Toronto-Dominion Bank et al. -- s. 5.1 of the Rule
Headnote
Application for a decision, pursuant to section 5.1 of OSC Rule 48-501, exempting the applicants from trading restrictions imposed by sections 2.1(a) and 2.2 of OSC Rule 48-501. Decision granted.
Rules Cited
Ontario Securities Commission Rule 48-501 -- Trading During Distributions, Formal Bids and Share Exchange Transactions
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED
(the Act)
AND
ONTARIO SECURITIES COMMISSION RULE 48-501
TRADING DURING DISTRIBUTIONS, FORMAL
BIDS AND SHARE EXCHANGE TRANSACTIONS
(the Rule)
AND
IN THE MATTER OF
THE TORONTO-DOMINION BANK
THE CANADA TRUST COMPANY
TD ASSET MANAGEMENT INC.
TD WATERHOUSE CANADA INC. ,
TD WATERHOUSE PRIVATE
INVESTMENT COUNSEL INC.,
TDAM USA INC. AND
TD SECURITIES INC.
DECISION
(Section 5.1 of the Rule)
UPON the Director (as defined in the Act) having received an application (the Application) from The Toronto-Dominion Bank (TD Bank), The Canada Trust Company (TCTC), TD Asset Management Inc. (TDAM), TD Waterhouse Canada Inc. (TDWCI), TD Waterhouse Private Investment Counsel Inc. (TDWPIC), TDAM USA Inc. (TDAM USA) and TD Securities Inc. (TDSI) for a decision (or its equivalent) pursuant to section 5.1 of the Rule exempting TD Bank, certain insiders of TD Bank and TCTC, TDAM, TDWCI, TDWPIC and TDAM USA (the Asset Managers) from certain trading restrictions imposed upon issuer-restricted persons by section 2.2 of the Rule, and exempting TDSI from certain trading restrictions imposed upon dealer-restricted persons by section 2.1(a) of the Rule, during the restricted period (the Restricted Period) that will apply to any distribution of common shares of TD Bank (the Shares) that is conducted pursuant to a prospectus that has been prepared, filed and receipted in accordance with applicable Canadian securities regulatory requirements (a Canadian Offering);
AND UPON considering the Application and the recommendation of staff of the Ontario Securities Commission (the Commission);
AND UPON TD Bank, each of the Asset Managers and TDSI having represented to the Director that:
1. TD Bank is a Schedule I bank under the Bank Act (Canada) and it is a reporting issuer in all provinces and territories of Canada.
2. Certain insiders of TD Bank (Non-Access Insiders) do not in the ordinary course receive, or have access to, undisclosed material facts or material changes (Material Information) concerning TD Bank or its securities and are exempt from insider reporting requirements pursuant to section 9.2 of National Instrument 55-104 Insider Reporting Requirements and Exemptions (NI 55-104).
3. TCTC is a wholly-owned subsidiary of TD Bank. Its principal business is acting as a trustee for personal and corporate clients. It is regulated by the Office of the Superintendent of Financial Institutions Canada.
4. TDAM is a wholly-owned subsidiary of TD Bank that carries on the business of a portfolio manager throughout Canada. It is registered as a portfolio manager and exempt market dealer under the securities legislation of all provinces and territories of Canada, as an investment fund manager under the Act and as a commodity trading manager under the Commodity Futures Act (Ontario).
5. TDWCI is a wholly-owned subsidiary of TD Bank. It is registered as an investment dealer under the securities legislation of all provinces and territories of Canada, and it is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and an approved participant of the Montreal Exchange (ME).
6. TDWCI conducts its business as an investment dealer through four distinct divisions. TD Waterhouse executes unsolicited orders for the purchase and sales of securities without the benefit of any investment advice or suitability review. TD Waterhouse Financial Planning offers a range of customized long-term financial planning services to individuals. TD Waterhouse Institutional Services provides comprehensive outsourcing solutions for financial services organizations in Canada. TD Waterhouse Private Investment Advice is TDWCI's full service brokerage and managed account channel that provides brokerage services, advice, and access to discretionary advice, on a full range of investment products to high net worth individuals.
7. TDWPIC is a wholly-owned subsidiary of TD Bank. It is registered as a portfolio manager and exempt market dealer under the securities legislation of all provinces and territories of Canada.
8. TDAM USA is a wholly-owned subsidiary of TD Bank. It carries on the business of an adviser in the United States and is registered as such with the U.S. Securities and Exchange Commission (the SEC).
9. Each of the Asset Managers manages accounts on behalf of clients at arms length to TD Bank and its affiliates, and on behalf of Non-Access Insiders, who have granted the Asset Manager discretionary investment authority over the assets in the clients' accounts (Managed Accounts) and who have provided the Asset Manager with express written consent to exercise such discretionary investment authority to purchase Shares on behalf of the Managed Accounts (Authorized Managed Accounts).
10. TDAM is the manager of investment funds that have an Independent Review Committee that has approved the purchase of Shares by the investment funds, both in the ordinary course and during a Restricted Period in accordance with either section 6.2 of National Instrument 81-107 Independent Review Committee for Investment Funds or the terms and conditions of an exemption that has been granted by the Commission (an Authorized TDAM Fund).
11. TD Bank is the sponsor and administrator of the Employee Future Builder Savings Plan (EFBSP) and the Employee Ownership Plan (EOP), two voluntary savings programs that are available to all employees of TD Bank and its affiliates that are resident in Canada including, without limitation, insiders of TD Bank that are not Non-Access Insiders (Access Insiders).
12. TD Bank is also the sponsor of the Global Service Recognition Program (GSRP) which provides all active full time, part time and casual employees of TD Bank and its affiliates located in Canada, the United States and the United Kingdom with 5 Shares to celebrate their fifth anniversary of service and a choice of either 5 Shares or merchandise on the anniversary of each subsequent 5 year employment period.
13. TDSI is a wholly-owned subsidiary of TD Bank that conducts an institutional brokerage business throughout Canada. It is registered as an investment dealer under the securities legislation of all provinces and territories of Canada, and it is a member of IIROC and the TSX Venture Exchange, a participating organization of The Toronto Stock Exchange and an approved participant of the ME.
14. TD Bank conducts Canadian Offerings of its Shares from time to time and each Canadian Offering is underwritten by, among others, TDSI.
15. During a Canadian Offering, TD Bank, each of the Non-Access Insiders, each Access Insider, the Asset Managers and TDSI is an issuer-restricted person, and TDSI is also a dealer-restricted person, for purposes of the Rule.
16. As an issuer-restricted person, each of TD Bank, the Non-Access Insiders, the Access Insiders and the Asset Managers is subject to trading restrictions (the Trading Restrictions) that prohibit it from purchasing Shares for its own account, the account of another issuer-restricted person or any account over which it exercises control or direction during the Restricted Period. The Trading Restrictions also prohibit it from attempting to induce, or causing, any person or company to purchase any Shares during the Restricted Period.
17. The Restricted Period begins on the date that is two trading days prior to the day the offering price of shares distributed pursuant to a Canadian Offering is determined and it ends on the date that the selling process ends and all stabilization arrangements in relation to the Shares have been terminated.
18. Canadian Offerings are generally conduced by TD Bank within compressed time periods to take advantage of trading windows and other market opportunities and there is therefore little or no opportunity to prepare, file and process an application seeking the exemptive relief sought pursuant to the Application prior to the Restricted Period for a Canadian Offering.
19. The Shares meet the requirements in the Rule to be considered a "highly-liquid security".
20. As both an issuer-restricted person and a dealer-restricted person, TDSI is exempt from the Trading Restrictions because the Shares are highly-liquid securities.
21. As a dealer-restricted person, TDSI is prohibited from purchasing Shares for an account which TDSI knows, or reasonably ought to know, is an account of an issuer-restricted person.
22. The Non-Access Insiders comprise officers of TD Bank and its subsidiaries other than executive officers of TD Bank, directors of TD Bank subsidiaries, and directors and officers of issuers that are insiders of TD Bank and the subsidiaries of such issuers that do not in the ordinary course of business receive, or have access to, undisclosed Material Information concerning TD Bank or its securities. Accordingly, although the Non-Access Insiders are therefore removed from the orbit of the executive officers of TD Bank who may have access to undisclosed Material Information in relation to a Canadian Offering, they will be unable to purchase Shares during a Restricted Period for either their own accounts or accounts over which they exercise control or direction that have beneficiaries that would not be prohibited from purchasing Shares for their own accounts in the absence of the exemption sought on behalf of TD Bank and the Non-Access Insiders pursuant to the Application even though the Shares are highly-liquid securities for purposes of the Rule.
23. In the absence of an exemption from the Trading Restrictions that has been sought on behalf of the Non-Access Insiders, a Non-Access Insider would be unable to purchase Shares for either his or her own account or an account over which the Non-Access Insider exercises control or direction during a Restricted Period.
24. In the absence of an exemption from the Trading Restrictions that has been sought on behalf of TDWCI pursuant to the Application, TDWCI will be unable to purchase Shares on behalf of a person or company that is not an issuer-restricted person other than a Non-Access Insider (an Unrestricted Person) pursuant to an unsolicited order to purchase Shares received by TDWCI from the Unrestricted Person throughout a Restricted Period.
25. In the absence of an exemption from the Trading Restrictions that has been sought on behalf of the Asset Managers pursuant to the Application, each Asset Manager would be unable to purchase Shares during a Restricted Period on behalf of Authorized Managed Accounts.
26. In the absence of an exemption from the Trading Restrictions that has been sought on behalf of TDAM pursuant to the Application, TDAM will be unable to purchase Shares on behalf of Authorized TDAM Funds throughout a Restricted Period.
27. In the absence of the exemptions sought by the Asset Managers pursuant the Application, each Asset Manager would be precluded from discharging its fiduciary obligation to its Authorized Managed Accounts, and TDAM would be precluded from discharging its fiduciary obligation to the Authorized TDAM Funds, in accordance with their investment objectives throughout a Restricted Period even though the Shares are highly-liquid securities.
28. As the administrator of the EFBSP and the EOP (collectively, the Employee Plans), TD Bank pays all administration and investment management fees associated with the execution of the investment options that are selected by Employee Plan participants. TD Bank makes all Share purchases on behalf of the Employee Plans and their participants through TDSI.
29. GSRP eligible employees who acquire Shares pursuant to the GSRP receive them as a gift. TD Bank makes all Share purchases on behalf of GSRP eligible employees through TDSI every second Friday.
30. Each of the Employee Plans and the GSRP is an automatic securities purchase plan for purposes of Part 5 of NI 55-104.
31. In the absence of an exemption from the Trading Restrictions that has been sought on behalf of the Access Insiders, an Access Insider who is a participant in an Employee Plan would be unable to purchase Shares in accordance with the terms and conditions of the Employee Plan during a Restricted Period.
32. In the absence of an exemption from the Trading Restrictions that has been sought on behalf of TD Bank, TD Bank would be unable to purchase Shares in accordance with the terms and conditions of an Employee Plan or the GSRP on behalf of any employee of TD Bank and its subsidiaries who is a participant in the Employee Plan or GSRP (a "Participating Employee") during a Restricted Period.
33. Although TDSI will be able to purchase Shares for its own account or for accounts over which it exercises control or direction throughout the Restricted Period in reliance upon the exemption for highly-liquid securities that is available pursuant to section 3.1(1)(b) of the Rule, it will be unable to purchase Shares on behalf of the Non-Access Insiders when they are purchasing Shares for their own accounts, and it will be unable to purchase Shares on behalf of TD Bank when it is purchasing Shares on behalf of a Participating Employee, during the Restricted Period in the absence of an exemption from section 2.1(a) of the Rule.
AND UPON the Director being satisfied that to do so would not be prejudicial to the public interest;
IT IS THE DECISION of the Director pursuant to section 5.1 of the Rule that for purposes of a Canadian Offering, the following purchases of Shares are exempt from section 2.2 of the Rule provided the Shares meet the requirements in the Rule to be considered a "highly liquid security" at the time such purchases are made:
(a) purchases of Shares by a Non-Access Insider for either his or her own account or an account over which the Non-Access Insider exercises control or direction;
(b) purchases of Shares in accordance with the terms and conditions of an Employee Plan by an Access Insider who is a participant in the Employee Plan;
(c) purchases of Shares by TDWCI on behalf of an Unrestricted Person pursuant to an unsolicited order to purchase the Shares that TDWCI has received from the Unrestricted Person;
(d) purchases of Shares by an Asset Manager on behalf of an Authorized Managed Account;
(e) purchases of Shares by TDAM on behalf of an Authorized TDAM Fund; and
(f) purchases of Shares by TD Bank on behalf of a Participating Employee in accordance with the terms and conditions of an Employee Plan or the GSRP.
IT IS ALSO THE DECISION of the Director pursuant to section 5.1 of the Rule that for the purposes of a Canadian Offering, TDSI is exempt from section 2.1(a) of the Rule in respect of any purchases of Shares on behalf of a Non-Access Insider who is purchasing the Shares for his or her own account and on behalf of an Access Insider when it is purchasing shares in accordance with the terms and conditions of an Employee Plan or the GSRP provided the Shares meet the requirements in the Rule to be considered a "highly liquid security" at the time such purchases are made.
November 6, 2012