case,the purchase or sale is made by or through an other registereddealer if the Registrant is not otherwise permitted to makethe purchase or sale pursuant to these terms and conditions;

(l) "Managed Account"means, for the Registrant, an investment portfolio accountof a client under which the Registrant, pursuant to a writtenagreement made between the Registrant and the client, makesinvestment decisions for the account and has full discretionaryauthority to trade in securities for the account withoutobtaining the client's specific consent to the trade;

(m) "Managed AccountTrade" means, for the Registrant, a trade to, or onbehalf of a Managed Account of the Registrant, where thetrade consists of a purchase or redemption, through theRegistrant of securities of a mutual fund, that is madeon behalf of the Managed Account;

where, in each case,

(i) the Registrant isthe portfolio adviser to the mutual fund;

(ii) the mutual fund ismanaged by the Registrant or an affiliate of the Registrant;and

(iii) either of:

(A) the mutual fundis prospectus-qualified in the jurisdiction where thetrade occurs; or

(B) the trade is notsubject to the registration and prospectus requirementsof the Act;

(n) "Mutual Fund Instrument"means National Instrument 81-102 Mutual Funds, as amended;

(o) "Ontario Regulation"means R.R.O. 1990, Reg. 1015, as amended, made under theOntario Act;

(p) "Permitted Client"means a person or company that is a client of the Registrant,and that is, or was at the time the person or company becamea client of the Registrant:

(i) an Executive or Employeeof the Registrant;

(ii) a Related Party ofan Executive or Employee of the Registrant;

(iii) a Service Provideror an affiliated entity of a Service Provider;

(iv) an Executive or Employeeof a Service Provider; or

(v) a Related Party ofan Executive or Employee of a Service Provider;

(q) "Permitted ClientTrade" means, for the Registrant, a trade to a personwho is a Permitted Client or who represents to the Registrantthat he, she or it is a person included in the definitionof Permitted Client, in securities of a mutual fund thatis managed by the Registrant or an affiliate of the Registrant,and the trade consists of a purchase or redemption, by theperson, through the Registrant, of securities of the mutualfund;

(r) "Pooled Fund Rule"means, for the Registrant, a rule or other regulation thatrelates, in whole or in part, to the distribution of securitiesof a mutual fund and/or non-redeemable investment fund,other than pursuant to a prospectus for which a receipthas been obtained from the Director, made by the Registranton or on behalf of a Managed Account, but does not includeOntario Rule 45-501 Exempt Distributions, BC Instrument45-103 Capital Raising Distributions or BC Instrument 45-505Alternative Reporting Requirements for Exempt Distributionsof Securities of Eligible Pooled Funds;

(s) "Registered Plan"means a registered pension plan, deferred profit sharingplan, registered retirement savings plan, registered retirementincome fund, registered education savings plan or otherdeferred income plan registered under the Income Tax Act(Canada);

(t) "Registrant"means Mulvihill Capital Management Inc.;

(u) "Related Party",for a person, means an other person who is:

(i) the spouse of theperson;

(ii) the issue of:

(A) the person,

(B) the spouse of theperson, or

(C) the spouse of anyperson that is the issue of a person referred to insubparagraphs (A) or (B) above;

(iii) the parent, grandparentor sibling of the person, or the spouse of any of them;

(iv) the issue of anyperson referred to in paragraph (iii) above; or

(v) a Registered Planestablished by, or for the exclusive benefit of, one,some or all of the foregoing;

(vi) a trust where oneor more of the trustees is a person referred to aboveand the beneficiaries of the trust are restricted to one,some, or all of the foregoing;

(vii) a corporation whereall the issued and outstanding shares of the corporationare owned by one, some, or all of the foregoing;

(v) "securities",for a mutual fund, means shares or units of the mutual fund;

(w) "Seed Capital Trade"means a trade in securities of a mutual fund made to a personsor company referred to in any of subparagraphs 3.1(1)(a)(i)to 3.1(1)(a)(iii) of the Mutual Fund Instrument; and

(x) "Service Provider"means:

(i) a person or companythat provides or has provided professional, consulting,technical, management or other services to the Registrantor an affiliated entity of the Registrant;

(ii) an Adviser to a mutualfund that is managed by the Registrant or an affiliatedentity of the Registrant; or

(iii) a person or companythat provides or has provided professional, consulting,technical, management or other services to a mutual fundthat is managed by the Registrant or an affiliated entityof the Registrant.

2. For the purposes hereof,a person or company is considered to be an "affiliatedentity" of an other person or company if the person orcompany would be an affiliated entity of that other personor company for the purposes of Ontario Securities CommissionRule 45-503 Trades To Employees, Executives and Consultantsand British Columbia Instrument 45-507 Trades to Employees,Executives and Consultants.

3. For the purposes hereof:

(a) "issue" and"sibling" includes any person having such relationshipthrough adoption, whether legally or in fact;

(b) "parent" and"grandparent" includes a parent or grandparentthrough adoption, whether legally or in fact;

(c) "registered dealer"means a person or company that is registered under the Actas a dealer in a category that permits the person or companyto act as dealer for the subject trade; and

(d) "spouse",for an Employee or Executive, means a person who, at therelevant time, is the spouse of the Employee or Executive.

4. Any terms that are notspecifically defined above shall, unless the context otherwiserequires, have the meaning:

(a) specifically ascribedto such term in the Mutual Fund Instrument; or

(b) if no meaning is specificallyascribed to such term in the Mutual Fund Instrument, thesame meaning the term would have for the purposes of theAct.

Restricted Registration

Permitted Activities

5. The registration of theRegistrant as a mutual fund dealer under the Act shall befor the purposes only of trading by the Registrant in securitiesof a mutual fund where the trade consists of:

(a) a Client Name Trade;

(b) an Exempt Trade;

(c) a Fund-on-Fund Trade;

(d) an In Furtherance Trade;

(e) a Managed Account Trade,provided that, at the time of the trade, the Registrantis registered under the Act as an adviser in the categoriesof "investment counsel" and "portfolio manager"or their equivalents;

(f) a Permitted Client Trade;or

(g) a Seed Capital Trade;

provided that, in the case ofall trades that are only referred to in clauses (a) or (f),the trades are limited and incidental to the principal businessof the Registrant, and provided also that paragraph (e) willcease to be in effect one year after the coming into force,subsequent to the date of this Decision, of any Pooled FundRule.