National Bank Financial Inc. and NatWealth Management (USA) Inc.

le 7 février 2022

Decision

Headnote

Exemptive relief application pursuant to sections 263 of the Securities Act (Quebec) and 74 of the Securities Act (Ontario) that a U.S. registered investment adviser, affiliated with a Quebec registered investment dealer, be exempted, subject to certain conditions, from the requirements of sections 148 and 149 of the Securities Act (Quebec), and of subsection 25(3) of the Securities Act (Ontario), in respect of advice provided by its representatives in respect of the U.S. tax-advantaged retirement savings, education or disability plans of clients formerly resident in the U.S.

Applicable Legislative Provision

Securities Act (Ontario), R.S.O. 1990, c. S.5, as am., s. 25(3).

February 7, 2022

IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the "Legislation") AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF NATIONAL BANK FINANCIAL INC. AND NATWEALTH MANAGEMENT (USA) INC. (the "Filers")

DECISION

Background

The securities regulatory authority or regulator in Québec and Ontario ("Decision Makers") have received an application from the Filers for a decision exempting NatWealth Management (USA) Inc. ("NatWealth") and its individual representatives that are registered under the Legislation as representatives of NBF (the "Dual Representatives") from the adviser registration requirement in respect of advice provided by the Dual Representatives, acting on behalf of NatWealth, to an individual (the "Ex-U.S. Client"), where the advice is in respect of the Ex-U.S. Client's retirement plans, tax-advantaged savings, education savings or disability savings plan (each, a "U.S. Plan"), and (i) the U.S. Plan is located in the United States of America (the "U.S."), (ii) the Ex-U.S. Client is a holder of or contributor to the U.S. Plan, and (iii) the Ex-U.S. Client was previously resident in the U.S. (the "Exemption Sought").

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 Filers have provided notice that section 4.7(1) of Regulation 11-102 respecting Passport System, CQLR, Chapter V-1.1, r. 1 ("Regulation 11-102") is intended to be relied upon in British Columbia, Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, the Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Saskatchewan, and the Yukon, 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 the Legislation, Regulation 14-101 respecting Definitions, CQLR, Chapter V-1.1, r. 3, Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations, CQLR, Chapter V-1.1, r. 10 ("Regulation 31-103") and Regulation 11-102 have the same meanings if used in this decision, unless otherwise defined.

Certain other defined terms have the meanings given to them above or below.

Representations

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

National Bank Financial Inc. ("NBF")

1. NBF is an indirect subsidiary of National Bank of Canada.

2. NBF is a registered investment dealer in all jurisdictions of Canada, a registered derivatives dealer in Québec and a registered futures commission merchant in Ontario and Manitoba. As an investment dealer, NBF is a member of the Investment Industry Regulatory Organization of Canada ("IIROC").

3. NBF carries on business in all jurisdictions.

4. NBF provides a broad array of wealth management services to Canadian residents, including discretionary and non-discretionary investment management and supervisory services financial planning, estates planning, and brokerage services.

5. NBF does not trade (nor provide advice with respect to the trading) in securities to, with, or on behalf of clients who reside in the U.S. ("U.S. Clients") other than in respect of tax-advantaged retirement savings, education savings or disability savings plans ("Canadian Plans") held by U.S. Clients who were former residents of Canada and who have now moved to the U.S. and left their Canadian Plans with NBF.

6. NBF is not registered under U.S. federal securities laws nor under any other U.S. securities laws. NBF carries on broker-dealer activities in the U.S. solely in reliance on blanket exemptive relief granted by the Securities and Exchange Commission inRe Investment Dealers Association of Canada dated June 7, 2000. NBF does not offer nor engage in any advisory services in the U.S.

7. NBF is not in default of its obligations under securities legislation in any of the jurisdictions.

NatWealth

8. NatWealth is a corporation established under the Canadian Business Corporation Act, with its head office located in Montréal, Québec.

9. NatWealth is an indirect subsidiary of National Bank of Canada. Accordingly, the Filers are affiliates.

10. NatWealth has no physical presence in the U.S. It currently carries on business in Alberta, Ontario and Québec and intends to eventually carry on business in all jurisdictions in which NBF is registered and operates.

11. NatWealth provides discretionary investment advisory services to U.S. Clients in reliance upon décision n^o 2015-PDG-0036 Décision Générale relative à la dispense de l'obligation d'inscription prévue aux articles 148 et 149 de la Loi sur les valeurs mobilières en faveur de certaines personnes agissant à titre de courtier ou de conseiller auprès de Clients résidant aux États-Unis d'Amérique of Autorité des Marchés Financiers, Ontario Securities Commission Rule 32-505 Conditional Exemption from Registration for United States Broker-Dealers and Advisers Servicing U.S. Clients from Ontario and equivalent exemptions in other jurisdictions.

12. NatWealth is registered as an investment adviser under the Investment Advisers Act of 1940 (United States) (the "1940 Act").

13. NatWealth is not registered under the securities laws of any jurisdiction of Canada.

14. NatWealth is not in default of its obligations under any applicable U.S. securities laws.

15. NatWealth confirms that there are currently no regulatory actions of the type contemplated by the Notice of Regulatory Action attached as Appendix "A" hereto in respect of NatWealth or any predecessors or specified affiliates of NatWealth.

16. NatWealth has engaged Pershing Advisor Solutions LLC ("PAS") for trading, custody, clearing and settlement services.

17. Pershing LLC ("Pershing"), an affiliate of PAS, acts as the carrying dealer for NatWealth's client accounts.

18. PAS is an introducing broker registered with the U.S. Securities and Exchange Commission (the "SEC"), a member of the Financial Industry Regulatory Authority, Inc. ("FINRA") and an affiliate of Pershing, a broker-dealer and clearing and carrying firm that is registered with the SEC and a member of FINRA, the New York Stock Exchange (the "NYSE") and other self-regulating organizations ("SROs").

Dual Representatives

19. NBF and NatWealth operate, or will operate, their businesses out of the same premises in each jurisdiction.

20. Each of the Dual Representatives act on behalf of the Filers in one of the Filers' offices located in the jurisdictions in which the Filers carry on their activities.

21. Each Dual Representative is registered as a representative of NBF in one or more of the Jurisdictions and is qualified to act as an adviser in the U.S on behalf of NatWealth.

22. Each Dual Representative, when acting on behalf of NBF, only advises NBF clients who are (i) residents in the jurisdiction(s) and (ii) U.S. Clients who were former residents of Canada in respect to their Canadian Plans.

23. None of the Dual Representatives is in default of his/her obligations under Canadian securities legislation, nor under any U.S. securities laws.

24. When acting on behalf of NatWealth, each Dual Representative currently only advises U.S. Clients.

25. NatWealth and the Dual Representatives acting on behalf of NatWealth, desire to advise Ex-U.S. Clients with respect to the trading of securities in their U.S. Plans, despite the fact that the Ex-U.S. Clients reside in the jurisdictions.

26. A Dual Representative, acting on behalf of NatWealth, would only advise Ex-U.S. Clients who are residents in the jurisdictions if the Dual Representative is registered as a dealing representative of NBF, in the IIROC approval category of portfolio management, in the relevant jurisdictions in which the Ex-U.S. Clients reside.

27. NatWealth is in the initial stage of its operations, having only started offering portfolio management services to U.S. Clients in January 2021. The impact of the advice that NatWealth proposes to provide to Ex-U.S. Clients, when compared to the overall advising activities of NatWealth, may fluctuate significantly in NatWealth's initial stage of operations. However, over time, NatWealth expects that its advice to Ex-U.S. Clients would become ancillary to NatWealth's principal business of advising U.S. Clients.

28. Notwithstanding the foregoing, it is NatWealth's intention that, as its client base continues to grow, U.S. Clients will comprise most of NatWealth's total revenue, and any revenue deriving from advice offered to Ex-U.S. Clients will become ancillary to NatWealth's principal business of advising U.S. Clients. NatWealth expects that the amount of revenue derived from Ex-U.S. Clients will not exceed 10% of its total revenue.

29. The Dual Representatives have the proficiency, education and experience to provide advice to Ex-U.S. Clients with respect to the trading of securities in their U.S. Plans.

30. It is proposed that PAS and its affiliates will provide trading, custody, clearing and settlement services for all Ex-U.S. Clients of NatWealth in respect of their U.S. Plans.

31. PAS and its affiliates rely upon an exemption from the dealer registration requirement under the Legislation pursuant to section 8.18 of Regulation 31-103 in connection with inter alia trades in "foreign securities" with a "permitted client". Accordingly, NatWealth and the Dual Representatives will only advise Ex-U.S. Clients with respect to the trading of "foreign securities" in their U.S. Plans while PAS and its affiliates act as dealers in respect of Ex-U.S. Client accounts.

32. When providing advice to Ex-U.S. Clients with respect to the trading of securities in their U.S. Plans, NatWealth and the Dual Representatives will comply with U.S. federal securities laws and any other applicable U.S. securities laws.

33. All Ex-U.S. Clients of NatWealth will enter, among other, into an investment management agreement and related documentation with NatWealth and associated account opening documentation with a foreign broker. All communications with Ex-U.S. Clients will be through NatWealth and the Dual Representatives, and will be under NatWealth branding.

34. To avoid client confusion, all Ex-U.S. Clients of NatWealth will receive disclosures that explain the relationship between NatWealth and NBF.

35. It would not be detrimental to the protection of investors to grant the Exemption Sought.

Principal Relief

36. Regulation 35-101 Conditional Exemption from Registration for United States Broker-Dealers and Agents, CQLR, Chapter V-1.1, r. 13 ("Regulation 35-101") provides exemptions from the dealer/underwriter registration requirement and prospectus requirement for U.S. broker-dealers and their agents trading with or for Ex-U.S. Clients, upon satisfying certain conditions.

37. It is a condition of the exemption for U.S. broker-dealers in paragraph 2.1(a) of Regulation 35-101, and for their agents in paragraph 3.1(b) of Regulation 35-101, that the broker-dealers and their agents have no office or other physical presence in any jurisdiction in Canada. It is also a condition that such U.S. broker-dealers only trade in foreign securities with Ex-U.S. Clients.

38. Ex-U.S. Clients would like to obtain services from NatWealth in respect of both foreign securities and securities other than foreign securities (hereafter referred to as "Canadian securities") as their U.S. Plan permits investments in both foreign and Canadian securities.

39. NatWealth and its representatives are unable to rely on the exemptions set out in Regulation 35-101, as NatWealth has an office or other physical presence in Canada, and NatWealth and its representatives wish to trade in Canadian Securities with Ex-U.S. Clients.

Decision

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

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:

(a) the advice is for an individual who is ordinarily residing in Canada, but previously resided in the U.S., if such advice is in respect of the individual's U.S. Plan, and

• the U.S. Plan is located in the U.S.;

• the individual is a holder of or contributor to the U.S. Plan; and

• the individual was previously a U.S. resident;

(b) NatWealth does not advertise for, nor actively solicit, new clients in the jurisdictions;

(c) NatWealth remains registered as an investment adviser under the 1940 Act;

(d) NatWealth and each of the Dual Representatives are in compliance with, and shall remain in compliance with, any adviser licensing or registration requirements under applicable U.S. securities legislation;

(e) NBF remains registered under the Legislation as an investment dealer and remains a member of IIROC;

(f) Each Dual Representative who provides advice on behalf of NatWealth is registered under the Legislation as a dealing representative in a category that would permit it to advise Ex-U.S. Clients with respect to the trading of securities in their U.S. Plans in compliance with the Legislation, if the U.S. Plans were instead Canadian Plans;

(g) NatWealth discloses to the Ex-U.S. Clients that it (and the Dual Representatives providing advice on its behalf) is not subject to full regulatory requirements otherwise applicable under the Legislation;

(h) NatWealth and the Dual Representatives, in the course of their dealings with Ex-U.S. Clients, act fairly, honestly and in good faith;

(i) NatWealth:

• enters into, among others, investment management agreements and related documentation with all Ex-U.S. Clients, such that all communications with Ex-U.S. Clients will be through NatWealth and the Dual Representatives, and such communications will use NatWealth branding; and

• provides all Ex-U.S. Clients with disclosure that explains the relationship between NatWealth and NBF;

(j) All trades recommended by NatWealth and the Dual Representatives acting on its behalf, will be conducted by PAS or other persons that are registered as a dealer, or exempt from the dealer registration requirement, under the securities laws of each relevant jurisdiction;

(k) the only physical premises or offices that NatWealth has in the jurisdiction are the premises that it shares with NBF;

(l) NatWealth notifies the Autorité des marchés financiers of any regulatory action initiated after the date of the order in respect of NatWealth, any predecessors or specified affiliates of NatWealth by completing and filing Appendix "A" hereto with the Autorité des marchés financiers within 10 days of the commencement of such action;

(m) NBF complies with its obligations under securities legislation to report regulatory actions relating to NBF and its specified affiliates to the applicable securities regulatory authority or self regulatory organization having jurisdiction over NBF;

(n) 12 months after the date of this Order (the "Notice Date"), NatWealth notifies the principal regulator of the percentage of its revenue which is derived from Ex-U.S. Clients compared to its total revenue, as of the Notice Date;

(o) if the revenue NatWealth derives from Ex-U.S. Clients is expected to exceed 10% of its total revenue 18 months after the date of this Order, NatWealth takes reasonable steps to obtain registration as an adviser in the jurisdictions by the date that is 18 months after the date of this Order;

(p) if this Order does not terminate pursuant to condition (q)(i), and if NatWealth's revenue derived from Ex-U.S. Clients exceeds 10% of its total revenue on any calendar quarter-end following 18 months after the date of this Order, then NatWealth forthwith provides a notice to the Autorité des marchés financiers, which refers to this Order and provides details with respect to the percentage of the revenue derived from Ex-U.S. Clients and the quarter-end date on which NatWealth's revenue exceeded 10% of its total revenue; and

(q) this Order will terminate on the earlier of:

(i) 18 months after the date of this Order, if, at that date, the revenue NatWealth derives from Ex-U.S. Clients exceeds 10% of its total revenue;

(ii) 5 years after the date of this Order; and

(iii) the coming into force of a change in securities law in the jurisdictions (as defined in the Legislation) that exempts NatWealth from the registration requirement in the Legislation in connection with the advice it provides to an Ex-U.S. Client with respect to the U.S. Plan on terms and conditions other than those set out in this Order.

"Éric Jacob"
Superintendent, Client Services and Distribution Oversight
Autorité des Marchés Financiers

Application File #: 2021/0377

Appendix "A"

NOTICE OF REGULATORY ACTION

Has the firm, or any predecessors or specified affiliates {1} the firm entered into a settlement agreement with any financial services regulator, securities or derivatives exchange, SRO or similar agreement with any financial services regulator, securities or derivatives exchange, SRO or similar organization?

Yes _____ No _____

If yes, provide the following information for each settlement agreement:

- - - - - - - - - - - - - - - - - - - -

Name of entity

Regulator/organization

Date of settlement (yyyy/mm/dd)

Details of settlement

Jurisdiction

- - - - - - - - - - - - - - - - - - - -

Has any financial services regulator, securities or derivatives exchange, SRO or similar organization:

Yes

No

Determined that the firm, or any predecessors or specified affiliates of the firm violated any securities regulations or any rules of a securities or derivatives exchange, SRO or similar organization?

_____

_____

Determined that the firm, or any predecessors or specified affiliates of the firm made a false statement or omission?

_____

_____

Issued a warning or requested an undertaking by the firm, or any predecessors or specified affiliates of the firm?

_____

_____

Suspended or terminated any registration, licensing or membership of the firm, or any predecessors or specified affiliates of the firm?

_____

_____

Imposed terms or conditions on any registration or membership of the firm, or predecessors or specified affiliates of the firm?

_____

_____

Conducted a proceeding or investigation involving the firm, or any predecessors or specified affiliates of the firm?

_____

_____

Issued an order (other than an exemption order) or a sanction to the firm, or any predecessors or specified affiliates of the firm for securities or derivatives-related activity (e.g. cease trade order)?

_____

_____

	Yes	No

Determined that the firm, or any predecessors or specified affiliates of the firm violated any securities regulations or any rules of a securities or derivatives exchange, SRO or similar organization?	_____	_____

Determined that the firm, or any predecessors or specified affiliates of the firm made a false statement or omission?	_____	_____

Issued a warning or requested an undertaking by the firm, or any predecessors or specified affiliates of the firm?	_____	_____

Suspended or terminated any registration, licensing or membership of the firm, or any predecessors or specified affiliates of the firm?	_____	_____

Imposed terms or conditions on any registration or membership of the firm, or predecessors or specified affiliates of the firm?	_____	_____

Conducted a proceeding or investigation involving the firm, or any predecessors or specified affiliates of the firm?	_____	_____

Issued an order (other than an exemption order) or a sanction to the firm, or any predecessors or specified affiliates of the firm for securities or derivatives-related activity (e.g. cease trade order)?	_____	_____

If yes, provide the following information for each action

Name of entity

Type of Action

Regulator/organization

Date of action (yyyy/mm/dd)

Reason for action

Jurisdiction

Is the firm aware of any ongoing investigation of which the firm or any of its specified affiliate is the subject?

Yes _____ No _____

If yes, provide the following information for each investigation:

- - - - - - - - - - - - - - - - - - - -

Name of entity

Reason or purpose of investigation

Regulator/organization

Date investigation commenced (yyyy/mm/dd)

Jurisdiction

Name of firm

Name of firm's authorized signing officer or partner

Title of firm's authorized signing officer or partner

Signature

Date (yyyy/mm/dd)

- - - - - - - - - - - - - - - - - - - -

Witness

The witness must be a lawyer, notary public or commissioner of oaths.

- - - - - - - - - - - - - - - - - - - -

Name of witness

Title of witness

Signature

Date (yyyy/mm/dd)

- - - - - - - - - - - - - - - - - - - -

{1} In this Appendix, the term "specified affiliate" has the meaning ascribed to that term in Form 33-109F6 to National Instrument 33-109 Registration Information.

Name of entity

Type of Action

Regulator/organization

Date of action (yyyy/mm/dd)	Reason for action

Jurisdiction