OSC Bulletin - Volume 34, Issue 2 - January 14, 2011 fileThe Ontario Securities Commission OSC Bulletin January 14, 2011 Volume 34, Issue 2 (2011), 34 OSCB The Ontario Securities Commission

The Ontario Securities Commission

OSC Bulletin

January 14, 2011

Volume 34, Issue 2

(2011), 34 OSCB

The Ontario Securities Commission administers the Securities Act of Ontario (R.S.O. 1990, c. S.5) and the

Commodity Futures Act of Ontario (R.S.O. 1990, c. C.20)

The Ontario Securities Commission Published under the authority of the Commission by:Cadillac Fairview Tower Carswell, a Thomson Reuters businessSuite 1903, Box 55 One Corporate Plaza 20 Queen Street West 2075 Kennedy Road Toronto, Ontario Toronto, Ontario M5H 3S8 M1T 3V4

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January 14, 2011 (2011) 34 OSCB

Table of Contents

Chapter 1 Notices / News Releases ........................397 1.1 Notices ............................................................3971.1.1 Current Proceedings before the Ontario Securities Commission ........................3971.1.2 Peak Energy Services Trust – Notice of Correction..........................................4031.1.3 OSC Staff Notice 54-701 – Regulatory Developments Regarding Shareholder Democracy Issues .......................404 1.2 Notices of Hearing......................................... (nil) 1.3 News Releases ...............................................406 1.3.1 OSC Commissioner Appointment: Edward Kerwin .................................................406 1.3.2 OSC Issues Update on Regulatory Proposals Related to Shareholder Democracy .......................................................407 1.3.3 OSC Announces Continuous Disclosure Advisory Committee Members for 2011-2013 ...................................................4091.4 Notices from the Office of the Secretary ..............................................410 1.4.1 North American Financial Group Inc. et al. .................................................................410 1.4.2 Al-tar Energy Corp. et al. .................................410

Chapter 2 Decisions, Orders and Rulings ..............411 2.1 Decisions ........................................................411 2.1.1 Mulvihill Pro-AMS RSP Split Share Corp..........411 2.1.2 Catapult Financial Management Inc. ................412 2.1.3 Encana Corporation .........................................415 2.1.4 Bell Aliant Regional Communications, Limited Partnership ..........................................4182.1.5 PIMCO Canada Corp. et al...............................427 2.1.6 Baytex Energy Trust ........................................438 2.1.7 GMIncome & Growth Fund...............................441 2.2 Orders..............................................................444 2.2.1 North American Financial Group Inc. et al. - ss. 127(7), 127(8) ..................................4442.2.2 Al-tar Energy Corp. et al. – ss. 127, 127.1...............................................445 2.3 Rulings ........................................................... (nil)

Chapter 3 Reasons: Decisions, Orders and Rulings.....................................................4473.1 OSC Decisions, Orders and Rulings ............447 3.1.1 Al-tar Energy Corp. et al. .................................447 3.2 Court Decisions, Order and Rulings............ (nil)

Chapter 4 Cease Trading Orders.............................463 4.1.1 Temporary, Permanent & Rescinding Issuer Cease Trading Orders ...........................463 4.2.1 Temporary, Permanent & Rescinding Management Cease Trading Orders ................463 4.2.2 Outstanding Management & Insider Cease Trading Orders......................................463

Chapter 5 Rules and Policies.................................. (nil)

Chapter 6 Request for Comments ..........................(nil)

Chapter 7 Insider Reporting.................................... 465

Chapter 8 Notice of Exempt Financings................. 683 Reports of Trades Submitted on Forms 45-106F1 and 45-501F1................ 683

Chapter 9 Legislation...............................................(nil)

Chapter 11 IPOs, New Issues and Secondary Financings............................................... 691

Chapter 12 Registrations........................................... 695 12.1.1 Registrants....................................................... 695

Chapter 13 SROs, Marketplaces and Clearing Agencies .................................. 699

13.1 SROs...............................................................(nil) 13.2 Marketplaces .................................................. 699 13.2.1 CNSX Markets Inc. – s. 15.1 of NI 21-101 Marketplace Operation.................... 699 13.3 Clearing Agencies .........................................(nil)

Chapter 25 Other Information ...................................(nil)

Index.............................................................................. 701

January 14, 2011 (2011) 34 OSCB 397

Chapter 1

Notices / News Releases

1.1 Notices

1.1.1 Current Proceedings Before The Ontario Securities Commission

January 14, 2011

CURRENT PROCEEDINGS

BEFORE

ONTARIO SECURITIES COMMISSION

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

Unless otherwise indicated in the date column, all hearings will take place at the following location:

The Harry S. Bray Hearing Room Ontario Securities Commission Cadillac Fairview Tower Suite 1700, Box 55 20 Queen Street West Toronto, Ontario M5H 3S8

Telephone: 416-597-0681 Telecopier: 416-593-8348

CDS TDX 76

Late Mail depository on the 19th Floor until 6:00 p.m.

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

THE COMMISSIONERS

Howard I. Wetston, Chair — HIW James E. A. Turner, Vice Chair — JEAT Lawrence E. Ritchie, Vice Chair — LER Sinan O. Akdeniz — SOA James D. Carnwath — JDC Mary G. Condon — MGC Margot C. Howard — MCH Kevin J. Kelly — KJK Paulette L. Kennedy — PLK Edward P. Kerwin — EPK Vern Krishna __ VK Patrick J. LeSage — PJL Carol S. Perry — CSP Christopher Portner — CP Charles Wesley Moore (Wes) Scott — CWMS

SCHEDULED OSC HEARINGS

January 17-21, 2011

10:00 a.m.

Carlton Ivanhoe Lewis, Mark Anthony Scott, Sedwick Hill, Leverage Pro Inc., Prosporex Investment Club Inc., Prosporex Investments Inc., Prosporex Ltd., Prosporex Inc., Prosporex Forex SPV Trust, Networth Financial Group Inc., and Networth Marketing Solutions

s. 127 and 127.1

H. Daley in attendance for Staff

Panel: JDC/MCH

January 17-21, January 26-February 1, 2011

10:00 a.m.

Maple Leaf Investment Fund Corp., Joe Henry Chau (aka: Henry Joe Chau, Shung Kai Chow and Henry Shung Kai Chow), Tulsiani Investments Inc., Sunil Tulsiani and Ravinder Tulsiani

s. 127

A. Perschy/C. Rossi in attendance for Staff

Panel: CP/PLK

January 17-19 and 21, 2011

10:00 a.m.

January 20, 2011

9:00 a.m.

Merax Resource Management Ltd. carrying on business as Crown Capital Partners, Richard Mellon and Alex Elin

s. 127

H. Craig in attendance for Staff

Panel: PJL/SA

January 24, 2011

10:00 a.m.

Shaun Gerard McErlean and Securus Capital Inc.

s. 127

M. Britton in attendance for Staff

Panel: TBA


January 14, 2011 (2011) 34 OSCB 398

January 25, 2011

2:00 p.m.

Ciccone Group, Medra Corporation, 990509 Ontario Inc., Tadd Financial Inc., Cachet Wealth Management Inc., Vince Ciccone, Darryl Brubacher, Andrew J. Martin., Steve Haney, Klaudiusz Malinowski and Ben Giangrosso

s. 127

P. Foy in attendance for Staff

Panel: CSP

January 25, 2011

3:00 p.m.

Majestic Supply Co. Inc., Suncastle Developments Corporation, Herbert Adams, Steve Bishop, Mary Kricfalusi, Kevin Loman and CBK Enterprises Inc.

s. 37, 127 and 127.1

D. Ferris in attendance for Staff

Panel: CSP

January 26, 2011

10:00 a.m.

Rezwealth Financial Services Inc., Pamela Ramoutar, Chris Ramoutar, Justin Ramoutar, Tiffin Financial Corporation, Daniel Tiffin, 2150129 Ontario Inc. and Sylvan Blackett

s. 127(1) and (5)

A. Heydon in attendance for Staff

Panel: CSP

January 26, 2011

11:00 a.m.

Global Consulting and Financial Services, Crown Capital Management Corporation, Canadian Private Audit Service, Executive Asset Management, Michael Chomica, Peter Siklos (Also Known As Peter Kuti), Jan Chomica, and Lorne Banks

s. 127

M. Boswell in attendance for Staff

Panel: CSP

January 26, 2011

12:00 p.m.

QuantFX Asset Management Inc., Vadim Tsatskin, Lucien Shtromvaser and Rostislav Zemlinsky

s. 127


Panel: CSP

January 27, 2011

2:00 p.m.

Irwin Boock, Stanton Defreitas, Jason Wong, Saudia Allie, Alena Dubinsky, Alex Khodjiaints Select American Transfer Co., Leasesmart, Inc., Advanced Growing Systems, Inc., International Energy Ltd., Nutrione Corporation, Pocketop Corporation, Asia Telecom Ltd., Pharm Control Ltd., Cambridge Resources Corporation, Compushare Transfer Corporation, Federated Purchaser, Inc., TCC Industries, Inc., First National Entertainment Corporation, WGI Holdings, Inc. and Enerbrite Technologies Group

s. 127 and 127.1


Panel: MGC

January 27, 2011

2:30 p.m.

Helen Kuszper and Paul Kuszper

s. 127 and 127.1

U. Sheikh in attendance for Staff

Panel: MGC

January 31 –February 7, February 9-18, February 23, 2011

10:00 a.m.

Anthony Ianno and Saverio Manzo

s. 127 and 127.1

A. Clark in attendance for Staff

Panel: EPK/SA

January 31, February 1-7, February 9-11, 2011

10:00 a.m.

Nest Acquisitions and Mergers, IMG International Inc., Caroline Myriam Frayssignes, David Pelcowitz, Michael Smith, and Robert Patrick Zuk

s. 37, 127 and 127.1

C. Price in attendance for Staff

Panel: TBA


January 14, 2011 (2011) 34 OSCB 399

February 8, 2011

2:30 p.m.

Ameron Oil and Gas Ltd. and MX-IV, Ltd.

s. 127


Panel: TBA

February 11, 2011

10:00 a.m.

Shallow Oil & Gas Inc., Eric O’Brien, Abel Da Silva, Gurdip Singh Gahunia aka Michael Gahunia and Abraham Herbert Grossman aka Allen Grossman

s. 127(7) and 127(8)


Panel: TBA

February 14-18, February 23 –March 1, 2011

10:00 a.m.

Nelson Financial Group Ltd., Nelson Investment Group Ltd., Marc D. Boutet, Stephanie Lockman Sobol, Paul Manuel Torres, H.W. Peter Knoll

s. 127

P. Foy in attendance for Staff

Panel: TBA

February 16, 2011

2:00 p.m.

Global Energy Group, Ltd., New Gold Limited Partnerships, Christina Harper, Howard Rash, Michael Schaumer, Elliot Feder, Vadim Tsatskin, Oded Pasternak, Alan Silverstein, Herbert Groberman, Allan Walker, Peter Robinson, Vyacheslav Brikman, Nikola Bajovski, Bruce Cohen and Andrew Shiff

s. 127


Panel: TBA

February 16, 2011

2:00 p.m.

Global Energy Group, Ltd., New Gold Limited Partnerships, Christina Harper, Vadim Tsatskin, Michael Schaumer, Elliot Feder, Oded Pasternak, Alan Silverstein, Herbert Groberman, Allan Walker, Peter Robinson, Vyacheslav Brikman, Nikola Bajovski, Bruce Cohen and Andrew Shiff

s. 37, 127 and 127.1


Panel: TBA

February 25, 2011

10:00 a.m.

Hillcorp International Services, Hillcorp Wealth Management, Suncorp Holdings, 1621852 Ontario Limited, Steven John Hill, and Danny De Melo

s. 127

A. Clark in attendance for Staff

Panel: TBA

February 28, 2011

11:00 a.m.

North American Financial Group Inc., North American Capital Inc., Alexander Flavio Arconti, and Luigino Arconti

s. 127


Panel: TBA

March 1-7,March 9-11,March 21 and March 23-31, 2011

10:00 a.m.

Paul Donald

s. 127


Panel: TBA

March 7, 2011

10:00 a.m.

Firestar Capital Management Corp., Kamposse Financial Corp., Firestar Investment Management Group, Michael Ciavarella and Michael Mitton

s. 127


Panel: TBA


January 14, 2011 (2011) 34 OSCB 400

March 21 and March 23-31, 2011

May 2 and May 4-16, 2011

10:00 a.m.

York Rio Resources Inc., Brilliante Brasilcan Resources Corp., Victor York, Robert Runic, George Schwartz, Peter Robinson, Adam Sherman, Ryan Demchuk, Matthew Oliver, Gordon Valde and Scott Bassingdale

s. 127


Panel: TBA

March 30, 2011

10:00 a.m.

Oversea Chinese Fund Limited Partnership, Weizhen Tang and Associates Inc., Weizhen Tang Corp., and Weizhen Tang

s. 127 and 127.1


Panel: TBA

April 4 and April 6-7, 2011

April 11-18 and April 20, 2011

10:00 a.m.

Uranium308 Resources Inc., Michael Friedman, George Schwartz, Peter Robinson, and Shafi Khan

s. 127


Panel: TBA

April 4 and April 6-15, 2011

10:00 a.m.

L. Jeffrey Pogachar, Paola Lombardi, Alan S. Price, New Life Capital Corp., New Life Capital Investments Inc., New Life Capital Advantage Inc., New Life Capital Strategies Inc., 1660690 Ontario Ltd., 2126375 Ontario Inc., 2108375 Ontario Inc., 2126533 Ontario Inc., 2152042 Ontario Inc., 2100228 Ontario Inc., and 2173817 Ontario Inc.

s. 127


Panel: TBA

April 5, 2011

2:30 p.m.

Lehman Brothers & Associates Corp., Greg Marks, Kent Emerson Lounds and Gregory William Higgins

s. 127


Panel: TBA

April 11-18, April 20-21 and April 26-29, 2011

10:00 a.m.

Axcess Automation LLC, Axcess Fund Management, LLC, Axcess Fund, L.P., Gordon Alan Driver, David Rutledge, 6845941 Canada Inc. carrying on business as Anesis Investments, Steven M. Taylor, Berkshire Management Services Inc. carrying on business as International Communication Strategies, 1303066 Ontario Ltd. carrying on business as ACG Graphic Communications, Montecassino Management Corporation, Reynold Mainse, World Class Communications Inc. and Ronald Mainse

s. 127

Y. Chisholm in attendance for Staff

Panel: TBA

April 26-27, 2011

10:00 a.m.

Biovail Corporation, Eugene N. Melnyk, Brian H. Crombie, John R. Miszuk and Kenneth G. Howling

s. 127(1) and 127.1

J. Superina, A. Clark in attendance for Staff

Panel: JEAT/PLK/MGC

May 2, May 4-16, 2011

10:00 a.m.

Innovative Gifting Inc., Terence Lushington, Z2A Corp., and Christine Hewitt

s. 127


Panel: TBA


January 14, 2011 (2011) 34 OSCB 401

May 24-30, 2011

10:00 a.m.

Sunil Tulsiani, Tulsiani Investments Inc., Private Investment Club Inc., and Gulfland Holdings LLC

s. 127

J. Feasby/C. Rossi in attendance for Staff

Panel: TBA

June 6-8, 2011

10:00 a.m.

Lehman Brothers & Associates Corp., Greg Marks, Kent Emerson Lounds and Gregory William Higgins

s. 127


Panel: TBA

September 12-19 and September 21-30, 2011

10:00 a.m.

FactorCorp Inc., FactorCorp Financial Inc. and Mark Twerdun

s. 127


Panel: TBA

TBA Yama Abdullah Yaqeen

s. 8(2)

J. Superina in attendance for Staff

Panel: TBA

TBA Microsourceonline Inc., Michael Peter Anzelmo, Vito Curalli, Jaime S. Lobo, Sumit Majumdar and Jeffrey David Mandell

s. 127

J. Waechter in attendance for Staff

Panel: TBA

TBA Frank Dunn, Douglas Beatty, Michael Gollogly

s. 127

K. Daniels in attendance for Staff

Panel: TBA

TBA MRS Sciences Inc. (formerly Morningside Capital Corp.), Americo DeRosa, Ronald Sherman, Edward Emmons and Ivan Cavric

s. 127 and 127(1)


Panel: TBA

TBA Goldpoint Resources Corporation, Lino Novielli, Brian Moloney, Evanna Tomeli, Robert Black, Richard Wylie and Jack Anderson

s. 127(1) and 127(5)


Panel: TBA

TBA Goldbridge Financial Inc., Wesley Wayne Weber and Shawn C. Lesperance

s. 127

C. Johnson in attendance for Staff

Panel: TBA

TBA Borealis International Inc., Synergy Group (2000) Inc., Integrated Business Concepts Inc., Canavista Corporate Services Inc., Canavista Financial Center Inc., Shane Smith, Andrew Lloyd, Paul Lloyd, Vince Villanti, Larry Haliday, Jean Breau, Joy Statham, David Prentice, Len Zielke, John Stephan, Ray Murphy, Alexander Poole, Derek Grigor and Earl Switenky

s. 127 and 127.1

Y. Chisholm in attendance for Staff

Panel: TBA

TBA Gold-Quest International, 1725587 Ontario Inc. carrying on business as Health and Harmoney, Harmoney Club Inc., Donald Iain Buchanan, Lisa Buchanan and Sandra Gale

s. 127


Panel: TBA


January 14, 2011 (2011) 34 OSCB 402

TBA Lyndz Pharmaceuticals Inc., James Marketing Ltd., Michael Eatch and Rickey McKenzie

s. 127(1) and (5)

J. Feasby in attendance for Staff

Panel: TBA

TBA M P Global Financial Ltd., and Joe Feng Deng

s. 127 (1)


Panel: TBA

TBA Shane Suman and Monie Rahman

s. 127 and 127(1)


Panel: JEAT/PLK

TBA Gold-Quest International, Health and Harmoney, Iain Buchanan and Lisa Buchanan

s. 127


Panel: JEAT/CSP/SA

TBA TBS New Media Ltd., TBS New Media PLC, CNF Food Corp., CNF Candy Corp., Ari Jonathan Firestone and Mark Green

s. 127


Panel: TBA

TBA Brilliante Brasilcan Resources Corp., York Rio Resources Inc., Brian W. Aidelman, Jason Georgiadis, Richard Taylor and Victor York

s. 127


Panel: TBA

TBA Juniper Fund Management Corporation, Juniper Income Fund, Juniper Equity Growth Fund and Roy Brown (a.k.a. Roy Brown-Rodrigues)

s. 127 and 127.1


Panel: TBA

TBA Abel Da Silva

s. 127


Panel: TBA

TBA Richvale Resource Corp., Marvin Winick, Howard Blumenfeld, John Colonna, Pasquale Schiavone, and Shafi Khan

s. 127(7) and 127(8)


Panel: TBA

TBA Sextant Capital Management Inc., Sextant Capital GP Inc., Otto Spork, Robert Levack and Natalie Spork

s. 127

T. Center in attendance for Staff

Panel: TBA

TBA Ameron Oil and Gas Ltd., MX-IV Ltd., Gaye Knowles, Giorgio Knowles, Anthony Howorth, Vadim Tsatskin, Mark Grinshpun, Oded Pasternak, and Allan Walker

s. 37, 127 and 127.1


Panel: TBA

TBA David M. O’Brien

s. 37, 127 and 127.1


Panel: TBA


January 14, 2011 (2011) 34 OSCB 403

TBA Paul Azeff, Korin Bobrow, Mitchell Finkelstein, Howard Jeffrey Miller and Man Kin Cheng (a.k.a. Francis Cheng)

s. 127

T. Center/D. Campbell in attendance for Staff

Panel: TBA

TBA Paladin Capital Markets Inc., John David Culp and Claudio Fernando Maya

s. 127


Panel: TBA

ADJOURNED SINE DIE

Global Privacy Management Trust and Robert Cranston

Livent Inc., Garth H. Drabinsky, Myron I. Gottlieb, Gordon Eckstein, Robert Topol

Portus Alternative Asset Management Inc., Portus Asset Management Inc., Boaz Manor, Michael Mendelson, Michael Labanowich and John Ogg

Maitland Capital Ltd., Allen Grossman, Hanouch Ulfan, Leonard Waddingham, Ron Garner, Gord Valde, Marianne Hyacinthe, Diana Cassidy, Ron Catone, Steven Lanys, Roger McKenzie, Tom Mezinski, William Rouse and Jason Snow

LandBankers International MX, S.A. De C.V.; Sierra Madre Holdings MX, S.A. De C.V.; L&B LandBanking Trust S.A. De C.V.; Brian J. Wolf Zacarias; Roger Fernando Ayuso Loyo, Alan Hemingway, Kelly Friesen, Sonja A. McAdam, Ed Moore, Kim Moore, Jason Rogers and Dave Urrutia

Hollinger Inc., Conrad M. Black, F. David Radler, John A. Boultbee and Peter Y. Atkinson

1.1.2 Peak Energy Services Trust – Notice of Correction

In Peak Energy Services Trust (2010), 33 OSCB 10664, published November 19, 2010, an incorrect date “November 2, 2011” appears. This decision should be dated “November 2, 2010”.


January 14, 2011 (2011) 34 OSCB 404

1.1.3 OSC Staff Notice 54-701 – Regulatory Developments Regarding Shareholder Democracy Issues

OSC STAFF NOTICE 54-701 REGULATORY DEVELOPMENTS REGARDING SHAREHOLDER DEMOCRACY ISSUES

The Ontario Securities Commission’s 2010-2011 Statement of Priorities included a commitment to review protections for shareholders’ rights and corporate governance. In addition, the Standing Committee on Government Agencies (SCOGA) March 2010 report on the Ontario Securities Commission (the OSC) recommended that the province of Ontario institute a formal review of democracy in corporate governance in Ontario. The OSC’s submissions to SCOGA noted that the OSC was in the process of a significant review of shareholder democracy.

This Notice provides an update from OSC staff on the current status of our work in the area of shareholder democracy issues. We have identified the following issues as requiring additional review at this time and, potentially, the development of regulatory proposals for reporting issuers:

• slate voting and majority voting for uncontested director elections,

• shareholder advisory votes on executive compensation, and

• the effectiveness of the proxy voting system.

We may identify additional issues as a result of our continued review and developments in the capital markets.

Slate voting and majority voting for uncontested director elections

Slate voting refers to a voting practice by which shareholders are able only to vote in respect of the entire slate of directornominees presented by management. Slate voting is in contrast to individual director voting, where shareholders are able to vote in respect of individual director nominees. Ontario securities legislation does not currently prohibit or restrict slate voting at shareholder meetings, through proxy requirements or otherwise. The dominant voting standard in Ontario is plurality voting, which permits directors to be elected without receiving a majority of votes in their favour.

We are assessing whether reforms to securities law are appropriate to facilitate individual director voting and majority voting for director elections of reporting issuers.

Mandated shareholder advisory votes on executive compensation

The issue of whether shareholders should have a separate advisory vote on executive compensation and “golden parachute” payments (Say-on-Pay) has recently been receiving increased attention from various stakeholders.

Legislation in the United Kingdom, Australia and some European countries already requires public companies to give shareholders a Say-on-Pay, and the United States is expected to impose a similar obligation. In particular, the Dodd-Frank Act requires every public company in the United States to include in the proxy for its first shareholder meeting held on or after January 21, 2011 an advisory Say-on-Pay vote on executive compensation, as well as a separate vote to determine whether subsequent Say-on-Pay votes will be held annually, or at intervals of two or three years. The Dodd-Frank Act also requires any public company seeking shareholder approval of a merger or acquisition at a meeting held on or after January 21, 2011 to include in its proxy an advisory vote on certain “golden parachute” payments to its executive officers in accordance with SEC regulations. On October 18, 2010, the SEC proposed rules to implement the various Say-on-Pay votes required by the Dodd-Frank Act.

While a number of large public companies are voluntarily giving their shareholders a Say-on-Pay, there is no current initiative to implement a mandatory Say-on-Pay regime for all reporting issuers.

Over the past few years, securities regulators have focused on improving executive compensation disclosure to provide shareholders with meaningful information to exercise their voting rights. However, we have also been monitoring international developments in respect of Say-on-Pay and are considering whether securities regulators should consider introducing mandatory Say-on-Pay.

Effectiveness of proxy voting system

We recognize the need for an effective proxy voting system that allows shareholders to make informed voting decisions and ensures that their votes are counted at shareholder meetings. In addition to the issues being considered by the Canadian Securities Administrators (CSA) in relation to its proposed amendments to National Instrument 54-101 Communications with


January 14, 2011 (2011) 34 OSCB 405

Beneficial Owners of Securities of a Reporting Issuer, OSC staff are generally reviewing the proxy voting system to determine whether there is a need for additional reforms and to what extent securities law should address these matters.

Next steps

We intend to coordinate our review and the development of regulatory proposals relating to this review with other members of the CSA.

We also anticipate additional consultations with interested stakeholders on the appropriate scope of any regulatory proposals, their impact on investor protection and the implications for the role of the board of directors.

At this time, we would be pleased to receive any comments on whether it is desirable that staff develop proposals in these areasand the appropriate scope of such proposals. Please send your comments to the address below by March 31, 2011. If you are sending your comments by email, you should also send an electronic file containing the submissions (in Windows format, Microsoft Word).

John Stevenson Secretary Ontario Securities Commission 20 Queen Street West 19th Floor, Box 55 Toronto, Ontario M5H 3S8 Fax: 416-593-2318 Email: [email protected]

Questions:

Please refer your questions to any of:

Naizam Kanji, Deputy Director Corporate Finance, Mergers & Acquisitions 416-593-8060 [email protected]

Winnie Sanjoto, Senior Legal Counsel Corporate Finance 416-593-8119 [email protected]

Frédéric Duguay, Legal Counsel Corporate Finance 416-593-3677 [email protected]

Stephanie Tjon, Legal Counsel Corporate Finance, Mergers & Acquisitions 416-593-3655 [email protected]

January 10, 2011


January 14, 2011 (2011) 34 OSCB 406

1.3 News Releases

1.3.1 OSC Commissioner Appointment: Edward Kerwin

FOR IMMEDIATE RELEASE January 6, 2011

OSC COMMISSIONER APPOINTMENT: EDWARD KERWIN

TORONTO – Ontario Securities Commission (OSC) Chair Howard Wetston, Q.C., today announced the appointment of Edward Kerwin as a Commissioner for a two-year term, effective January 4, 2011. Mr. Kerwin was a partner of McCarthy Tétrault from 1979 until his retirement at the end of 2009.

“Edward Kerwin’s tremendous legal expertise, knowledge of the capital markets and experience as a director will serve the Commission well in carrying out its regulatory, adjudicative and operational responsibilities,” said Mr. Wetston.

Mr. Kerwin has more than 35 years of experience in securities, mergers and acquisitions, and corporate governance law. He has advised major investment dealers on securities offerings by reporting issuers, and has advised the senior management of issuers. Mr. Kerwin has also served on the boards of TMX-listed corporations.

Mr. Kerwin is a graduate of the University of Toronto (B.Sc.) and Osgoode Hall Law School at York University (LLB). He was called to the Ontario bar in 1973 and the Alberta bar in 1981. He completed the Directors Education Program at the Rotman School of Management at the University of Toronto in 2005 and has also attained the ICD.D designation from the Institute of Corporate Directors. Mr. Kerwin has served as a board member for a number of arts organizations and community groups.

As the regulatory body responsible for overseeing the capital markets in Ontario, the OSC administers and enforces securities legislation in the province of Ontario. The OSC’s statutory mandate is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets.

For media inquiries:

Wendy Dey Director, Communications & Public Affairs 416-593-8120

Dylan Rae Media Relations Specialist 416-595-8934

Theresa Ebden Senior Communications Specialist 416-593-8307

For investor inquiries:

OSC Contact Centre 416-593-8314 1-877-785-1555 (Toll Free)


January 14, 2011 (2011) 34 OSCB 407

1.3.2 OSC Issues Update on Regulatory Proposals Related to Shareholder Democracy


OSC ISSUES UPDATE ON REGULATORY PROPOSALS

RELATED TO SHAREHOLDER DEMOCRACY

TORONTO – The Ontario Securities Commission (OSC) is considering regulatory proposals for issuers in Ontario to address certain shareholder democracy issues and is seeking public comment on this initiative.

The OSC today published Staff Notice 54-701 Regulatory Developments Regarding Shareholder Democracy Issues, which updates the status of staff’s review in the following three areas of shareholder democracy:

• Slate voting and majority voting for uncontested director elections: OSC staff are assessing the appropriateness of regulatory requirements that would facilitate individual director voting and majority voting for director elections in Ontario;

• Shareholder advisory votes on executive compensation: OSC staff are reviewing whether securities regulators should consider introducing mandatory say-on-pay requirements for reporting issuers in Ontario; and

• The effectiveness of the proxy voting system: OSC staff are looking at whether additional reforms are needed to the proxy voting system and to what extent securities regulators should address these matters.

“Shareholder democracy has attracted considerable public attention in Canada and other countries, and OSC staff are reviewing our regime to identify the need for reform in this area,” said Leslie Byberg, Director, Corporate Finance at the OSC. “I look forward to consulting with our stakeholders and hearing their comments about potential regulatory proposals.”

Interested parties may comment on Staff Notice 54-701 Regulatory Developments Regarding Shareholder Democracy Issues by March 31, 2011. The notice is available on the OSC website.

Related regulatory initiatives on corporate governance for issuers:

Corporate Governance Disclosure: Published in December 2010, CSA Staff Notice 58-306 2010 Corporate Governance Disclosure Compliance Review1 sets out the results of the review and provides further guidance to issuers on complying with existing requirements.

Executive Compensation: On November 19, 2010, the Canadian Securities Administrators (CSA) published for comment proposed amendments to Form 51-102F6 Statement of Executive Compensation2.

Environmental Disclosure: The CSA published CSA Staff Notice 51-333 Environmental Reporting Guidance3 for reporting issuers on October 27, 2010.

Certification Requirements: CSA Staff Notice 52-327 Certification Compliance Update4 summarizes issuer compliance with the requirements of National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings.

Issuer Communications with Investors: Proposed amendments to National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer5, the related companion policy and related instruments aim to improve procedures for issuer communications with investors who hold securities through intermediaries.

1 http://www.osc.gov.on.ca/en/NewsEvents_nr_20101202_csa-corp-gov-disclosure.htm 2 http://www.osc.gov.on.ca/en/NewsEvents_nr_20101119_csa-amd-disclosure-requirements.htm 3 http://www.osc.gov.on.ca/en/NewsEvents_nr_20101027_csa-guidance-environ-disc.htm 4 http://www.osc.gov.on.ca/en/NewsEvents_nr_20101015_csa-improvement-issuers-cert-req.htm 5 http://www.osc.gov.on.ca/en/NewsEvents_nr_20100409_csa-issuer-comm.htm


January 14, 2011 (2011) 34 OSCB 408






January 14, 2011 (2011) 34 OSCB 409

1.3.3 OSC Announces Continuous Disclosure Advisory Committee Members for 2011-2013

January 13, 2011

OSC ANNOUNCES CONTINUOUS DISCLOSURE ADVISORY COMMITTEE MEMBERS FOR 2011-2013

TORONTO – The Ontario Securities Commission (OSC) announced today the new membership of the Continuous Disclosure Advisory Committee (CDAC).

OSC staff recognize the critical importance of consulting with market participants and other stakeholders in carrying out its mandate. The CDAC advises staff on a range of projects, including the planning, implementation and communication of the OSC’s review program, as well as policy and rule-making initiatives.

Effective immediately, the committee members are:

Abbas Ali Khan Fraser Milner Casgrain LLP Ivan Chittenden Ernst & Young LLP Judy Cotte Canadian Coalition for Good Governance Tom Enright Canadian Investor Relations Institute Eleanor Fritz TMX Group Marc Gold Thomson Reuters Kelly Gorman (Chair) Ontario Securities Commission Andrew Grossman Ogilvy Renault LLP Paul Guthrie Royal Bank of Canada Kathryn Jenkins Fairmont Raffles Hotels International Gale Kelly KPMG LLP A. Dimitri Lascaris Siskinds LLP Philip Maguire Glenidan Consultancy Ltd. Bruce M. Mann Rogers Communications Inc. Anthony Scilipoti Veritas Investment Research Bassem A. Shakeel Magna International Inc. Debra Sisti Institutional Shareholder Services Bob Tait IAMGOLD Corporation

Established in 2002, the CDAC meets on average five times a year. Additional details on consultative committees are available on the OSC website (www.osc.gov.on.ca).

For Media Inquiries: Wendy Dey Director, Communications & Public Affairs 416-593-8120



For Investor Inquiries: OSC Contact Centre 416-593-8314 1-877-785-1555 (Toll Free)


January 14, 2011 (2011) 34 OSCB 410

1.4 Notices from the Office of the Secretary

1.4.1 North American Financial Group Inc. et al.


IN THE MATTER OF THE SECURITIES ACT

R.S.O. 1990, c. S.5, AS AMENDED

AND

IN THE MATTER OF NORTH AMERICAN FINANCIAL GROUP INC.,

NORTH AMERICAN CAPITAL INC., ALEXANDER FLAVIO ARCONTI, AND LUIGINO ARCONTI

TORONTO – The Commission issued an Order in the above named matter which provides that the Temporary Order be extended to March 1, 2011 and the hearing in this matter be adjourned to Monday February 28, 2011 at 11:00 a.m.

A copy of the Order dated January 6, 2011 is available at www.osc.gov.on.ca.

OFFICE OF THE SECRETARY JOHN P. STEVENSON SECRETARY







1.4.2 Al-tar Energy Corp. et al.


IN THE MATTER OF THE SECURITIES ACT,


AND

IN THE MATTER OF AL-TAR ENERGY CORP.,

ALBERTA ENERGY CORP., DRAGO GOLD CORP., DAVID C. CAMPBELL,

ABEL DA SILVA, ERIC F. O’BRIEN AND JULIAN M. SYLVESTER

TORONTO – The Commission issued its Reasons and Decision on Sanctions and Costs and an Order in the above noted matter.

A copy of the Reasons and Decision on Sanctions and Costs and the Order dated January 6, 2011 are available at www.osc.gov.on.ca.

OFFICE OF THE SECRETARY JOHN P. STEVENSON SECRETARY







January 14, 2011 (2011) 34 OSCB 411

Chapter 2

Decisions, Orders and Rulings

2.1 Decisions

2.1.1 Mulvihill Pro-AMS RSP Split Share Corp.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Fund deemed to have ceased to be a reporting issuer – Fund meets requirements set out in CSA Staff Notice 12-307.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10). CSA Staff Notice 12-307 – Applications for a Decision that

an Issuer is not a Reporting Issuer

January 5, 2011

MULVIHILL PRO-AMS RSP SPLIT SHARE CORP. 121 King Street West, Suite 2600 Standard Life Centre Toronto, Ontario M5H 3T9

Dear Sirs/Mesdames:

Re: Mulvihill Pro-AMS RSP Split Share Corp. (the “Applicant”) – Application for a decision under the securities legislation of Ontario, Alberta, Saskatchewan, Manitoba, Quebec, New Bruns-wick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador (the “Jurisdic-tions”) that the Applicant is not a reporting issuer

The Applicant has applied to the local securities regulatory authority or regulator (the “Decision Maker”) in each of the Jurisdictions for a decision under the securities legislation (the “Legislation”) of the Jurisdictions that the Applicant is not a reporting issuer.

As the Applicant has represented to the Decision Maker that:

(a) the outstanding securities of the Applicant, including debt securities, are beneficially owned, directly or indirectly, by fewer than 15 security holders in each of the Jurisdictions in Canada and fewer than 51 security holders in total in Canada;

(b) no securities of the Applicant are traded on a marketplace as defined in National Instrument 21-101 – Marketplace Operation;

(c) the Applicant is applying for a decision that it is not a reporting issuer in all of the jurisdictions in Canada, in which it is currently a reporting issuer; and

(d) the Applicant is not in default of any of its obligations under the Legislation as a reporting issuer,

each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met and orders that the Applicant is not a reporting issuer.

“Darren McKall” Assistant Manager, Investment Funds Branch Ontario Securities Commission


January 14, 2011 (2011) 34 OSCB 412

2.1.2 Catapult Financial Management Inc.

Headnote

One time trade of securities between non-redeeemable investment fund to mutual fund in connection with rollover of flow-through LP – funds managed by unrelated fund managers, but both advised by the same portfolio manager – rollover transaction exempt from the self–dealing prohibitions in paragraph s.13.5(2)(b)(iii), National Instrument 31–103 – Registration Requirements and Exemptions.


National Instrument 31-103 Registration Requirements and Exemptions, ss. 13.5(2)(b)(iii),15.1.

December 14, 2010

IN THE MATTER OF THE SECURITIES LEGISLATION OF

ALBERTA (THE JURISDICTION)

AND

IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF CATAPULT FINANCIAL MANAGEMENT INC.

(THE FILER)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the jurisdiction of the principal regulator (the Legislation) for exemptive relief (the Requested Relief)from Section 13.5(2)(b)(iii) of National Instrument 31-103 – Registration Requirements and Exemptions (NI 31-103), which prohibits a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, to purchase or sell a security from or to the investment portfolio of an investment fund for which a responsible person acts as an adviser, in order to effect the transfer of the investment portfolio of Catapult Energy 2008 FTS Limited Partnership (the Partnership) to Ark Resource Corp. (the Mutual Fund Corp.) in consideration for the issue to the Partnership of series A shares of Ark Catapult Energy Class Fund (the Fund), a class of shares of the Mutual Fund Corp., on a tax-deferred basis followed by the dissolution and winding-up of the Partnership, and in order to effect the transfer of the investment portfolio as part of any future roll-over transaction between a limited partnership and mutual fund

for which the Filer acts as portfolio adviser to each (the Roll-over Transaction).

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

(a) the Alberta Securities Commission is the principal regulator (the Principal Regulator) for this application; and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System(MI 11-102) is intended to be relied upon in each of the provinces of Canada, other than the province of Ontario (the Non-Principal Jurisdic-tions).

Interpretation

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

Representations

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

1. The Partnership is a limited partnership established under the laws of the Province of Alberta and governed by an amended and restated partnership agreement dated October 29, 2008, as amended (the Partnership Agreement).In November, 2008, units of the Partnership were issued pursuant to a prospectus dated October 29, 2008. The proceeds raised by the Partnership pursuant to the prospectus offering were used principally to subscribe for flow-through shares of resource issuers in accordance with the investment criteria and restrictions set out in the Partnership Agreement. As disclosed in its prospectus, the Partnership intends on or before December 31, 2010 to transfer its assets to a mutual fund in exchange for shares of the mutual fund to be distributed to the investors in the Partnership.

2. The Partnership is a “non-redeemable investment fund” as defined under applicable securities laws. Catapult Energy 2008 Inc. (the General Partner),a corporation incorporated under the Business Corporations Act (Alberta), is the general partner of the Partnership and, pursuant to the Partnership Agreement, has the exclusive authority to manage and operate the business and affairs of the Partnership. The Filer was retained by the General Partner on behalf of the Partnership to manage the investment portfolio of the Partnership.

3. The Fund is a class of shares of Ark Resource Corp., a mutual fund corporation incorporated under the Business Corporations Act (Ontario).


January 14, 2011 (2011) 34 OSCB 413

Shares of the Fund are currently offered under a combined simplified prospectus and annual information form each dated November 5, 2010. As disclosed in its simplified prospectus, the Fund was established, in part, to facilitate exchange transactions pursuant to which the assets of one or more limited partnerships are transferred into the Fund on a mutual fund rollover transaction.

4. The Fund is a “mutual fund” as defined under applicable securities laws. Redwood Asset Management Inc. (Redwood) is the manager of the Fund. The Filer was retained by Redwood on behalf of the Fund to manage the investment portfolio of the Fund. Redwood is not affiliated with the Filer, the Partnership or the General Partner.

5. The Filer is registered as a portfolio manager in the Provinces of Alberta and Ontario. The Filer is not currently in default of any requirements of applicable securities legislation.

6. The Partnership is a reporting issuer under the applicable securities legislation of each of the Provinces of British Columbia, Alberta, Saskatch-ewan, Manitoba, Ontario and Quebec and is not on the list of defaulting reporting issuers maintained under such securities legislation.

7. The Fund is a reporting issuer under the applicable securities legislation of each of the Provinces of Canada and is not on the list of defaulting reporting issuers maintained under such securities legislation.

8. The General Partner, on behalf of the Partnership, and Redwood, on behalf of the Fund, intend to effect the Roll-over Transaction on or about December 15, 2010 (the Effective Date), subject to regulatory approval and approval by the unitholders of the Partnership and the satisfaction of all other conditions precedent to the proposed transaction.

9. As required by National Instrument 81-107 – Independent Review Committee for Investment Funds (NI 81-107), an independent review committee (each an IRC) has been appointed for the Partnership, and the Roll-over Transaction has been presented to the IRC for a recommendation. The IRC considered the proposed Roll-over Transaction and provided a positive recommendation on the basis that the Roll-over Transaction would achieve a fair and reasonable result for the Partnership.

10. Unitholders of the Partnership will be asked to approve the Roll-over Transaction at a special meeting of unitholders scheduled to be held on November 26, 2010 (the Meeting). The Roll-over Transaction is not a matter that requires approval by the shareholders of the Fund.

11. No sales charges, redemption fees or other fees or commissions will be payable by unitholders of the Partnership in connection with the Roll-over Transaction.

12. In connection with the Meeting, the General Partner on behalf of the Partnership has sent to the unitholders of the Partnership a notice of special meeting of unitholders and management information circular each dated October 27, 2010 and a related form of proxy (collectively, the Meeting Materials). The Meeting Materials have been filed on SEDAR and were mailed to unitholders of the Partnership on November 1, 2010.

13. Following completion of the Roll-over Transaction, Fund will continue as a publicly offered open-end mutual fund and the Partnership will be wound up and terminated.

14. The Roll-over Transaction will be completed on a tax-deferred basis.

15. The transfer of the investment portfolio of the Partnership to the Fund (and the corresponding purchase of such investment portfolio by the Fund) as a step in the Roll-over Transaction may be considered a purchase or sale of securities, knowingly caused by a registered adviser that manages the investment portfolios of both the Partnership and the Fund, from the Partnership to, or by the Fund from, an investment fund for which a “responsible person” acts as an adviser, contrary to NI 31-103.

16. Completion of the Roll-over Transaction will involve two principal steps as follows:

(a) on the Effective Date, the Partnership will, on a tax-deferred basis, transfer its assets to the Mutual Fund Corp. in exchange for series A shares of the Fund having a value equal to the Partnership’s aggregate net asset value on the Effective Date; and

(b) within 60 days of the Effective Date, the series A shares of the Fund that the Partnership received as consideration for the transfer of its assets will be distributed to the unitholders of the Partnership on a pro rata basis on the dissolution and winding up of the Partnership.

17. The transfer of assets from the Partnership to the Fund will take place at a value determined by common valuation procedures and unitholders of the Partnership will receive series A shares of the Fund, the value of which are equal to the net asset value of the units held by such unitholder in the Partnership.


January 14, 2011 (2011) 34 OSCB 414

18. Unitholders of the Partnership will not be required to take any action in order to be recognized as shareholders of the Fund or to be in a position to redeem the shares of the Fund following completion of the Roll-over Transaction.

19. In the absence of this order, the Filer would be prohibited from purchasing and selling the securities of the Partnership (and thereby transferring its investment portfolio to the Fund) in connection with the Roll-over Transaction.

20. The effect of the Roll-over Transaction is that unit-holders of the Partnership will become share-holders of the Fund and the Fund would then own directly all of the assets previously owned by the Partnership. The assets of the Partnership to be transferred on the Effective Date will be accep-table to the portfolio adviser of the Fund and will conform with the investment objectives the Fund. The General Partner believes that the Roll-over Transaction will be beneficial to unitholders of the Partnership because:

(i) the Roll-over Transaction will provide for liquidity because the shares of the Fund distributed to unitholders will be redeem-able;

(ii) the Roll-over Transaction will provide for a tax-deferral should a unitholder wish to maintain his or her investment until a future date; and

(iii) the alternative of liquidating the assets of the Partnership in a short period of time may have a larger negative impact on the Partnership’s net asset value, in comparison to liquidating the correspond-ing assets of the Fund to fund redemption requests on a shareholder by shareholder basis.

21. Redwood believes that the Roll-over Transaction will be beneficial to shareholders of the Fund because:

(i) the Roll-over Transaction will result in the Fund having a larger portfolio and so should offer improved portfolio diversi-fication to shareholders of the Fund; and

(ii) shareholders of the Fund should benefit from increased economies of scale and lower proportionate fund operating expenses.

22. The assets of the Partnership will be transferred to the Fund in accordance with the steps described above. Because the transfer of assets will take place at a value determined by common valuation procedures and unitholders of the Partnership will receive series A shares of the Fund, the value of

which are equal to the net asset value of the units held by such unitholder in the Partnership, it is the General Partner’s and Redwood’s opinion that there will be no conflict of interest for the Roll-over Transaction to be effected.

23. The General Partner and Redwood believe that the Roll-over Transaction will not adversely affect unitholders of the Partnership or shareholders of the Fund and will in fact be in the best interests of such unitholders and shareholdes. The IRC for the Partnership has considered the proposed Roll-over Transaction and has provided a positive recommendation on the basis that the Roll-over Transaction would achieve a fair and reasonable result for the Partnership.

24. Unitholders of the Partnership will be asked to approve the Roll-over Transaction at the Meeting and it is expected that such unitholders will vote overwhelmingly in favour of the Roll-over Transaction as the benefits of a roll-over transaction are precisely what the unitholders had bargained to receive when they made their investment decision in November 2008 to invest in the Partnership, as disclosed extensively in the prospectus of the Partnership.

25. Shareholders of the Fund are also expecting to receive the benefits of roll-over transactions into the Fund when they made their investment decision to invest in the Fund, as disclosed extensively in the simplified prospectus of the Fund.

26. The Roll-over Transaction would comply with subsection 6.1(2) of NI 81-107 and the Requested Relief would not be necessary, but for the requirement in subsection 6.1(2) that the Partnership and the Fund be managed by the same manager or affiliated managers.

Decision

The Principal Regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the Principal Regulator under the Legislation is that the Requested Relief is granted.

“David McKeller” Director, Market Regulation Alberta Securities Commission


January 14, 2011 (2011) 34 OSCB 415

2.1.3 Encana Corporation

Headnote

Multilateral Instrument 11-102 Passport Systemand National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Issuer allowed to make disclosure of reserves and future net revenue based on US disclosure requirements, at its option – the Issuer’s US disclosure would not meet certain requirements in NI 51-101 – the Issuer is subject to the requirements of NI 51-101 and will provide disclosure compliant with that instrument.


National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

Citation: Encana Corporation, Re, 2011 ABASC 4

January 4, 2011


ALBERTA AND ONTARIO (THE JURISDICTIONS)

AND



AND

IN THE MATTER OF ENCANA CORPORATION (THE FILER)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filer be exempted from the following (collectively, the Exemptions Sought):

(a) sections 5.2 and 5.3 of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101) (the COGEH Relief);

(b) section 5.15(b)(iii) of NI 51-101 (the Transitional F&D Comparative Relief);

(c) item 4.1 of Form 51-101F1 Statement of Reserves Data and Other Information (Form 51-101F1) (the Transitional Reconciliation Relief);

(d) item 5.1 of Form 51-101F1 (the Transitional 2010 PUD Relief); and

(e) paragraphs 5.1(1)(a) and 5.1(2)(a) of Form 51-101F1 (the Transitional 2011/2012 PUD Relief).

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

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the provinces and territories in Canada other than Alberta and Ontario; and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority orregulator in Ontario.


January 14, 2011 (2011) 34 OSCB 416

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102, NI 51-101 or CSA Staff Notice 51-324 Glossary To NI 51-101 Standards of Disclosure for Oil and Gas Activities have the same meaning if used in this decision, unless otherwise defined herein.

Representations

The Filer represents to the Commission that:

1. The head office of the Filer is located in Calgary, Alberta.

2. The Filer is a reporting issuer or equivalent in each of the provinces and territories of Canada and is not in default of securities legislation in any of the provinces or territories of Canada.

3. The Filer has securities registered under the 1934 Act.

4. The Filer is active in capital markets outside Canada where it competes for capital with foreign issuers, and has offered and intends to continue to offer securities in the United States of America (the US).

5. A significant portion of the Filer’s securities are held, or a significant portion of its security holders are located, outside Canada.

6. Differences between the requirements and restrictions under US securities laws and guidance applied by the SEC, as they relate to disclosure concerning reserves and future net revenue, in material required to be filed with the SEC (collectively, the US Disclosure Requirements), and the requirements and restrictions under NI 51-101 are such that, absent relief, some disclosure made in accordance with US Disclosure Requirements would contravene NI 51-101, Form 51-101F1 or both (together, the Instrument).

7. For purposes of making an investment decision or providing investment analysis or advice, a significant portion of the Filer’s investors, lenders and investment analysts in both Canada and the US routinely compare the Filer to issuers engaged in oil and gas activities that are based in the US or other foreign countries, such that comparability of the Filer’s disclosure to that of such foreign-based issuers is of primary relevance to those market participants.

8. Pursuant to a decision dated 29 September 2008 issued in respect of the Filer, the Filer has been permitted to make certain disclosure in accordance with US Disclosure Requirements (the 2008 Relief).

9. Under its terms, the Filer will cease to be able to rely on the 2008 Relief after 1 January 2011 and will become subject to all of the requirements of the Instrument. Temporary transitional relief would facilitate convergence of certain of the Filer’s reserves and future net revenue disclosure practices with the Instrument, without detriment to market participants.

10. The Filer may wish to include, in its disclosure that is subject to Part 5 of NI 51-101, disclosure of reserves and future net revenue prepared in accordance with US Disclosure Requirements (the Filer’s US Disclosure).

Decision

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

Pursuant to section 8.1 of NI 51-101:

(a) the COGEH Relief is granted with respect to the Filer’s US Disclosure (if any), and with respect to the Filer’s disclosure of finding and development costs based on reserves determined in accordance with US Disclosure Requirements (the Filer’s US F&D Disclosure)(if any), as the case may be, provided that:

(i) the Filer describes any material differences between such disclosure and the corresponding disclosure it also makes, as required, under Canadian securities laws (its Required Canadian Disclosure), within or proximate to its Required Canadian Disclosure;


January 14, 2011 (2011) 34 OSCB 417

(ii) in the case of the Filer’s US Disclosure (if any), it:

A. complies with the US Disclosure Requirements;

B. is identified as having been prepared in accordance with US Disclosure Requirements;

C. discloses the effective date of the estimates disclosed therein; and

D. is based on reserves estimates which have been prepared or audited by a qualified reserves evaluator or auditor; and

(iii) in the case of the Filer’s US F&D Disclosure (if any):

A. all proved reserves, and any probable reserves, are determined in accordance with US Disclosure Requirements and are accompanied by a statement to the effect that the proved reserves, and any probable reserves, have been determined in accordance with US Disclosure Requirements; and

B. the Filer provides disclosure in accordance with section 5.15 of NI 51-101 and this disclosure is publicly available to investors;

(b) the Transitional F&D Comparative Relief is granted for the Filer’s disclosure of finding and development costs for the Filer’s financial years ending in 2010, 2011 and 2012, in each case only to the extent that the requisite comparative information for the most recent financial year, the second most recent financial year and the averages for the three most recent financial years is not available to the Filer;

(c) the Transitional Reconciliation Relief is granted for the Required Canadian Disclosure for the Filer’s financial year ending in 2010;

(d) the Transitional 2010 PUD Relief is granted for the Required Canadian Disclosure for the Filer’s financial year ending in 2010, only to the extent that the requisite information about volumes of proved undeveloped reserves or probable undeveloped reserves that were first attributed in each of the most recent three financial years, and the aggregate attributed before that time, is not available to the Filer, provided that the Filer includes in its annual filing under section 2.1 of NI 51-101 an explanation of why this information is omitted; and

(e) the Transitional 2011/2012 PUD Relief is granted for the Required Canadian Disclosure for the Filer’s financial years ending in 2011 and 2012, only to the extent that information about volumes of proved undeveloped reserves or probable undeveloped reserves that were first attributed in each of the most recent three financial years, and the aggregate attributed before that time, is not available to the Filer, provided that the Filer includes in its annual filing under section 2.1 of NI 51-101 an explanation of why this information is omitted.

This decision, as it relates to paragraph (a) above, will terminate on the effective date of any amendment to the Legislation that permits disclosure of the nature contemplated by that paragraph.

For the Commission:

“Glenda A. Campbell, QC” Vice-Chair

“Stephen Murison” Vice-Chair


January 14, 2011 (2011) 34 OSCB 418

2.1.4 Bell Aliant Regional Communications, Limited Partnership

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – application from credit support issuer for a decision exempting issuer from certain continuous disclosure, certification, audit committee, corporate governance,and short form and shelf prospectus qualification requirements – relief granted subject to conditions.


National Instrument 51-102 Continuous Disclosure Obligations, ss. 13.1, 13.4. National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, s. 8.6. National Instrument 52-110 Audit Committees and National Instrument 58-101 Disclosure of Corporate Governance Practices,

ss. 5.1, 8.1. National Instrument 44-101 Short form Prospectus Distributions, ss.2.1, 8.1. National Instrument 44-102 Shelf Distributions, ss. 2.1, 11.1.

December 24, 2010


NOVA SCOTIA AND ONTARIO (the “Jurisdictions”)

AND



AND

IN THE MATTER OF BELL ALIANT REGIONAL COMMUNICATIONS,

LIMITED PARTNERSHIP (the “Filer”)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (collectively, the “Decision Makers”) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the “Legislation”) for:

(a) a decision (the “Continuous Disclosure Relief”) pursuant to Section 13.1 of National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”) that the requirements of NI 51-102 as well as any comparable continuous disclosure requirements under the Legislation that have not yet been repealed or otherwise rendered ineffective as a consequence of the adoption of NI 51-102 (collectively, the “Continuous Disclosure Requirements”) may be satisfied by the Filer by filing the continuous disclosure documents required to be filed by Bell Aliant Amalco (as defined below) and Bell Aliant Inc. (as defined below) under the Continuous Disclosure Requirements;

(b) in the event that the Continuous Disclosure Relief is granted, in order to relieve the Filer from certain additional continuous disclosure obligations, a decision (the “Consequential Disclosure Relief”):

(i) pursuant to Section 8.6 of National Instrument 52-109 – Certification of Disclosure in Issuers' Annual and Interim Filings (“NI 52-109”) that the requirements of NI 52-109 shall not apply to the Filer;

(ii) pursuant to Section 8.1 of National Instrument 52-110 – Audit Committees (“NI 52-110”) that the requirements of Section 5.1 of NI 52-110 shall not apply to the Filer; and

(iii) pursuant to Section 3.1 of National Instrument 58-101 – Disclosure of Corporate Governance Practices (“NI58-101”) that the requirements of Part 2 of NI 58-101 shall not apply to the Filer;


January 14, 2011 (2011) 34 OSCB 419

(c) a decision (the “Short Form Eligibility Relief”) pursuant to Section 8.1 of National Instrument 44-101 – Short Form Prospectus Distributions (“NI 44-101”) exempting the Filer from the requirement set out in Section 2.1 of NI 44-101 that an issuer shall not file a prospectus in the form of Form 44-101F1 – Short Form Prospectus unless the issuer is qualified under any of Sections 2.2 to 2.6 of NI 44-101 (the “Short Form Eligibility Requirements”); and

(d) in the event that the Short Form Eligibility Relief is granted, a decision (the “Shelf Eligibility Relief”) pursuant to Section 11.1 of National Instrument 44-102 – Shelf Distributions (“NI 44-102”) exempting the Filer from the requirements set out in Section 2.1 of NI 44-102 that an issuer shall not file a short form prospectus that is a base shelf prospectus unless the issuer is qualified to do so under NI 44-102 (the “Shelf Eligibility Requirements”).

(together, the “Exemption Sought”)

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

(a) the Nova Scotia Securities Commission is the principal regulator for this application,

(b) the Filer has provided notice that Section 4.7(1) of Multilateral Instrument 11-102 Passport System (“MI 11-102”) is intended to be relied upon in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Newfoundland and Labrador and Prince Edward Island, and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority orregulator in Ontario.

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


1. On July 7, 2006, the former Aliant Inc. (“Old Aliant”), BCE Inc. (“BCE”) and Bell Canada completed the implementation of a plan of arrangement (the “2006 Arrangement”), which involved an exchange of certain business operations between Bell Canada and Old Aliant and the conversion of Old Aliant to an income trust.

2. The 2006 Arrangement resulted in

(i) the combination of Old Aliant’s wireline telecommunications operation in Atlantic Canada, information technology operation and other operations with Bell Canada’s wireline telecommunications operation in certain of its regional territories in Ontario and Québec, now carried on by the Filer (such businesses, the “BellAliant Business”);

(ii) the transfer of Bell Canada’s 63.4% indirect interest in NorthernTel, Limited Partnership and Télébec, Limited Partnership (collectively the “Bell Nordiq Partnerships”) to Bell Aliant Holdings LP (as defined below);

(iii) the transfer of Old Aliant’s wireless operations and its interest in DownEast Ltd. to Bell Canada; and

(iv) the conversion of Old Aliant to an income trust, Bell Aliant Regional Communications Income Fund (the “Fund”), with the outstanding common shares of Old Aliant (other than a number of shares held by BCE) being exchanged for units of the Fund on a one for one basis.

3. Subsequently, in January 2007, the Fund acquired the remaining indirect interest in the Bell Nordiq Partnerships from the public. All but a nominal interest in the Bell Nordiq Partnerships is now held by Bell Aliant Regional Communications Holdings, Limited Partnership (“Bell Aliant Holdings LP”).

4. The foregoing transactions resulted in the creation of a number of entities held directly and indirectly, in whole or in partby the Fund, each of which is a general partner or other holding entity created to facilitate the operation of the Bell Aliant Business by the Filer and the distribution of cash derived from the operations and activities of the Filer and the Bell Nordiq Partnerships to Fund unitholders.


January 14, 2011 (2011) 34 OSCB 420

5. The Fund is an unincorporated, open-ended trust governed by the laws of the Province of Ontario. The Fund was established on March 30, 2006 under a declaration of trust, as amended and restated on July 6, 2006 (the “Declaration of Trust”), in connection with the 2006 Arrangement.

6. The beneficial interests in the Fund are divided into interests of two classes, designated as “Units” and “Special Voting Units”. An unlimited number of Units and Special Voting Units are issuable pursuant to the Declaration of Trust.

7. Each Unit is transferable and represents an equal undivided beneficial interest in any distributions from the Fund and in the net assets of the Fund in the event of a termination or winding up of the Fund. Each Unit entitles the holder thereof to one vote at all meetings of holders of Units and Special Voting Units (collectively, “Voting Unitholders”).

8. Special Voting Units are not entitled to any beneficial interest in any distribution from the Fund or in the net assets of the Fund in the event of a termination or winding up of the Fund. Each Special Voting Unit entitles the holder thereof to one vote at any meeting of Voting Unitholders (subject to customary anti-dilution adjustments).

9. The Units of the Fund are listed on the Toronto Stock Exchange under the symbol “BA.UN”. As of September 30, 2010, 127,384,917 Units were issued and outstanding representing a 55.93% voting interest in the Fund.

10. Pursuant to undertakings provided to the Decision Makers and other Canadian securities regulatory authorities, the Fund files on SEDAR and provides to holders of Units separate annual audited and interim unaudited financial statements and MD&A of Bell Aliant Holdings LP so long as generally accepted accounting principles prohibit the consolidation of financial information of Bell Aliant Holdings LP and the Fund and Bell Aliant Holdings LP (and any of its significant business interests) represents a significant asset of the Fund.

11. Bell Aliant Holdings LP is a limited partnership established under the laws of the Province of Québec on June 29, 2006. The head office of Bell Aliant Holdings LP is located at 6 South Maritime Centre, 1505 Barrington Street, P.O. Box 880 Central, Halifax, Nova Scotia.

12. Bell Aliant Holdings LP is a reporting issuer or the equivalent under the securities legislation of each of the provinces ofCanada, either as a successor issuer to Old Aliant or by virtue of having been deemed or declared to be a reporting issuer under an order dated November 24, 2006 granted by the securities regulatory authorities in the provinces of Saskatchewan, Ontario, New Brunswick and Newfoundland and Labrador.

13. The partnership interests in Bell Aliant Holdings LP include a nominal value general partnership interest (the “Holdings GP Interest”), Class 1 exchangeable limited partnership units (the “Holdings Class 1 Exchangeable LP Units”) and Class 2 limited partnership units (the “Holdings Class 2 LP Units”). The Holdings Class 1 Exchangeable LP Units are exchangeable on a one-for-one basis for Units of the Fund.

14. Bell Aliant Regional Communications Holdings Inc. (“Bell Aliant Holdings GP”) is the general partner of Bell Aliant Holdings LP and holds the Holdings GP Interest.

15. As at September 30, 2010, there were 28,168,803 Holdings Class 1 Exchangeable LP Units and 132,367,606 Holdings Class 2 LP Units outstanding. To the knowledge of the Filer, BCE directly or indirectly holds all of the Holdings Class 1 Exchangeable LP Units. The Fund holds, indirectly, all of the Holdings Class 2 LP Units through Bell Aliant Holdings Trust and Bell Nordiq Trust, each a wholly-owned subsidiary of the Fund.

16. As at September 30, 2010, there were 152,292,479 common shares of Bell Aliant Holdings GP outstanding. To the knowledge of the Filer, BCE directly or indirectly holds 28,168,803 common shares of Bell Aliant Holdings GP. The Fund holds 124,123,676 common shares of Bell Aliant Holdings GP.

17. The Filer is a limited partnership established in connection with the 2006 Arrangement under the laws of the Province of Manitoba on July 5, 2006. The head office of the Filer is located at 6 South Maritime Centre, 1505 Barrington Street, P.O. Box 880 Central, Halifax, Nova Scotia.

18. The partnership interests in the Filer include a nominal value general partnership interest (the “Wireline GP Interest”), Class A limited partnership units (“Wireline Class A Units”) and Class B exchangeable limited partnership units (“Wireline Exchangeable LP Units”). The Wireline Exchangeable LP Units are exchangeable on a one-for-one basis for Units of the Fund.

19. Bell Aliant Regional Communications Inc. (“Bell Aliant GP”) is the general partner of the Filer and holds the Wireline GP Interest. Bell Aliant GP is a wholly-owned subsidiary of Bell Aliant Holdings LP.


January 14, 2011 (2011) 34 OSCB 421

20. As at September 30, 2010, there were 118,526,408 Wireline Class A Units outstanding. Bell Aliant GP and 6583458 Canada Inc., each indirect subsidiaries of the Fund, together hold all outstanding Wireline Class A Units, representing a 62.14% interest in the Filer.

21. As at September 30, 2010, there were 72,205,024 Wireline Exchangeable LP Units outstanding, representing a 37.86% interest in the Filer. To the knowledge of the Filer, BCE, indirectly through its affiliates, holds all of the issued and outstanding Wireline Exchangeable LP Units.

22. The Filer is a reporting issuer or equivalent under the securities legislation of each of the provinces of Canada. To theknowledge of the Filer, the Filer is not in default of securities legislation in any of the jurisdictions of Canada.

23. In aggregate, to the knowledge of the Filer, BCE and Bell Canada beneficially own and control a 43.94% interest in the Fund on a fully diluted basis, almost entirely in the form of Holdings Class 1 Exchangeable LP Units and Wireline Exchangeable LP Units.

24. BCE has been granted certain governance rights in respect of the boards of directors and trustees of the Fund and its related entities (together, the “Fund Entities”). In connection with the 2006 Arrangement, BCE, Bell Canada, Bell Aliant GP and Bell Aliant Holdings GP, among others, entered into a securityholders’ agreement (the “Securityholders’ Agreement”) as a result of which BCE was given the right to appoint or nominate, as applicable, a majority of the directors of Bell Aliant Holdings GP and Bell Aliant GP, and the trustees of the Fund (and a majority of the directors and trustees of certain underlying entities of the Fund), subject to certain conditions, for so long as BCE has not less than a 30% interest in the Fund (on a fully-diluted basis) and certain commercial agreements between the parties are in place. The written consent of BCE is also required, along with a majority vote from the board, prior to undertaking certain matters or transactions for so long as BCE and Bell Canada, directly or indirectly, hold not less than 20% of the Fund Units (on a fully diluted basis). It is expected that BCE and Bell Canada will retain this level of voting ownership and their contractual rights under an amended and restated Securityholders’ Agreement immediately following the Conversion Transaction (as defined below). BCE and Bell Canada do not guarantee any of the obligations of the Fund, Bell Aliant Holdings LP, the Filer or the Bell Nordiq Partnerships.

25. On October 31, 2006 the Minister of Finance (Canada) announced proposals to change the Canadian federal income tax rules governing “specified investment flow-through” entities, including income trusts such as the Fund, which changes would become effective beginning in 2011. Under these proposed rules, which have now been enacted, income trusts and their taxable unitholders will generally be subject to taxation as if such income trusts were corporations.

26. As a result, the Fund, Bell Aliant Holdings LP and the Filer, and certain other Fund Entities, are planning to implement a conversion of the Fund from an income trust structure to a corporate structure by way of a court-approved plan of arrangement pursuant to Section 192 of the Canada Business Corporations Act (the “Conversion Transaction”). The Conversion Transaction was approved by the unitholders of the Fund at an annual and special meeting held on June 16, 2010 (the “Meeting”) and by a final order granted by the Supreme Court of Nova Scotia on June 24, 2010. The Conversion Transaction remains subject to the satisfaction or waiver of a number of conditions, including the obtaining of certain regulatory consents, approvals and exemptions, satisfaction or waiver of the conditions to the effectiveness of the consent given by BCE and Bell Canada and certain other conditions. Assuming the conditions are satisfied or waived, the Conversion Transaction is expected to be implemented on January 1, 2011.

27. Under the Conversion Transaction, the holders of Fund Units will exchange their Fund Units for common shares of a new corporation established by the Fund and named Bell Aliant Inc. (“Bell Aliant Inc.”).

28. Similarly, under the Conversion Transaction, BCE and its affiliates will, indirectly, exchange their Holdings Class 1 Exchangeable LP Units and Wireline Exchangeable LP Units, and the accompanying Special Voting Units (collectively, the “Exchangeable LP Units”) and common shares of Bell Aliant Holdings GP (other than one share to which BCE is entitled pursuant to the Securityholders’ Agreement), for common shares of Bell Aliant Inc.

29. Following the above exchanges, it is intended that certain Fund Entities, including the Fund, Bell Aliant Holdings Trust and Bell Aliant Holdings LP will be wound up to simplify Bell Aliant’s corporate structure. The Filer will remain in existence as the principal operating entity of the Bell Aliant Business. The assets currently held by Bell Aliant Holdings LP will be transferred to a new subsidiary corporation (“LP Subco”) before it is wound up. Bell Aliant Holdings GP will amalgamate with Bell Aliant GP and LP Subco, with the amalgamated corporation (“Bell Aliant Amalco”) continuing as the general partner of the Filer. All of the shares of Bell Aliant Amalco, other than one common share retained by BCE or an affiliate of BCE pursuant to the Securityholders’ Agreement, will be held by Bell Aliant Inc.

30. In connection with the Meeting and the Conversion Transaction, the Fund delivered to unitholders a management information circular dated May 7, 2010 (the “2010 Management Information Circular”). As the Conversion


January 14, 2011 (2011) 34 OSCB 422

Transaction will be a “restructuring transaction” in respect of the Fund, Bell Aliant Holdings LP and the Filer, the 2010 Management Information Circular was prepared in compliance with section 14.2 of Form 51-102F5 Information Circular as applicable to those entities and contained, among other things, a detailed description of the Conversion Transaction and prospectus-level disclosure, including pro forma financial statements reflecting the Conversion Transaction, regarding each of Bell Aliant Inc. and Bell Aliant Amalco.

31. Upon completion of the Conversion Transaction, Bell Aliant Inc. will become the successor reporting issuer to the Fund, and it is intended that the common shares of Bell Aliant Inc. will be listed on the Toronto Stock Exchange (the “TSX”). The TSX has conditionally approved the listing of the common shares of Bell Aliant Inc.

32. Bell Aliant Inc., as successor corporation to the Fund, and Bell Aliant Amalco, as successor corporation to Bell Aliant Holdings GP, Bell Aliant Holdings LP and Bell Aliant GP, will become a party to the Securityholders’ Agreement as a result of the Conversion Transaction. It is intended that the Securityholders’ Agreement will be amended and restated in connection with the Conversion Transaction to reflect the conversion and the continuation of BCE’s and Bell Canada’s rights, including the succession of Bell Aliant Inc. to the Securityholders’ Agreement, the termination and winding up of the Fund and certain of the Fund Entities under the Conversion Transaction, and the exchange of outstanding Fund Units and Exchangeable LP Units for common shares of Bell Aliant Inc.

33. Immediately after the implementation of the Conversion Transaction, it is possible that all or substantially all of the assets of the Bell Nordiq Partnerships, or either of them, (the “Bell Nordiq Business”) may be transferred to the Filer. Such transactions are not part of the Conversion Transaction, would be subject to certain conditions, and may or may not occur.

34. Because BCE is entitled to elect a majority of the board of Bell Aliant GP and Bell Aliant Holdings GP, generally accepted accounting principles do not permit consolidation of the financial information regarding the Filer or Bell Aliant Holdings LP in the Fund’s financial statements. Financial information concerning the Filer is consolidated with that of the Bell Nordiq Partnerships in the financial statements of Bell Aliant Holdings LP. Similarly, it is expected that, following completion of the Conversion Transaction, Bell Aliant Inc. will not be able to consolidate the financial information of Bell Aliant Amalco and the Filer due to BCE’s continuing governance rights.

35. Pursuant to an MRRS Decision Document dated November 10, 2006 (the “Initial CD Relief”), the Filer was granted an exemption from the financial statement and other continuous disclosure requirements of NI 51-102 and certain related requirements of securities laws on the basis set out therein, including that the Filer files (i) continuous disclosure documents (including an annual information form, financial statements and MD&A) of Bell Aliant Holdings LP on its own SEDAR profile, and (ii) selected consolidating summary financial information for Bell Aliant Holdings LP, the Filer and other subsidiaries of Bell Aliant Holdings LP, on its own SEDAR profile.

36. Following completion of the Conversion Transaction, the Filer will continue to exist and to carry on its business activities. Bell Aliant Inc. will be the successor public corporation to the Fund, Bell Aliant Holdings Trust and Bell Nordiq Trust, and will assume and succeed to the obligations of those predecessor entities as guarantors of the indebtedness of the Filer.

37. Following completion of the Conversion Transaction, Bell Aliant Amalco will be the successor corporation to Bell Aliant Holdings GP, Bell Aliant Holdings LP and Bell Aliant GP, and will assume and succeed to the obligations of those predecessor entities as guarantors of the indebtedness of the Filer.

38. The assets and liabilities of the Filer’s enterprise, from both an accounting perspective and economic perspective, are not changing based on the Conversion Transaction. While changes to the consolidated financial statements of Bell Aliant Inc., as successor to the Fund, and Bell Aliant Amalco, as successor to Bell Aliant Holdings LP, will be required to reflect the organizational structure following the Conversion Transaction, primarily to reflect the loss of the tax advantages of the income trust structure and to reflect the exchange by BCE and Bell Canada of their partnership interests in Bell Aliant Holdings LP and Bell Aliant LP for common shares of Bell Aliant Inc., the financial position of each of Bell Aliant Inc. and Bell Aliant Amalco will otherwise be substantially the same as reflected in the Fund and Bell Aliant Holdings LP audited annual consolidated financial statements most recently filed or required to have been filed under Part 4 of NI 51-102 prior to the date of the 2010 Management Information Circular and the Fund and Bell Aliant Holding LP's unaudited interim consolidated financial statements most recently filed or required to have been filed under Part 4 of NI 51-102 prior to the date of the 2010 Management Information Circular.

39. While BCE and its affiliates will exchange their interests in Bell Aliant Holdings LP and the Filer for common shares of Bell Aliant Inc., the Conversion Transaction will not result in a change in the ultimate beneficial ownership of the assets and liabilities of the Filer, from both an accounting perspective and an economic perspective. The Conversion Transaction does not contemplate the acquisition of any additional operating assets or the disposition of any existing


January 14, 2011 (2011) 34 OSCB 423

operating assets and will be an internal reorganization undertaken without economic or voting dilution to the Fund unitholders or additional debt or interest expense.

40. On September 15, 2006, a receipt was issued by the securities regulatory authorities in each province of Canada for a base shelf prospectus (the “2006 Shelf Prospectus”) of the Filer qualifying the distribution of medium term notes (the “Notes”) by the Filer. The 2006 Shelf Prospectus incorporated by reference the historical and pro forma financial statements relating to Bell Aliant Holdings LP and the predecessor entities or businesses of the Filer that were included in the management information circular sent to holders of shares of Old Aliant in connection with their approval of the 2006 Arrangement.

41. Pursuant to an MRRS Decision Document dated November 6, 2008 (the “2008 Prospectus Relief”), the Filer was granted an exemption from the short form and shelf prospectus eligibility requirements in respect of any base shelf prospectus filed by the Filer so long as, among other things, the Filer incorporates by reference in such base shelf prospectus the annual information form and annual and interim financial statements and MD&A of Bell Aliant Holdings LP.

42. On April 28, 2009 a receipt was issued by the securities regulatory authorities in each province of Canada for a renewal base shelf prospectus (as it may be amended, the “2009 Shelf Prospectus”) of the Filer qualifying the distribution of Notes by the Filer through subsequent prospectus or pricing supplements to be filed in connection with the distribution thereof. The 2009 Shelf Prospectus, and the two pricing supplements that have been filed thereunder, incorporated by reference the annual information form and annual and interim financial statements and MD&A of Bell Aliant Holdings LP, and the consolidating summary financial information for Bell Aliant Holdings LP, the Filer and other subsidiaries of Bell Aliant Holdings LP, filed on SEDAR by the Filer, as required by item 12.1(1) of Form 44-101F1 – Short Form Prospectus and the 2008 Prospectus Relief.

43. The Notes are unsecured debt obligations of the Filer ranking pari passu with all other unsecured and unsubordinated indebtedness incurred by the Filer, and are fully and unconditionally guaranteed by Bell Aliant Holdings LP, Bell Aliant Holdings GP, 6583458 Canada Inc., Bell Aliant GP and Bell Aliant Holdings Trust, but not by the Fund.

44. The Filer currently has approximately $2.6 billion aggregate principal amount of Notes outstanding, issued in seven tranches. Following completion of the Conversion Transaction, it is anticipated that the currently outstanding Notes, and those subsequently issued by the Filer under the 2009 Shelf Prospectus and/or subsequent prospectuses, will be guaranteed by Bell Aliant Inc., Bell Aliant Amalco and 6583458 Canada Inc. The Notes will continue to be guaranteed by Bell Aliant Inc. and Bell Aliant Amalco (or their applicable successors under the trust indenture pursuant to which the Notes are issued) for so long as the Notes remain outstanding. The Notes may also from time to time be guaranteed by other affiliates of the Filer (together with 6583458 Canada Inc., the “Designated Affiliates”).

45. Both the Filer and Bell Aliant Holdings LP are reporting issuers under applicable securities laws. Bell Aliant Holdings LP is subject to the continuous disclosure requirements of NI 51-102 and has a “current AIF” (the “Bell Aliant Holdings AIF”) and “current annual financial statements” (the “Bell Aliant Holdings Financial Statements”) (as such terms are defined in NI 44-101). Pursuant to the Initial CD Relief, the Filer has been granted an exemption from the continuous disclosure requirements of NI 51-102, and is instead permitted to file and rely on the continuous disclosure documents filed by Bell Aliant Holdings LP. Likewise, pursuant to the 2008 Prospectus Relief, the Filer has been granted an exemption from the short form and shelf prospectus eligibility requirements and is permitted to rely on the Bell Aliant Holdings AIF and Bell Aliant Holdings Financial Statements for the purposes thereof.

46. Following completion of the Conversion Transaction, Bell Aliant Amalco will be successor to Bell Aliant Holdings LP. The annual information form (the “Bell Aliant Amalco AIF”) and annual and interim financial statements and MD&A (the "Bell Aliant Amalco Financial Statements") of Bell Aliant Amalco, prepared and filed in accordance with NI 51-102 (including on a continuity of interest basis from Bell Aliant Holdings LP) and the consolidating summary financial information for Bell Aliant Amalco, the Filer and other subsidiaries of Bell Aliant Amalco, will be filed on SEDAR by the Filer and incorporated by reference in any subsequent prospectus or pricing supplements filed by the Filer under the 2009 Shelf Prospectus and subsequent prospectuses as required by item 12.1(1) of Form 44-101F1 – Short Form Prospectus.

47. In connection with the implementation of the Conversion Transaction, it is expected that Bell Aliant Amalco will succeed Bell Aliant Holdings LP as a guarantor of the Notes. As is currently the case with Bell Aliant Holdings LP under the Initial CD Relief, the public disclosure of Bell Aliant Amalco will

(i) include all relevant information concerning the operations of the Filer;

(ii) consolidate the financial position and results of operations of the Filer within the Bell Aliant Amalco Financial Statements with respect to the business and affairs of Bell Aliant Amalco; and


January 14, 2011 (2011) 34 OSCB 424

(iii) provide all relevant information to a potential investor concerning the Filer’s ability to pay interest and repay the principal on the Notes, given that repayment of the Notes will be guaranteed by Bell Aliant Amalco.

48. Following completion of the Conversion Transaction, the annual information form (the “Bell Aliant Inc. AIF”) and annual and interim financial statements and MD&A (the "Bell Aliant Inc. Financial Statements") of Bell Aliant Inc., prepared and filed in accordance with NI 51-102 (including on a continuity of interest basis from the Fund) will be filed on SEDAR by the Filer and incorporated by reference in any subsequent prospectus or pricing supplements filed by the Filer under the 2009 Shelf Prospectus and subsequent prospectuses as required by item 12.1(1) of Form 44-101F1 – Short Form Prospectus.

49. The Bell Aliant Amalco Financial Statements and the Bell Aliant Inc. Financial Statements, together with the additional consolidating summary financial information filed by the Filer, will provide investors and potential investors in the Notes with sufficient information to make an informed investment decision concerning the Filer’s ability to pay interest and repay the principal on the Notes when due, given that the Filer’s financial results will be consolidated into the Bell Aliant Amalco Financial Statements and that repayment of the Notes will be guaranteed by Bell Aliant Amalco. The Decision Makers have previously recognized this (with respect to Bell Aliant Holdings LP in the current structure) in granting the Initial CD Relief and 2008 Prospectus Relief.

50. For the purposes of Section 2.3(d) of NI 44-101 the Filer should be permitted to file subsequent prospectus or pricing supplements to the 2009 Shelf Prospectus and (i) until such time as Bell Aliant Amalco files the first Bell Aliant Amalco AIF and Bell Aliant Amalco Financial Statements, to continue to rely on the Bell Aliant Holdings AIF and Bell Aliant Holdings Financial Statements, and (ii) thereafter, to rely on the Bell Aliant Amalco AIF and the Bell Aliant Amalco Financial Statements, each to be filed by the Filer on its SEDAR profile, as if they were the Filer’s “current AIF” and “current annual financial statements”. This would be consistent with the 2009 Shelf Prospectus and the basis on which the Initial CD Relief and 2008 Prospectus Relief were granted to the Filer.

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:

1. in respect of the Continuous Disclosure Relief and the Consequential Disclosure Relief:

(i) Bell Aliant Amalco and Bell Aliant Inc. are each reporting issuers in at least one of the jurisdictions listed in Appendix B of National Instrument 45-102 – Resale of Securities (“NI 45-102”) and are each electronic filers under National Instrument 13-101 – System for Electronic Document Analysis and Retrieval (SEDAR);

(ii) all outstanding voting securities of the Filer are held directly or indirectly by Bell Aliant Amalco or its affiliates;

(iii) Bell Aliant Amalco and Bell Aliant Inc. have each filed all documents they are required to file under NI 51–102;

(iv) the Filer does not issue any securities, and does not have any securities outstanding, other than

(1) debt securities that are guaranteed by Bell Aliant Amalco or one of its affiliates;

(2) securities issued to and held by Bell Aliant Inc., Bell Aliant Amalco, or their respective affiliates;

(3) debt securities issued to and held by banks, loan corporations, loan and investment corporations, savings companies, trust corporations, treasury branches, savings or credit unions, financial services cooperatives, insurance companies or other financial institutions; or

(4) securities issued under exemptions from the prospectus requirement in Section 2.35 of National Instrument 45–106 – Prospectus and Registration Exemptions;

(v) the Filer files in electronic format,

(1) a notice indicating that the Filer is relying on the continuous disclosure documents filed by Bell Aliant Amalco and Bell Aliant Inc. and setting out where those documents can be found for viewing in electronic format, if Bell Aliant Amalco is a reporting issuer in the local jurisdiction; or


January 14, 2011 (2011) 34 OSCB 425

(2) copies of all documents Bell Aliant Amalco and Bell Aliant Inc. are required to file under securities legislation, other than in connection with a distribution, at the same time as the filing by Bell Aliant Amalco or Bell Aliant Inc., as applicable, of those documents with a securities regulatory authority or regulator;

(vi) the Filer issues in Canada a news release and files a material change report for all material changes in respect of the affairs of the Filer that are not also material changes in the affairs of Bell Aliant Amalco;

(vii) the Filer files, in electronic format, in the notice referred to in (v)(1) above or in or with the copy of the Bell Aliant Amalco Financial Statements filed under clause (v)(2) above, either

(1) a statement that the financial results of the Filer are included in the consolidated financial results of Bell Aliant Amalco, if at that time,

(A) the Filer has minimal assets, operations, revenues or cash flows other than those related to the issuance, administration and repayment of the securities described in paragraph (iv), and

(B) each item of the summary financial information of the subsidiaries of Bell Aliant Amalco on a combined basis, other than the Filer, represents less than 3% of the corresponding items on the Bell Aliant Amalco Financial Statements being filed or referred to under paragraph (v), or

(2) for the periods covered by the Bell Aliant Amalco Financial Statements filed, consolidating summary financial information for Bell Aliant Amalco presented with a separate column for each of the following:

(A) Bell Aliant Amalco;

(B) the Filer;

(C) any other subsidiaries of Bell Aliant Amalco on a combined basis;

(D) consolidating adjustments; and

(E) the total consolidated amounts;

such information, the “Bell Aliant Amalco Consolidating Information”;

(viii) the Filer files a corrected notice under (v)(1) above if the Filer filed the notice with the statement contemplated in (vii)(1) above and the Filer can no longer rely on (vii)(1) above;

(ix) in the case of securities that are “designated credit support securities” as defined under section 13.4(1) of NI 51-102, the Filer concurrently sends to all holders of such securities all disclosure materials that are sent to holders of similar debt of Bell Aliant Amalco in the manner and at the time required by the Legislation;

(x) the Notes will continue to be guaranteed by Bell Aliant Inc. and Bell Aliant Amalco for so long as the Notes remain outstanding;

(xi) no person or company other than Bell Aliant Amalco, Bell Aliant Inc. or any Designated Affiliates has provided a guarantee or alternative credit support for the payments to be made under any issued and outstanding securities of the Filer;

(xii) if a Designated Affiliate becomes a guarantor of the Filer’s indebtedness under the Notes, and if the financial results of such Designated Affiliate are included in the consolidated financial results of Bell Aliant Inc., but not in the consolidated financial results of Bell Aliant Amalco, the Filer files, in electronic format, with the copy of the Bell Aliant Inc. Financial Statements filed under clause (v)(2) above,

(1) for the periods covered by the Bell Aliant Inc. Financial Statements filed, consolidating summary financial information for Bell Aliant Inc. presented with a separate column for each of the following:

(A) Bell Aliant Inc.;


January 14, 2011 (2011) 34 OSCB 426

(B) the Designated Affiliates whose financial results are included in the consolidated financial results of Bell Aliant Inc., but not in the consolidated financial results of Bell Aliant Amalco, on a combined basis;

(C) any other subsidiaries of Bell Aliant Inc. whose financial results are included in the consolidated financial results of Bell Aliant Inc., on a combined basis;

(D) consolidating adjustments; and

(E) the total consolidated amounts;

such information, the “Bell Aliant Inc. Consolidating Information”; and

(xiii) the financial results of any Designated Affiliate which becomes a guarantor of the Filer’s indebtedness under the Notes shall be included in the consolidated financial results of either Bell Aliant Inc. or Bell Aliant Amalco, as applicable.

2. in respect of the Short Form Eligibility Relief and the Shelf Eligibility Relief:

(i) at the time the Filer files a prospectus or pricing supplement to the 2009 Shelf Prospectus or any other shelf prospectus or supplement thereto filed by the Filer, the Filer satisfies every qualification criteria set out in Section 2.3 of NI 44-101 and Section 2.3(1)(b) of NI 44-102, other than the qualification criteria set out in paragraph 2.3(d) of NI 44-101;

(ii) any filed prospectus or pricing supplement to the 2009 Shelf Prospectus or any other shelf prospectus or supplement thereto filed by the Filer incorporates by reference:

(1) (a) the Bell Aliant Amalco AIF, the Bell Aliant Amalco Financial Statements and the Bell Aliant Amalco Consolidating Information, or (b) prior to the filing by the Filer thereof, the Bell Aliant Holdings AIF, the Bell Aliant Holdings Financial Statements and the equivalent consolidating summary financial information for Bell Aliant Holdings LP and the 2010 Management Information Circular;

(2) any other document of Bell Aliant Amalco that would be required to be incorporated by reference into a short form prospectus or a prospectus or pricing supplement to the 2009 Shelf Prospectus or another shelf prospectus under Section 11.1 of Form 44-101F1 if Bell Aliant Amalco were the issuer under the 2009 Shelf Prospectus or another short form prospectus, as required by item 12.1(1) of Form 44-101F1 – Short Form Prospectus;

(3) (a) the Bell Aliant Inc. AIF, the Bell Aliant Inc. Financial Statements and the Bell Aliant Inc. Consolidating Information (if applicable), or (b) prior to the filing by the Filer thereof, the most recent annual and interim financial statements and annual information form of the Fund, and the 2010 Management Information Circular,

(4) any other document of Bell Aliant Inc. that would be required to be incorporated by reference into a short form prospectus or a prospectus or pricing supplement to the 2009 Shelf Prospectus or another shelf prospectus under Section 11.1 of Form 44-101F1 if Bell Aliant Inc. were the issuer under the 2009 Shelf Prospectus or another short form prospectus, as required by item 12.1(1) of Form 44-101F1 – Short Form Prospectus;

(iii) the Filer complies with all the conditions of the Continuous Disclosure Relief and the Consequential Disclosure Relief.

“Kevin G. Redden” Director, Corporate Finance Nova Scotia Securities Commission


January 14, 2011 (2011) 34 OSCB 427

2.1.5 PIMCO Canada Corp. et al.

Headnote

National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions – exemption from section 2.7(1)(a) ofNI 81-102 to permit interest rate and credit derivative swaps and currency forwards with a remaining term to maturity of greaterthan 3 years – exemption from section 2.8(1) of NI 81-102 to the extent that cash cover is required in respect of specified derivatives to permit the funds to cover specified derivative positions with: certain bonds, debentures, notes or other evidencesof indebtedness – exemption from sections 2.8(1)(d) and (f)(i) NI 81-102 to permit the funds when they open or maintain a long position in a standardized future or forward contract or when they enter into or maintain an interest rate swap position and duringthe periods when the Funds are entitled to receive payments under the swap, to use as cover, an option to sell an equivalent quantity of the underlying interest of the standardized future, forward or swap – relief granted from section 2.6 of NI 81-102 toallow mutual fund to short sell up to 20% of net assets, subject to certain conditions – exemption from section 2.1(1) of NI 81-102 to permit global bond mutual funds to investment more than 10 percent of net assets in debt securities issued by a foreign government or supranational agency.


National Instrument 81-102 Mutual Funds, ss. 2.1(1), 2.6(a), 2.6(c), 2.7(1), 2.8(1), 6.1(1).

January 7, 2011


ONTARIO (THE JURISDICTION)

AND



AND

IN THE MATTER OF PIMCO CANADA CORP.

(PIMCO CANADA)

AND

THE FUNDS LISTED IN SCHEDULE A (COLLECTIVELY THE FILERS)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption relieving the funds set out in Schedule A (the New Funds) and future mutual funds managed by PIMCO Canada and sub-advised by an affiliate of PIMCO Canada that are subject to National Instrument 81-102 Mutual Funds (NI 81-102) (the Future Funds) (the New Funds and the Future Funds, respectively, together, the Funds and individually, a Fund) from the following sections of National Instrument 81-102 (NI81-102):

(a) the requirement in section 2.7(1)(a) of NI 81-102, in order to permit the Funds to enter into interest rate swaps or creditdefault swaps and, if the transaction is for hedging purposes, currency swaps and forwards, in all cases with a remaining term to maturity of greater than three years;

(b) the requirement in section 2.8(1) of NI 81-102 in order to permit each of the Funds to cover specified derivative positions with:


January 14, 2011 (2011) 34 OSCB 428

(i) any bonds, debentures, notes or other evidence of indebtedness that are liquid (collectively, Fixed Income Securities) provided they have a remaining term to maturity of 365 days or less and have approved credit rating; or

(ii) floating rates evidences of indebtedness;

(c) the requirement in sections 2.8(1)(d) and 2.8(1)(f)(i) of NI 81-102 in order to permit each of the Funds when it

(i) opens or maintains a long position in a debt-like security that has a component that is a long position in a forward contract or in a standardized future or forward contract, or

(ii) enters into or maintains a swap position and during the periods when the Fund is entitled to receive payments under the swap,

to use as cover, a right or obligation to sell an equivalent quantity of the underlying interest of the standardized future, forward or swap;

(d) the requirement in sections 2.6(a), 2.6(c) and 6.1(1) of NI 81-102 in order to permit each of the Funds to:

(i) sell securities short;

(ii) provide a security interest over a Fund’s assets; and

(iii) deposit any part of a mutual fund’s assets with an entity other than the mutual fund’s custodian;

(e) the requirement in section 2.1(1) in order to permit PIMCO Global Advantage Strategy Bond Fund (Canada) to invest:

(A) up to 20% of its net assets in securities issued or guaranteed as to principal and interest by any government or agency thereof (other than a government or agency of Canada or a province thereof or of the United States, in which investment by all of the Funds is unrestricted) or any permitted supranational agency (as defined in NI 81-102), provided that the securities have a minimum AA rating by Standard & Poor’s Rating Service or the equivalent rating by any other rating agency listed in NI 81-102;

(B) up to 35% of its net assets in securities issued or guaranteed as to principal and interest by any government or agency thereof (other than a government or agency of Canada or a province thereof or of the United States, in which investment by all of the Funds is unrestricted) or by any permitted supranational agency (as defined in NI 81-102), provided that the securities have a minimum AAA rating by Standard & Poor’s Rating Service or the equivalent rating by any other rating agency listed in NI 81-102;

provided that sub-paragraphs (A), (B) and (C) of this paragraph (e) cannot be combined for any one issuer.

Paragraph (a) is referred to as the Swap and Currency Derivatives Requested Relief, paragraph (b) is referred to as the Fixed Income and FRN Cover Requested Relief, paragraph (c) is referred to as the Put Option Cover Requested Relief,paragraph (d) is referred to as the Short Selling Requested Relief, and paragraph (e) is referred to as the Sovereign Government and Supranational Entity Concentration Requested Relief, and collectively, the Swap and Currency Derivatives Requested Relief, Cover Requested Relief, Short Selling Requested Relief and Sovereign Government and Supranational Entity Concentration Requested Relief shall be referred to as the Requested Relief.

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

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filers have provided notice that section 4.7 of Multilateral Instrument 11-102 Passport System (NI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decisions unless otherwise defined.


January 14, 2011 (2011) 34 OSCB 429

Representations

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

PIMCO Canada

1. PIMCO Canada is registered in the Province of Ontario as an investment fund manager (Manager), adviser in the category of portfolio manager, a commodity manager and an exempt market dealer. PIMCO Canada is an indirect, wholly owned subsidiary of Pacific Investment Management Company LLC (PIMCO). PIMCO is an adviser registered under the Investment Advisers Act in the US. PIMCO Canada’s head office is in Toronto, Ontario.

2. PIMCO Canada is the Manager and the portfolio manager of the Funds. Under its agreement with the Funds, PIMCO Canada is authorized to, and will, appoint PIMCO as sub-adviser to the Funds in accordance with OSC Rule 35-502 Non-Resident Advisors, section 7.3.

3. PIMCO is one of the world's largest fixed income managers. Organized in 1971, PIMCO provides investment management and advisory services to private accounts of institutional and individual clients and to mutual funds around the world.

4. The Filers are not in default of securities legislation in any jurisdiction.

The Funds

5. The New Funds are mutual fund trusts being established under the laws of Ontario and any future Funds will be mutual fund trusts. The New Funds will be offered by an initial simplified prospectus in all the Jurisdictions, with the preliminary prospectus expected to be filed in November 2010 and future funds will also be offered by prospectus. As a result, all of the Funds will become reporting issuers and will be subject to the requirements of NI 81-102.

6. The investment objective and strategies of each Fund will be set out in the Fund's simplified prospectus. In most cases, the primary investment objective is to invest in, or gain exposure to, fixed income securities, such as bonds and debentures issued by governments, supranational entities and corporations, or a combination of fixed income and equities. In other cases, the investment objective is focused primarily on equities but the Fund retains the right to include a portion in fixed income either routinely or under conditions determined by PIMCO Canada.

7. In all cases, the Funds will be permitted to use specified derivatives to hedge against losses caused by changes in securities prices, interest rates, exchange rates and/or other risks. The Funds may also use specified derivatives for non-hedging purposes under their investment strategies in order to invest indirectly in securities or financial markets or to gain exposure to other currencies, provided the use of specified derivatives is consistent with the particular Fund’s investment objective. When specified derivatives are used for non-hedging purposes, the Funds are subject to the cover requirements of NI 81-102.

Extended Term to Maturity for Interest Rate Swaps, Credit Default Swaps and currency Swaps or Forwards

8. Paragraph 2.7(1)(a) of NI 81-102 prohibits mutual funds from entering into swaps or currency forwards with terms to maturity of greater than three years, or greater than five years if the contract provides the fund with a right to eliminate its exposure within three years. PIMCO Canada seeks the ability to enter into interest rate swaps and credit default swaps for the Funds or, if the transaction is for hedging purposes, currency forwards on behalf of the Funds without a restriction as to term of the swap or forward.

9. In order to achieve adequate diversification at a reasonable cost while the Funds remain small, PIMCO Canada anticipates utilizing credit default swaps (CDS) on indexes of credit default swaps (CDX). CDX indexes are linked to the number of the most highly liquid CDS, and therefore permit quick and cost effective diversification to high yield and emerging market issuers.

10. Fixed income investments have risks which include (but are not limited to) interest rate risk, credit risk and currency risk. These risks can be controlled or mitigated through the use of over-the-counter (OTC) derivatives. Interest rate risk may be managed by interest rate swaps, credit risk is managed by credit default swaps and currency risk by currency swaps or forwards.

11. The term of a swap equals the maturity of its exposure, in contrast to other OTC derivatives transactions, such as options and certain other types of forwards, where the contract term and maturity of the underlying security are not related. As a result, there is no restriction under NI 81-102, for example, on a forward referencing an underlying interest having a term of 10 years whereas there is a restriction if the derivative is in the form of a swap.


January 14, 2011 (2011) 34 OSCB 430

12. Credit default swaps have a similar risk profile to their reference entity (corporate or sovereign bonds), or in the case ofa CDX, to an average of all the reference entities in the CDX index. The term of a CDS imparts credit risk similar to that of a bond of the reference entity with the same term. The Funds will not be able to achieve the same sensitivity to credit risk as their underlying benchmarks by using CDSs with a maximum term of 3 years because their underlying benchmarks may have an average term of greater than 3 years. There is no term restriction in NI 81-102 when investing directly in the reference entities (corporate or sovereign bonds).

13. The term of a swap equals the maturity of its exposure, in contrast to other over-the-counter transactions, such as options and forwards, where the contract term and maturity of the underlying security are not related. There is no restriction under NI 81-102, for example, on a forward with an underlying interest having a term of 10 years whereas there is a restriction if the derivative is in the form of a swap.

14. The interest rate swap market, CDS market and currency forward and swap markets are very large and liquid.

15. With respect to foreign exchange, the Bank for International Settlements reported that the notional amount of outright forwards and foreign exchange swaps outstanding was U.S. $23 trillion as at December, 2009. For comparative purposes, the S&P 500 had an estimated market capitalization of U.S. $10.3 trillion on such date. The Bank for International Settlements also reported that the average daily turnover of OTC foreign exchange was U.S. $4 trillion during April 2010. The average daily turnover of outright forwards and foreign exchange swaps totaled U.S. $2 trillion during such period. For comparative purposes, the daily trading during April, 2010 was, in the case of the New York Stock Exchange, approximately U.S. $75 billion. In the case of the Toronto Stock Exchange, the most recent data shows average daily turnover of approximately CAD $5 billion. Daily trading is many times larger for currencies and currency forwards than for well-known equity exchanges.

16. It is also not market convention to have a transaction with a 5 year term (subject to a right to eliminate the exposure within 3 years) as required by NI 81-102 and, as a result, from time to time, this off-market feature may subject a fund to less efficient pricing.

17. The interest rate swap market, CDS markets and currency forward and swap markets are very large and liquid.

18. Although there is no exchange through which swap and forward contracts are traded, there is a very active OTC market in these contracts. In order to unwind a position, a counterparty could find a new counterparty willing to take over its contract at a fair market price and get the other counterparty to approve the new counterparty. Market participants can also unwind their positions in interest rate swaps and currency swaps or forwards by simply closing out the swap or forward with the counterparty at market value. In the case of CDS, the counterparty can either close out the CDS with the counterparty at market value or it can trade with another counterparty by assigning the swap to the other counterparty (with the consent of the original counterparty).

19. Credit risk exposure to a counterparty on an interest rate swap transaction is generally a small fraction of the underlying notional exposure, equal to the cumulative price change since the inception of the swap. Even that small risk will be mitigated because the counterparty will be required to have an approved credit rating prescribed by NI 81-102 and PIMCO Canada requires collateral transfer. In addition, in situations where the counterparty does not meet PIMCO Canada’s own internal criteria, PIMCO Canada requires that credit support be provided by an entity meeting such criteria.

20. Potential credit exposure to a counterparty on a CDS or a CDX is equal to the notional exposure to any issuer in the index who has defaulted, or in the case of a single name CDS, equal to the full notional exposure. As is the case with interest rate swaps, this exposure is mitigated because the counterparty will be required to have an approved credit rating prescribed by NI 81-102, exposure to any individual counterparty is limited by NI 81-102 and PIMCO Canada requires collateral transfer. In addition, in situations where the counterparty does not meet PIMCO Canada’s own internal criteria, PIMCO Canada requires that credit support be provided by an entity meeting such criteria.

21. By permitting the Funds to enter into swaps and forwards that have terms beyond 3 years they will have a broader set of investment, it increases the possibility for the Funds to (i) increase returns, due to the fact that the opportunities and (ii)to target exposures that might not otherwise be available in the cash bond markets or could not be achieved as efficiently as in the cash bond markets. Further, the use of swaps and forwards with terms beyond 3 years enables the Funds to effect hedging transactions that are more tailored which should help mitigate underlying investment risks associated with investing in fixed income investments, it enables the Funds to effect hedging transactions that are more efficient and tailored.


January 14, 2011 (2011) 34 OSCB 431

Using Fixed Incomes Securities and Floating Rate Debt as Cover

Cash Cover

22. The purpose of the cash cover requirement in NI 81-102 is to prohibit a mutual fund from leveraging its assets when using certain specified derivatives and to ensure that the mutual fund is in a position to meet its obligations on the settlement date. This is evident from the definition of “cash cover”, which is defined as certain specific portfolio assets of the mutual fund that have not been allocated for specific purposes and that are available to satisfy all or part of the obligations arising from a position in specified derivatives held by the mutual fund. Currently, the definition of “cash cover” includes six different categories of securities, including certain evidences of indebtedness (cash equivalents and commercial paper) that generally have a remaining term to maturity of 365 days or less and that have an approved credit rating or are issued or guaranteed by an entity with an approved credit rating (collectively, short-term debt).

23. In addition to the securities currently included in the definition of cash cover, the Funds would also like to invest in Fixed Income Securities and/or floating rate evidences of indebtedness for purposes of satisfying their cash cover requirements.

Fixed Income Securities

24. While the money market instruments that are currently permitted as cash cover are highly liquid, these instruments typically generate very low yields relative to longer dated instruments and similar risk alternatives.

25. Other fixed income securities with remaining terms to maturity of less than 365 days and approved credit ratings are also highly liquid but provide the potential for higher yields.

26. The definition of cash cover addresses regulatory concerns of interest rate risk and credit risk by limiting the terms of the instruments and requiring the instruments to have an approved credit rating. It is submitted that by permitting the Funds to use for cash cover purposes Fixed Income Securities with a remaining term to maturity of 365 days or less and an approved credit rating, the regulatory concerns are met, since the term and credit rating will be the same as other short-term debt instruments currently permitted to be used as cash cover.

Floating Rate Evidences of Indebtedness

27. Floating rate evidences of indebtedness, also known as floating rate notes (FRNs), are debt securities issued by the federal or provincial governments, the Crown or other corporations and other entities with floating interest rates that reset periodically, usually every 30 to 90 days. Although the term to maturity of FRNs can be more than 365 days, the Funds propose to limit their investment in FRNs used for cash cover purposes to those that have interest rates that reset at least every 185 days.

28. Allowing the Funds to use FRNs for cash cover purposes could increase the rate of return earned by each of the Fund's investors without reducing the credit quality of the instruments held as cash cover. The frequent interest rate resets mitigate the risk of investing in FRNs as cash cover. For the purposes of money market funds under NI 81-102 meeting the 90 days dollar-weighted average term to maturity, the term of a floating rate evidence of indebtedness is the period remaining to the date of the next rate setting. If a FRN resets every 365 days, then the interest rate risk of the FRN is about the same as a fixed rate instrument with a term to maturity of 365 days.

29. Financial instruments that meet the current cash cover requirements have low credit risk. The current cash cover requirements provide that evidences of indebtedness of issuers, other than government agencies, must have approved credit ratings. As a result, if the issuer of FRNs is an entity other than a government agency, the FRNs used by the Funds for cash cover purposes will have an approved credit rating as required by NI 81-102.

30. Given the frequent interest rate resets, the nature of the issuer and the adequate liquidity of FRNs, the risk profile andthe other characteristics of FRNs are similar to those of short-term debt, which constitute cash cover under NI 81-102.

Using Put Options as Cover for Long Positions in Futures, Forwards and Swaps

31. Sections 2.8(1)(d) and 2.8(1)(f)(i) of NI 81-102 do not permit covering the position in long positions in futures and forwards and long positions in swaps for a period when a fund is entitled to receive payments under the swap, in whole or in part with a right or obligation to sell an equivalent quantity of the underlying interest of the future, forward or swap.In other words, those sections of NI 81-102 do not permit the use of put options or short future positions to cover long future, forward or swap positions.


January 14, 2011 (2011) 34 OSCB 432

32. Regulatory regimes in other countries recognize the hedging properties of options for all categories of derivatives, including long positions evidenced by standardized futures or forwards or in respect of swaps where a fund is entitled to receive payments from the counterparty, provided they are covered by an amount equal to the difference between the market price of a holding and the strike price of the option that was bought or sold to hedge it. NI 81-102 effectively imposes the requirement to overcollateralize, since the maximum liability to the fund under the scenario described is equal to the difference between the market value of the long and the exercise price of the option. Overcollateralization imposes a cost on a fund.

33. Section 2.8(1)(c) of NI 81-102 permits a mutual fund to write a put option and cover it with buying a put option on an equivalent quantity of the underlying interest of the written put option. This position has similar risks as a long position in a future, forward or swap and therefore, PIMCO Canada submits that the Funds should be permitted to cover a long position in a future, forward or swap with a put option or short future position.

Derivative Policies and Risk Management

34. PIMCO Canada sets and reviews the investment objectives and overall investment policies of the Funds, which will allow for trading in derivatives. The derivative contracts entered into by or on behalf of the Funds must be in accordance with the investment objectives and strategies of each of the Funds and in compliance with NI 81-102.

35. Pursuant to its agreement with PIMCO appointing it as the portfolio adviser to the Funds, PIMCO Canada will permit PIMCO to use derivatives for the Funds under certain conditions and limitations in order to gain exposure to financial markets or to invest indirectly in securities or other assets. Such agreement will also require PIMCO to use risk management processes to monitor and measure the risks of all portfolio holdings within the Funds, including derivatives positions.

36. As manager of the Funds, PIMCO Canada will supervise and oversee PIMCO in the use of derivatives as investments within the Funds and PIMCO Canada will put in place policies and procedures which will set out supervision and oversight processes to ensure that the use of derivatives is adequately monitored and derivatives risk is appropriately managed.

37. The simplified prospectus and annual information form of the Funds will include disclosure of the nature of the exemptions granted in respect of the Funds.

38. Without these exemptions, the Funds will not have the flexibility to enhance yield and to manage more effectively the exposures under specified derivatives.

Short Selling

39. PIMCO Canada proposes that each Fund be authorized to engage in a limited, prudent and disciplined amount of short selling. PIMCO Canada is of the view that the Funds could benefit from the implementation and execution of a controlled and limited short selling strategy. This strategy would operate as a complement to the Funds’ current primary discipline of buying securities with the expectation that they will appreciate in market value.

40. Short sales will be made only if they are consistent with each Fund’s investment objectives.

41. In order to effect a short sale, a Fund will borrow securities from either its custodian or a dealer (in either case, a Borrowing Agent), which Borrowing Agent may be acting either as principal for its own account or as agent for other lenders of securities.

42. The Fund will be required to deposit Fund assets with the Borrowing Agent as security in connection with the short sale transaction in accordance with usual industry practice.

43. All short sales will be effected through market facilities through which the securities sold short are normally bought andsold and will be sold short within normal trade settlement periods for the market in which the short sale is effected. Securities will be sold short for cash only.

44. The securities sold short will not be “illiquid assets” as such term is defined in NI 81-102, and will be securities that are either:

(a) listed and posted for trading on a stock exchange; and

(i) the issuer of the security has a market capitalization of not less than CDN $100 million, or the equivalent thereof, at the time the short sale is effected; or


January 14, 2011 (2011) 34 OSCB 433

(ii) the Fund’s portfolio advisor has pre-arranged to borrow the securities for the purpose of such sale; or

(b) bonds, debentures or other evidences of indebtedness of, or guaranteed by, any issuer.

45. Each Fund will hold cash cover (as defined in NI 81-102) to cover its obligations in relation to the short sale.

46. Each Fund will maintain appropriate internal controls regarding its short sales including written policies and procedures,risk management controls and proper books and records of all short sales and Fund assets deposited with Borrowing Agents as security.

Sovereign and Supranational Debt

47. The investment objective of PIMCO Global Advantage Strategy Bond Fund (Canada) (Global Advantage Fund) is to seek a total return which exceeds that of its benchmark consistent with prudent investment management.

48. Global Advantage Fund will invest primarily in non-Canadian fixed income securities, such as bonds and debentures issued by governments and corporations, mortgage and other asset-backed securities, obligations of international and supranational entities or by obtaining exposure to such securities.

49. The Concentration Restriction prevents Global Advantage Fund from purchasing a security of an issuer or entering into a specified derivatives transaction, if immediately after the transaction, more than 10 percent of the net assets of Global Advantage Fund would be invested in securities of any issuer.

50. The Concentration Restriction does not apply to a purchase of a "government security", which, under NI 81-102, means an evidence of indebtedness issued, or fully and unconditionally guaranteed as to principal and interest, by any of the government of Canada, the government of a jurisdiction or the government of the United States of America.

51. Prior to the adoption of the Euro, there were greater diversification opportunities as the European debt markets comprised several currency-denominated issuers (including well developed and liquid markets for Lira, Franc, and Mark issued debt securities), each impacted by national government monetary policies. In contrast, today the European debt markets are dominated by Euro-currency denominated debt which comprises approximately 40% of the world government bond market and the coordinated monetary policy followed by the members of the European Union has effectively reduced diversification opportunities.

52. PIMCO Canada believes that the exemption sought will be in the best interests of Global Advantage Fund for the following reasons:

(a) it will provide more flexibility and more favourable prospects for Global Advantage Fund because Global Advantage Fund will be better able to compose a global fixed income portfolio that will best achieve its investment objectives;

(b) in certain jurisdictions, the securities of supranational agencies or governments may be the only liquid or rated debts available for investment; and

(c) higher concentration limits may allow Global Advantage Fund to benefit from investment efficiencies and reduced transaction costs as certain foreign government treasury offerings are more readily available for investment and trades can be completed faster in certain markets that are more readily accessible to foreign investment.

Decision

The principal regulator is satisfied that the decision meets the test contained in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Requested Relief is granted provided that:

1. in the case of the Fixed Income and FRN Cover Requested Relief:

(a) the Fixed Income Securities have a remaining term to maturity of 365 days or less and have an “approved credit rating” as defined in NI 81-102;

(b) the FRNs meet the following requirements:


January 14, 2011 (2011) 34 OSCB 434

(i) the floating interest rates of the FRNs reset no later than every 185 days;

(ii) the FRNs are floating rate evidences of indebtedness with the principal amounts of the obligations that will continue to have a market value of approximately par at the time of each change in the rate to be paid to the holders of the evidences of indebtedness;

(iii) if the FRNs are issued by a person or company other than a government or “permitted supranational agency” as defined in NI 81-102, the FRNs must have an “approved credit rating” as defined in NI 81-102;

(iv) if the FRNs are issued by a government or permitted supranational agency, the FRNs have their principal and interest fully and unconditionally guaranteed by (I) the government of Canada or the government of a jurisdiction in Canada; or (II) the government of the United States of America, the government of one of the states of the United States of America, the government of another sovereign state or a “permitted supranational agency” as defined in NI 81-102, if, in each case, the FRN has an “approved credit rating” as defined in NI 81-102; and

(v) the FRNs meet the definition of “conventional floating rate debt instrument” in section 1.1 of NI 81-102;

2. in the case of the Put Option Cover Requested Relief:

(a) when a Fund enters into or maintains a swap position for periods when the Fund would be entitled to receive fixed payments under the swap, the Fund holds:

(i) cash cover, Fixed Income Securities or FRNs (collectively, Cover), in an amount that, together with margin on account for the swap and the market value of the swap, is not less than, on a daily mark-to-market basis, the underlying market exposure of the swap;

(ii) a right or obligation to enter into an offsetting swap on an equivalent quantity and with an equivalent term and Cover that together with margin on account for the position is not less than the aggregate amount, if any, of the obligations of the Fund under the swap less the obligations of the Fund under such offsetting swap; or

(iii) a combination of the positions referred to in clauses (a) and (b) that is sufficient, without recourse to other assets of the Funds, to enable the Funds to satisfy its obligations under the swap; and

(b) when a Fund opens or maintains a long position in a debt-like security that has a component that is a long position in a forward contract, or in a standardized future or forward contract, the Fund holds:

(i) cash cover, Fixed Income Securities or FRNs (collectively, Cover), in an amount that, together with margin on account for the specified derivative and the market value of the specified derivative, is not less than, on a daily mark-to-market basis, the underlying market exposure of the specified derivative;

(ii) a right or obligation to sell an equivalent quantity of the underlying interest of the future or forward contract, and Cover that together with margin on account for the position, is not less than the amount, if any, by which the price of the future or forward contract exceeds the strike price of the right or obligation to sell the underlying interest; or

(iii) a combination of the positions referred to in subparagraphs a) and b) that is sufficient, without recourse to other assets of the Fund, to enable the Fund to acquire the underlying interest of the future or forward contract;

(c) a Fund will not (i) purchase a debt-like security that has an option component or an option, or (ii) purchase or write an option to cover any positions under section 2.8(1)(b), (c), (d), (e) and (f) of NI 81-102, if immediately after the purchase or writing of such option, more than 10% of the net assets of the Fund, taken at market value at the time of the transaction, would be in the form of (1) purchased debt-like securities that have an option component or purchased options, in each case, held by the Fund for purposes other than hedging, or (2) options used to cover any positions under section 2.8(1)(b), (c), (d), (e) and (f) of NI 81-102;

3. in the case of the Swap and Currency Derivatives Requested Relief, Fixed Income and FRN Cover Requested Relief, and the Put Option Cover Requested Relief, each of the Funds shall disclose the nature and terms of the Cover


January 14, 2011 (2011) 34 OSCB 435

Requested Relief in the Fund's prospectus under the Investment Strategies section and in the Fund's annual information form;

4. in the case of the Short Selling Requested Relief:

(a) any short sales made by the Fund will be subject to compliance with the investment objectives of the Fund;

(b) any short sales will be effected through market facilities through which the securities sold short are normally bought and sold;

(c) the security sold short is sold for cash;

(d) no proceeds from short sales by the Fund will be used by the Fund to purchase long positions in securities other than cash cover;

(e) the Short Selling Requested Relief will not apply to a Fund that is classified as a money market fund;

(f) the aggregate market value of all securities sold short by the Fund does not exceed 20% of the total net assets of the Fund on a daily marked-to-market basis;

(g) the aggregate market value of all securities of an issuer that are sold short by the Fund shall not exceed 5% of the total net assets of the Fund on a daily marked-to-market basis;

(h) the Fund will hold “cash cover” (as defined in NI 81-102) in an amount, including the Fund assets deposited with Borrowing Agents as security in connection with short sale transactions, that is at least 150% of the aggregate market value of all securities sold short by the Fund on a daily marked-to-market basis;

(i) except where the Borrowing Agent is the Fund’s custodian, where the Fund deposits Fund assets with a Borrowing Agent as security in connection with a short sale transaction, the amount of Fund assets deposited with the Borrowing Agent does not, when aggregated with the amount of the Fund assets already held by the Borrowing Agent as security for outstanding short sale transactions of the Fund, exceed 10% of the total net assets of the Fund, taken at market value as at the time of the deposit;

(j) for short sale transactions in Canada, every dealer that holds Fund assets as security in connection with short-sale transactions by the Fund shall be a registered dealer in Canada and a member of a self-regulatory organization that is a participating member of the Canadian Investment Protection Fund;

(k) for short sale transactions outside of Canada, every dealer that holds Fund assets as security in connection with short sale transactions by the Fund shall:

(i) be a member of a stock exchange, and, as a result, is subject to a regulatory audit; and

(ii) have a net worth in excess of the equivalent of $50 million determined from its most recent audited financial statements that have been made public;

(l) the security interest provided by a Fund over any of its assets that is required to enable the Fund to effect short sale transactions, is made in accordance with industry practice for that type of transaction and relates only to obligations arising under such short sale transactions;

(m) the Fund will maintain appropriate internal controls regarding its short sales including written policies and procedures, risk management controls and proper books and records;

(n) prior to conducting any short sales, the Fund discloses in its simplified prospectus a description of: (i) short selling, (ii) how the Fund intends to engage in short selling, (iii) the risks associated with short selling, and (iv) in the Investment Strategy section of the simplified prospectus, the Fund’s strategy and this exemptive relief;

(o) prior to conducting any short sales, the Fund discloses in its annual information form the following information:

(i) that there are written policies and procedures in place that set out the objectives and goals for short selling and the risk management procedures applicable to short selling;


January 14, 2011 (2011) 34 OSCB 436

(ii) who is responsible for setting and reviewing the policies and procedures referred to in the preceding paragraph, how often the policies and procedures are reviewed, and the extent and nature of the involvement of the board of directors of PIMCO Canada in the risk management process;

(iii) whether there are trading limits or other controls on short selling in place and who is responsible for authorizing the trading and placing of limits or other controls on the trading;

(iv) whether there are individuals or groups that monitor the risks independent of those who trade; and

(v) whether risk measurement procedures or simulations are used to test the portfolio under stress conditions;

(p) prior to conducting any short sales, either the Fund’s initial simplified prospectus and annual information form and each renewal thereof has included the disclosure in the Fund’s simplified prospectus and annual information form as outlined in paragraphs (n) and (o) above or the Fund has provided to its securityholders not less than 60 days’ written notice that discloses the Fund’s intent to begin short selling transactions and such disclosure in the Fund’s simplified prospectus and annual information form;

5. in the case of the Sovereign Government and Supranational Entity Debt Concentration Requested Relief:

(a) the securities that are purchased pursuant to this Relief are traded on a mature and liquid market;

(b) the acquisition of the securities purchased pursuant to this Relief is consistent with the fundamental investment objective of each Fund;

(c) the simplified prospectus of the Fund discloses the additional risks associated with the concentration of net assets of the Funds in securities of fewer issuers, such as the potential additional exposure to the risk of default of the issuer in which the Fund has so invested and the risks, including foreign exchange risks, of investing in the country in which that issuer is located; and

(d) the simplified prospectus of the Funds discloses, in the investment strategy section, the details of the Sovereign Government and Supranational Entity Debt Concentration Requested Relief along with the conditions imposed and the type of securities covered by this Relief.

“Darren McKall” Assistant Manager, Investment Funds Branch Ontario Securities Commission


January 14, 2011 (2011) 34 OSCB 437

SCHEDULE A

PIMCO Canadian Total Return Bond Fund PIMCO Canadian Real Return Bond Fund PIMCO Canadian Short-Term Bond Fund PIMCO Canadian Long-Term Bond Fund PIMCO Monthly Income Fund (Canada) PIMCO Global Advantage Strategy Bond Fund (Canada) PIMCO Global Balanced Fund (Canada) PIMCO EqS Pathfinder Fund™ (Canada)


January 14, 2011 (2011) 34 OSCB 438

2.1.6 Baytex Energy Trust

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – exemption granted from the requirement to file a notice declaring its intention to be qualified to file a short form prospectus at least 10 business days prior to the filing of a preliminary short form prospectus – exemption granted to a successor issuer from the requirement to deliver personal information forms for individuals for whom the trust previously delivered personal information form – exemptions granted in connection with a proposed internal reorganization pursuant to which its business operations will be conducted through a corporate entity – the arrangement does not contemplate the acquisition of any additional interest in any operating assets or the disposition of any of the trust’s existing interests in operating assets.


National Instrument 44-101 Short Form Prospectus Distributions, s. 8.1.

Citation: Baytex Energy Trust, Re, 2010 ABASC 596

December 23, 2010


ALBERTA AND ONTARIO (the Jurisdictions)

AND



AND

IN THE MATTER OF BAYTEX ENERGY TRUST

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation):

(a) exempting Baytex Energy Corp. (New Baytex),which will be the successor issuer to the Filer as a result of the exchange of common shares of New Baytex (New Baytex Shares) for the units of the Filer (Trust Units), and the dissolution of the Filer into New Baytex pursuant to the terms of a plan of arrangement (the Arrangement) under the

Business Corporations Act (Alberta) (the ABCA),from the requirement applicable to New Baytex contained in section 2.8 of National Instrument 44-101 Short Form Prospectus (NI 44-101) to file a notice declaring its intention to be qualified to file a short form prospectus at least 10 business days prior to the filing of its first preliminary short form prospectus after the notice (the Prospectus Relief); and

(b) exempting New Baytex from the requirement under subsection 4.1(b) of NI 44-101 for New Baytex to file a Personal Information Form and Authorization to Collect, Use and Disclose Personal Information in the form attached as Appendix A to National Instrument 41-101 General Prospectus Requirements (NI 41-101) for each director and executive officer of New Baytex at the time of filing a preliminary short form prospectus for whom the Filer has previously delivered any of the documents described in paragraphs 4.1(b)(i)(E) through (G) of NI 44-101 at the time of filing such preliminary short-form prospectus (the PIF Relief).


(a) the Alberta Securities Commission is the principal regulator for this Application;

(b) the Filer has 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, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island; 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 National Instrument 14-101 Definitionsand MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations


The Filer, the Corporation, and New Baytex

The Filer

1. The Filer is open-ended investment trust established under the laws of Alberta pursuant to the third amended and restated trust indenture dated May 20, 2008, as amended from time to


January 14, 2011 (2011) 34 OSCB 439

time. The principal office of the Filer is located in Calgary, Alberta.

2. The Filer is a reporting issuer or the equivalent under the securities legislation of each of the provinces of Canada. The Filer is not in default of securities legislation in any jurisdiction of Canada.

3. The authorized capital of the Filer includes an unlimited number of Trust Units. As at December 10, 2010, there were 113,273,987 Trust Units issued and outstanding.

4. The Trust Units are listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE).

5. The Filer has filed a “current AIF” and “current annual financial statements” (as such terms are defined in NI 44-101) for the financial year ended December 31, 2009.

The Corporation

6. Baytex Energy Ltd. (the Corporation) is a corporation amalgamated under the laws of Alberta. The principal office of the Corporation is located in Calgary, Alberta.

7. The Corporation is a reporting issuer or the equivalent under the securities legislation of each of the provinces of Canada and is not in default of applicable securities legislation in any jurisdiction of Canada.

8. The authorized capital of the Corporation includes an unlimited number of common shares. All common shares of the Corporation are held by the Filer.

9. The common shares of the Corporation are not listed or posted for trading on any exchange or quotation and trade reporting system.

New Baytex

10. New Baytex is a corporation incorporated under the laws of Alberta. The principal office of New Baytex is located in Calgary, Alberta.

11. New Baytex is not a reporting issuer in any jurisdiction and is not in default of applicable securities legislation in any jurisdiction of Canada. Following completion of the Arrangement, New Baytex, as the successor issuer to the Filer, will be a reporting issuer in each of the provinces of Canada.

12. New Baytex is authorized to issue an unlimited number of New Baytex Shares. The Corporation is the sole holder of all the issued and outstanding New Baytex Shares.

13. None of the New Baytex Shares will be listed or posted for trading on any exchange or quotation system and trade reporting system. Applications will be made to have New Baytex Shares to be issued in connection with the Arrangement listed on the TSX and the NYSE.

Arrangement

14. As part of the Arrangement, (i) the Trust Units will be exchanged for New Baytex Shares on a one for one basis; (ii) the Filer will be dissolved into New Baytex; and (iii) New Baytex will own all of the assets of the Filer and assume all of the existing liabilities of the Filer.

15. Following the completion of the Arrangement: (i) the sole business of New Baytex will be the current business of the Filer; (ii) New Baytex will be a reporting issuer or the equivalent under the securities legislation in each of the provinces of Canada; and (iii) the New Baytex Shares will, subject to approval by the TSX and NYSE, be listed on the TSX and NYSE, respectively.

16. The Arrangement does not contemplate the acquisition of any additional operating assets or the disposition of any existing operating assets and will not result in a change in the ultimate beneficial ownership of the assets and liabilities of the Filer. The Arrangement will be an internal reorganization undertaken without dilution to the holders of Trust Units (Unitholders) or additional debt or interest expense.

17. Pursuant to the interim order of the Court of Queen's Bench of Alberta (the Interim Order)dated October 26, 2010 issued under subsection 193(4) of the ABCA, the Unitholders were required to approve the Arrangement at a special meeting of the Unitholders (the Meeting). The Arrange-ment was required to be approved by not less than two-thirds of the votes cast by Unitholders at the Meeting. The Meeting took place December 9, 2010 and the Arrangement was approved by the requisite majority of Unitholders pursuant to the Interim Order.

18. The Arrangement is being undertaken to reorganize the Filer following the enactment by the federal government of rules in respect of the tax treatment of specified investment flow-through trusts. Pursuant to the Arrangement, the Filer will be reorganized into New Baytex, a public company, which together with its subsidiaries, will carry on the business presently carried on by the Filer through its subsidiaries, and will own, directly or indirectly, all of the existing assets and assume all of the existing liabilities of the Filer.

19. The rights of the Unitholders in respect of New Baytex following the Arrangement will be substantively equivalent to the rights the Unit-


January 14, 2011 (2011) 34 OSCB 440

holders currently have in respect of the Filer and their relative interest in and to the business carried on by New Baytex will not be affected by the Arrangement.

20. The only securities that will be distributed to the Unitholders pursuant to the Arrangement will be New Baytex Shares.

Prospectus Relief

21. The Filer is qualified to file a prospectus in the form of a short form prospectus pursuant to subsection 2.2 of NI 44-101 and is deemed to have filed a notice of intention to be qualified to file a short form prospectus under subsection 2.8(4) of NI 44-101.

22. The Filer anticipates that New Baytex may wish to file a preliminary short form prospectus following the completion of the Arrangement, relating to the offering or potential offering of securities (including New Baytex Shares or other securities) of New Baytex.

23. Pursuant to the qualification criteria set forth in section 2.2 of NI 44-101, following the Arrangement, New Baytex will be qualified to file a short form prospectus pursuant to NI 44-101.

24. Notwithstanding section 2.2 of NI 44-101, subsection 2.8(1) of NI 44-101 provides that an issuer is not qualified to file a short form prospectus unless it has filed a notice declaring its intention to be qualified to file a short form prospectus at least 10 business days prior to the issuer filing its first preliminary short form prospectus.

25. In anticipation of the filing of a preliminary short form prospectus, and assuming the Arrangement has been completed, New Baytex intends to file a notice of intention to be qualified to file a short form prospectus (the Notice of Intention)following completion of the Arrangement. In the absence of the Prospectus Relief, New Baytex will not be qualified to file a preliminary short form prospectus until ten business days from the date upon which the Notice of Intention is filed.

26. The short form prospectus of New Baytex will incorporate by reference the documents that would be required to be incorporated by reference under item 11 of Form 44-101F1 in a short form prospectus of New Baytex.

PIF Relief

27. Prior to July 28, 2009, the date of the most recently filed preliminary short form prospectus by the Filer, the Filer had previously delivered the documents described in subparagraphs 4.1(b)(i)(E) through (G) of NI 44-101 for each

individual acting in the capacity of director or executive officer of the Corporation, the administrator of the Filer, at such time (each a Filer PIF).

Decision


The decision of the Decision Makers under the Legislation is that:

(a) the Prospectus Relief is granted, provided that at the time New Baytex files its Notice of Intention, New Baytex meets the require-ments of section 2.2 of NI 44-101; and

(b) the PIF Relief is granted, provided that:

(i) each individual who is a director or executive officer of New Baytex at the time of a prospectus filing by New Baytex and for whom the Filer has previously delivered a Filer PIF authorizes the Decision Makers, in respect of a prospectus filing by New Baytex, to collect, use and disclose the personal information that was previously provided in the Filer PIF;

(ii) New Baytex, if requested by the Decision Maker, promptly delivers such further information from each individual referred to in paragraph (i) above as the Decision Maker may require; and

(iii) the PIF Relief will terminate in any jurisdiction in which the decision is in effect on the effective date of any change to subsection 4.1(b)(i) of NI 44-101.

“Cheryl McGillivray” Manager, Corporate Finance


January 14, 2011 (2011) 34 OSCB 441

2.1.7 GMIncome & Growth Fund

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Closed-end investment fund exempt from prospectus requirements in connection with the sale of units repurchased from existing security holders pursuant to market purchase programs and by way of redemption of units by security holder subject to conditions.

Ontario Statues Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53 and 74(1).

National Instruments Cited

National Instrument 45-102 Resale of Securities, s. 2.8(2).

Citation: GMIncome & Growth Fund, Re, 2011 ABASC 14

January 10, 2011


ALBERTA AND ONTARIO (the Jurisdictions)

AND



AND

IN THE MATTER OF GMINCOME & GROWTH FUND

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filer be exempted from the requirement contained in the Legislation to file a prospectus (the Prospectus Requirement) in connection with the distribution of units of the Filer (Units) that have been repurchased by the Filer pursuant to the Programs (as that term is defined below) (the Exemption Sought).


(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Northwest Territories, Nunavut and 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 National Instrument 14-101 Definitionsand MI 11-102 have the same meaning if used in this decision, unless otherwise defined in this decision.

Representations


1. The Filer is an unincorporated closed-end investment trust established under the laws of the Alberta by a declaration of trust made as of September 29, 2010 (as amended from time to time, the Declaration of Trust).

2. The Filer is not a “mutual fund” as defined in the Legislation because the holders of the Units (Unitholders) are not entitled to receive on demand an amount computed by reference to the value of a proportionate interest in the whole or in part of the net assets of the Filer as contemplated by the definition of “mutual fund” in the Legislation.

3. The Filer is a reporting issuer or equivalent in each of the provinces and territories of Canada and is not in default of any of the requirements of securities legislation applicable to it.

4. The Units are listed and posted for trading on the Toronto Stock Exchange (the TSX). As of November 16, 2010, there were 2,595,000 Units issued and outstanding.

5. Each whole Unit carries entitlements to one vote at all meetings of Unitholders and to participate equally with all other Units with respect to any and all distributions made by the Filer.

6. Middlefield Limited (the Manager), which was incorporated pursuant to the BusinessCorporations Act (Alberta), is the manager and the trustee of the Filer.

7. In order to enhance liquidity and to provide market support for the Units, pursuant to the Declaration of Trust and the terms and conditions that attach to the Units and subject to compliance with any applicable regulatory requirements, the Filer is


January 14, 2011 (2011) 34 OSCB 442

obligated to purchase (the Mandatory Purchase Program) any Units offered on the TSX (or any successor thereto) if, at any time after the closing of the Filer’s initial public offering, the price at which Units are then offered for sale on the TSX (or any successor thereto) is less than 95% of the net asset value of the Filer (Net Asset Value) per Unit as at the close of business in Toronto, Ontario on the immediately preceding business day, provided that the maximum number of Units that the Filer is required to purchase pursuant to the Mandatory Purchase Program in any calendar quarter is 1.25% of the number of Units outstanding at the beginning of each such period.

8. The Filer is not required to purchase Units pursuant to the Mandatory Purchase Program if:

(a) the Manager reasonably believes that the Filer would be required to make an additional distribution in respect of the year to Unitholders of record on December 31 of such year in order that the Filer will generally not be liable to pay income tax under the Income Tax Act (Canada) after the making of such purchase;

(b) in the opinion of the Manager, the Filer lacks the cash, debt capacity or other resources to make such purchases; or

(c) in the opinion of the Manager, such purchases would adversely affect the ongoing activities of the Filer or the remaining Unitholders.

9. The Declaration of Trust provides that, subject to applicable regulatory requirements and limitations, the Filer shall have the right, but not the obligation, exercisable in its sole discretion, at any time, to purchase outstanding Units in the market at prevailing market prices (the Discretionary Purchase Program).

10. Subject to the Filer’s right to suspend redemptions, Units may be surrendered for redemption (the Redemption Program):

(a) on the last business day of each month (a Monthly Redemption Date) to the principal office of the Filer’s registrar and transfer agent (the Transfer Agent) in Toronto, Ontario by no later than 5:00 p.m. (Toronto time) on a date which is at least 20 business days prior to the Monthly Redemption Date, in order to be redeemed at a redemption price per Unit equal to the lesser of:

(i) 94% of the weighted average trading price of the Units on the TSX during the 15 trading days

preceding the Monthly Redemp-tion Date; and

(ii) the “closing market price” of the Units (generally determined as the closing market price of the Units on the principal market on which the Units are quoted for trading on the Monthly Redemp-tion Date); and

(b) on May 31 of each year commencing in 2012, to the principal office of the Transfer Agent in Toronto, Ontario on a date that is at least 20 business days prior to the last day of May of such year at a redemption price per Unit equal to the Redemption Price per Unit (as defined in the Prospectus).

11. At the sole discretion of the Manager and subject to the receipt of any necessary regulatory approvals, the Manager may allow additional redemptions from time to time of Units (Additional Redemptions), provided that the holder thereof shall be required to use the full amount received on such redemption to purchase treasury securities of a new or existing fund promoted by Middlefield Limited or an affiliate thereof then being offered to the public by prospectus.

12. Purchases of Units made by the Filer under the Mandatory Purchase Program, Discretionary Purchase Program, Redemption Program, and Additional Redemptions (collectively, the Programs) are exempt from the issuer bid requirements of the Legislation pursuant to exemptions contained therein.

13. On the Filer redeeming or otherwise acquiring any Units pursuant to the Programs the Filer shall not be considered to be a Unitholder and, pending the sale of such Units, the rights, privileges and obligations attached to issued and outstanding Units shall be suspended and such Units shall not be considered to be issued and outstanding Units. Upon the sale of one or more Units that have been so previously redeemed or otherwise acquired by the Filer, such Units shall then bear the rights and privileges and be subject to the obligations of the Declaration of Trust and shall be considered to be issued and outstanding for the purposes of the Declaration of Trust.

14. The Filer desires to, and the Declaration of Trust provides that the Filer shall have the ability to, sell through one or more securities dealers, Units that have been repurchased by the Filer pursuant to the Programs (Repurchased Units), subject to obtaining all necessary regulatory approvals.

15. In order to effect sales of Repurchased Units by the Filer, the Filer intends to sell, in its sole


January 14, 2011 (2011) 34 OSCB 443

discretion and at its option, any Repurchased Units purchased by it under the Programs primarily through one or more securities dealers and through the facilities of the TSX (or such other exchange on which the Units are then listed).

16. All Repurchased Units will be held by the Filer for at least 4 months after the repurchase thereof by the Filer (the Hold Period), prior to the resale thereof.

17. The sale of Repurchased Units will not have a significant adverse impact on the market price of the Units.

18. Repurchased Units that the Filer does not resell within 12 months after the Hold Period (or 16 months after the date of repurchase) will be cancelled by the Filer.

19. Prospective purchasers of Repurchased Units will have access to the Filer’s continuous disclosure, which will be filed on SEDAR.

20. The Legislation provides that a trade by or on behalf of an issuer in previously issued securities of that issuer have been purchased by that issuer is a distribution and, as such, is subject to the Prospectus Requirement. In the absence of the Exemption Sought, any sale by the Filer of Repurchased Units is a distribution that is subject to the Prospectus Requirement.

Decision


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

(a) the Repurchased Units are sold by the Filer through the facilities of and in accordance with the regulations and policies of the TSX or of any other exchange on which the Units are then listed;

(b) the Filer complies with the insider trading restrictions imposed by securities legisla-tion with respect to the trades of Repur-chased Units; and

(c) the Filer complies with the conditions of paragraphs 1 through 5 of subsection 2.8(2) of National Instrument 45-102 Resale of Securities with respect to the sale of the Repurchased Units.

For the Commission:

“William Rice, QC” Chair

“Stephen Murison” Vice-Chair


January 14, 2011 (2011) 34 OSCB 444

2.2 Orders

2.2.1 North American Financial Group Inc. et al. – ss. 127(7), 127(8)



AND

NORTH AMERICAN FINANCIAL GROUP INC., NORTH AMERICAN CAPITAL INC., ALEXANDER

FLAVIO ARCONTI, AND LUIGINO ARCONTI

ORDERSections 127(7) & 127(8)

WHEREAS on the 10th day of November, 2010, pursuant to subsections 127(1) and 127(5) of the Securities Act, RSO 1990, c S.5, as amended (the “Act”), the Ontario Securities Commission (the “Commission”) made an order against North American Financial Group Inc. (“NAFG”), North American Capital Inc. (“NAC”), Alexander Flavio Arconti (“Flavio”) and Luigino Arconti (“Gino”);

AND WHEREAS on the 10th day of November, 2010, pursuant to subsection 127(6) of the Act, the Commission ordered that the following Temporary Order shall expire on the 15th day after its making unless extended by order of the Commission;

AND WHEREAS by Commission Order dated November 10, 2010, the Commission made the following temporary order (the “Temporary Order”);

1. pursuant to clause 2 of subsection 127(1) of the Act, that trading in the securities of NAFG and NAC shall cease;

2. pursuant to clause 2 of subsection 127(1) of the Act, that NAFG, NAC, Flavio and Gino cease trading in all securities; and

3. that pursuant to clause 3 of subsection 127(1) of the Act, that the exemptions contained in Ontario securities law do not apply to NAFG, NAC, Flavio or Gino.

AND WHEREAS by Commission Order dated November 23, 2010, the Temporary Order was amended such that Flavio and Gino may trade in securities for their own accounts or their parents’ accounts or for the accounts of their registered retirement savings plan or registered income fund (as defined in the Income Tax Act (Canada)) provided that they trade through accounts opened in their parents’ names or either of their names only;

AND WHEREAS the Temporary Order as amended was extended to December 3, 2010;

AND WHEREAS the Temporary Order was extended to January 10, 2011;

AND WHEREAS the Commission is of the opinion that it is in the public interest to make the following order;

AND WHEREAS the parties to this proceeding consent to the making of this order;

IT IS ORDERED that the Temporary Order be extended to March 1, 2011 and the hearing in this matter be adjourned to Monday February 28, 2011 at 11:00 a.m.

DATED at Toronto this 6th day of January, 2011.

“Carol S. Perry”


January 14, 2011 (2011) 34 OSCB 445

2.2.2 Al-tar Energy Corp. et al. – ss. 127, 127.1



AND

IN THE MATTER OF AL-TAR ENERGY CORP.,

ALBERTA ENERGY CORP., DRAGO GOLD CORP., DAVID C. CAMPBELL,

ABEL DA SILVA, ERIC F. O’BRIEN AND JULIAN M. SYLVESTER

ORDER(Sections 127 and 127.1 of the Securities Act)

WHEREAS on February 14, 2008, a Statement of Allegations and a Notice of Hearing were issued pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the “Act”), in respect of Al-tar Energy Corp. (“Al-tar”), Alberta Energy Corp. (“Alberta Energy”), Drago Gold Corp. (“Drago”), David C. Campbell (“Campbell”), Abel Da Silva (“Da Silva”), Eric F. O’Brien (“O’Brien”) and Julian M. Sylvester (“Sylvester”) (such persons are referred to as the “Respondents”);

AND WHEREAS the Commission conducted the hearing on the merits in this matter on April 20, 21, 22, 23 and 27, 2009;

AND WHEREAS the Commission issued its Reasons and Decision on the merits in this matter on June 11, 2010 (the “Merits Decision”);

AND WHEREAS the Commission is satisfied that the Respondents carried out a fraudulent investment scheme, have not complied with Ontario securities law and have acted contrary to the public interest, as described in the Merits Decision;

AND WHEREAS the Commission conducted a hearing with respect to the sanctions and costs to be imposed in this matter on September 13, 2010;

AND WHEREAS the Commission is of the opinion that it is in the public interest to make this order;

IT IS HEREBY ORDERED THAT:

(a) pursuant to clause 2 of subsection 127(1) of the Act, each of the Respondents shall cease trading in any securities permanently;

(b) pursuant to clause 2.1 of subsection 127(1) of the Act, the acquisition of any securities by any of the Respondents is prohibited permanently;

(c) pursuant to clause 3 of subsection 127(1) of the Act, any exemptions in Ontario securities law do not apply permanently to any of the Respondents;

(d) pursuant to clause 6 of subsection 127(1) of the Act, each of Campbell, Da Silva, O’Brien and Sylvester are reprimanded;

(e) pursuant to clause 7 of subsection 127(1) of the Act, each of Campbell, Da Silva, O’Brien, and Sylvester shall immediately resign all positions they may hold as a director or officer of any issuer;

(f) pursuant to clause 8 of subsection 127(1) of the Act, each of Campbell, Da Silva, O’Brien and Sylvester are prohibited permanently from becoming or acting as a director or officer of any issuer;

(g) pursuant to clause 8.1 of subsection 127(1) of the Act, each of Campbell, Da Silva, O’Brien and Sylvester are prohibited permanently from becoming or acting as a director or officer of any registrant;

(h) pursuant to clause 9 of subsection 127(1) each of the individual respondents shall pay an administrative penalty in the following amount:


January 14, 2011 (2011) 34 OSCB 446

(i) Sylvester shall pay an administrative penalty of $200,000;

(ii) O’Brien shall pay an administrative penalty of $500,000;

(iii) Da Silva shall pay an administrative penalty of $650,000; and

(iv) Campbell shall pay an administrative penalty of $750,000;

(i) pursuant to clause 10 of subsection 127(1) of the Act, the Respondents shall disgorge to the Commission, the following amounts:

(i) Al-tar, O’Brien, Campbell and Da Silva shall jointly and severally disgorge to the Commission $615,199.50; and

(ii) Alberta Energy, Drago, Campbell and Sylvester shall jointly and severally disgorge to the Commission $42,909.53;

(j) the amounts referred to in paragraphs (h) and (i) of this Order shall be allocated by the Commission to or for the benefit of third parties, including investors who lost money as a result of investing in the investment scheme that was the subject matter of this proceeding, in accordance with subsection 3.4(2)(b) of the Act; and

(k) pursuant to section 127.1 of the Act, the Respondents shall jointly and severally pay $133,865.00 in costs to the Commission.

Dated at Toronto, Ontario this 6th day of January 2011.

“James E. A. Turner”

“Carol S. Perry”

January 14, 2011 (2011) 34 OSCB 447

Chapter 3

Reasons: Decisions, Orders and Rulings

3.1 OSC Decisions, Orders and Rulings

3.1.1 Al-tar Energy Corp. et al.



AND

IN THE MATTER OF AL-TAR ENERGY CORP., ALBERTA ENERGY CORP.,

DRAGO GOLD CORP., DAVID C. CAMPBELL, ABEL DA SILVA, ERIC F. O’BRIEN AND JULIAN M. SYLVESTER

REASONS AND DECISION ON SANCTIONS AND COSTS

Hearing: September 13, 2010

Decision: January 6, 2011

Panel: James E. A. Turner – Vice-Chair and Chair of the Panel Carol S. Perry – Commissioner

Appearances: Sean Horgan – For the Ontario Securities Commission Carlo Rossi

David C. Campbell – For himself

Abel Da Silva – For himself

No one appeared for Al-tar Energy Corp., Alberta Energy Corp., Drago Gold Corp., Eric F. O’Brien or Julian M. Sylvester

TABLE OF CONTENTS

I. OVERVIEW 1. HISTORY OF THE PROCEEDING 2. THE NON-ATTENDANCE OF SOME OF THE RESPONDENTS AT THE SANCTIONS HEARING

II. THE MERITS DECISION

III. SANCTIONS AND COSTS REQUESTED BY STAFF

IV. THE LAW ON SANCTIONS

V. APPROPRIATE SANCTIONS IN THIS MATTER 1. RELEVANT FACTORS IN THE CIRCUMSTANCES 2. TRADING AND OTHER PROHIBITIONS 3. ADMINISTRATIVE PENALTIES 4. DISGORGEMENT 5. ALLOCATION OF AMOUNTS FOR THE BENEFIT OF THIRD PARTIES

VI. COSTS

VII. DECISION ON SANCTIONS AND COSTS


January 14, 2011 (2011) 34 OSCB 448

REASONS AND DECISION ON SANCTIONS AND COSTS

I. Overview

1. History of the Proceeding

[1] This was a bifurcated hearing before the Ontario Securities Commission (the “Commission”) pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the “Act”), to consider whether it is in the public interest to make an order with respect to sanctions and costs against Al-tar Energy Corp. (“Al-tar”), Alberta Energy Corp. (“Alberta Energy”), Drago Gold Corp. (“Drago”), David C. Campbell (“Campbell”), Abel Da Silva (“Da Silva”), Eric F. O’Brien (“O’Brien”) and Julian M. Sylvester (“Sylvester”) (collectively, the “Respondents”).

[2] The hearing on the merits took place on April 20, 21, 22, 23 and 27, 2009. None of the Respondents were present or represented by legal counsel at the merits hearing. The decision on the merits was issued on June 11, 2010 (Re Al-tar et al. (2010), 33 O.S.C.B. 5535 (the “Merits Decision”)).

[3] Following the release of the Merits Decision, we held a hearing on September 13, 2010, to consider sanctions and costs (the “Sanctions Hearing”). Staff of the Commission (“Staff”) appeared at the Sanctions Hearing and made oral and written submissions and filed a Bill of Costs. Campbell and Da Silva were the only respondents who appeared at the Sanctions Hearing. They were self-represented and made oral submissions.

[4] Following the Sanctions Hearing, we requested by letter dated September 15, 2010, that Staff provide the Panel with a corrected version of the Bill of Costs, supported by time dockets setting out the hourly rates of the various individuals and adescription of the work performed. On September 21, 2010, we received from Staff an Amended Bill of Costs, an Affidavit of Alice Hewitt dated September 21, 2010 and a detailed docket summary.

[5] In a letter dated September 15, 2010, we invited the parties to provide additional written submissions concerning the appropriate amount of administrative penalties. That letter stated that:

Specifically, the Panel is considering whether to order administrative penalties against the Respondents that would exceed the amounts requested by Staff in light of the findings of the Merits Decision.

[6] On October 1, 2010 we received written submissions from Staff and Da Silva with respect to this issue. None of the other respondents provided further written submissions.

[7] These are our reasons and decision as to the appropriate sanctions and costs to be ordered against the Respondents.

2. The Non-attendance of Some of the Respondents at the Sanctions Hearing

[8] O’Brien, Sylvester, Al-tar, Alberta Energy and Drago were not present or represented by legal counsel at the Sanctions Hearing. Staff provided an Affidavit of Service of Charlene Rochman dated September 13, 2010 describing the steps that Staff took to serve all of the Respondents.

[9] Subsection 7(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended (the “SPPA”) provides that a tribunal may proceed in the absence of a party when that party has been given adequate notice. We are satisfied that Staff gave adequate notice of this hearing to the respondents referred to in paragraph 8 of these reasons, and that we are entitled toproceed in their absence in accordance with subsection 7(1) of the SPPA.

II. The Merits Decision

[10] The Panel concluded in the Merits Decision that:

(a) all of the Respondents traded in securities in breach of subsection 25(1)(a) of the Act;

(b) Da Silva traded in securities in breach of the Commission’s order dated May 10, 2006 issued in Re Allen (2006), 29 O.S.C.B. 3944 (“Allen Sanctions”) and Campbell traded in securities in breach of the Commission’s temporary cease trade order dated April 13, 2006 issued in Re Limelight (2006), 29 O.S.C.B. 3362;

(c) all of the Respondents engaged in a distribution of securities in breach of subsection 53(1) of the Act;

(d) there were no registration or prospectus exemptions available to the Respondents;


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(e) none of the Respondents breached subsection 38(2) of the Act;

(f) none of the Respondents breached subsection 38(3) of the Act;

(g) all of the Respondents engaged or participated in an act, practice or course of conduct relating to securities that perpetrated a fraud on a person in breach of section 126.1(b) of the Act;

(h) pursuant to section 129.2 of the Act, O’Brien is deemed not to have complied with Ontario securities law as a result of Al-tar’s non-compliance and Sylvester is deemed not to have complied with Ontario securities law as a result of Alberta Energy and Drago’s non-compliance; and

(i) all of the Respondents acted contrary to the public interest.

(See Merits Decision, supra at paras. 53 and 349)

[11] The merits Panel found that the investment scheme described in the Merits Decision “as a whole was fraudulent” (Merits Decision, supra at para. 343) and that “[it] was a continuous scheme that took place over an 18 month period from spring of 2006 until fall of 2007” (Merits Decision, supra at para. 63).

[12] During this time period, a total of $658,109.03 was raised from investors from the sale of shares of Al-tar, Alberta Energy and Drago (collectively, the “Corporate Respondents”) (Merits Decision, supra at para. 73). Members of the public were cold-called by sales representatives (some of whom used aliases) using high pressure sales tactics to persuade them to invest. The specific amounts raised from investors by each of the Corporate Respondents is as follows:

(a) 120 investors invested a total of $615,199.50 in Al-tar (Merits Decision, supra at para. 116);

(b) two investors invested a total of $33,909.53 in Alberta Energy (Merits Decision, supra at para. 120); and

(c) three investors invested a total of $9,000 in Drago (Merits Decision, supra at para. 123).

[13] Funds received from investors by the Corporate Respondents were immediately transferred to bank accounts controlled by Campbell, Da Silva, O’Brien or Sylvester (collectively, the “Individual Respondents”) and others (Merits Decision,supra at paras. 76 to 79). The evidence shows that:

… the majority of the total funds of $658,109.03 raised from Al-tar, Alberta Energy and Drago investors was immediately distributed to individuals and other related entities as described below:

• Canadian Oil Riggers, controlled by Campbell, received in total $217,195.93. Most of these funds were subsequently distributed out as follows:

o Carlos Da Silva and/or companies controlled by him who were not named as respondents received a total $112,201 from Canadian Oil Riggers. We have no evidence as to what these payments were for.

o A deposit of $24,000 was made to a Swiss bank account. We were not provided with any details regarding who controlled this account.

o Zap, which was controlled by Campbell, received $57,000.

• O’Brien received a total of $147,791.50 directly and through Sterling.

• Da Silva received a total of $207,030 through Premium Resource.

(Merits Decision, supra at para. 78)

[14] Paragraph 13 of these reasons makes reference to a number of persons who were not respondents in this matter such as Zap, Carlos Da Silva, Sterling, Premium Resource and Canadian Oil Riggers. A full description of these third parties and their relationship to the Respondents and the investment scheme is provided at paragraph 75 of the Merits Decision.

[15] The merits Panel found that the Corporate Respondents did not engage in any legitimate business activities and that O’Brien, Campbell, Da Silva and Sylvester were aware of this. Specifically, it was held in the Merits Decision that:


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… the Corporate Respondents did not carry on any business other than raising funds from investors. Their promotional materials, websites and press releases contained false and misleading information about fictitious activities. The Corporate Respondents were purportedly involved in the oil and gas and mineral mining industries, however, the evidence revealed that none of them were involved in any legitimate business in any industry.

The whole investment scheme involving the three Corporate Respondents raised $658,109.03. Once funds were raised from investors, the majority of these funds were deposited into the bank accounts of the Corporate Respondents and then immediately transferred to other accounts controlled by some of the respondents or related individuals and entities. The Individual Respondents used investor funds for personal use. The only business-related expenditures were to facilitate raising funds from investors.

This matter dealt with egregious conduct involving significant contraventions of the Act including fraud. The fraudulent activities of the Respondents caused significant harm to investors and investors were deprived of their funds. Investors of Al-tar, Alberta Energy and Drago lost their entire investments totaling $658,109.03.

(Merits Decision, supra at paras. 344 to 346)

III. Sanctions and Costs Requested by Staff

[16] Staff requested that the following order be made against the Respondents:

(a) an order that the Corporate Respondents cease trading in securities permanently, pursuant to subsection 127(1)2 of the Act;

(b) an order that the Individual Respondents cease trading in securities permanently, pursuant to subsection 127(1)2 of the Act;

(c) an order that the acquisition of any securities by the Respondents is prohibited permanently, pursuant to subsection 127(1)2.1 of the Act;

(d) an order that any exemptions contained in Ontario securities law do not apply to the Respondents permanently, pursuant to subsection 127(1)3 of the Act;

(e) an order reprimanding the Individual Respondents pursuant to subsection 127(1)6 of the Act;

(f) an order that the Individual Respondents resign all positions that they may hold as a director or officer of an issuer, pursuant to subsection 127(1)7 of the Act;

(g) an order that the Individual Respondents be prohibited permanently from becoming or acting as a director or officer of any issuer pursuant to clause 8 of subsection 127(1) of the Act;

(h) an order that the Individual Respondents be prohibited permanently from becoming or acting as a director or officer of any registrant pursuant to clause 8.1 of subsection 127(1) of the Act;

(i) an order that Al-tar, O’Brien, Campbell and Da Silva jointly and severally disgorge to the Commission $615,199.50 obtained as a result of their non-compliance with Ontario securities law, pursuant to subsection 127(1)10 of the Act, such amount to be allocated to or for the benefit of third parties pursuant to subsection 3.4(2)(b) of the Act, including investors who lost money as a result of the Respondent’s breaches of Ontario securities law;

(j) an order that Alberta Energy, Drago, Campbell and Sylvester jointly and severally disgorge to the Commission $42,909.53 obtained as a result of their non-compliance with Ontario securities law, pursuant to subsection 127(1)10 of the Act, such amount to be allocated to or for the benefit of third parties pursuant to subsection 3.4(2)(b) of the Act, including investors who lost money as a result of the Respondent’s breaches of Ontario securities law;

(k) an order requiring Sylvester to pay an administrative penalty of $100,000, pursuant to subsection 127(1)9 of the Act;


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(l) an order requiring O’Brien to pay an administrative penalty of $175,000, pursuant to subsection 127(1)9 of the Act;

(m) an order requiring Da Silva to pay an administrative penalty of $250,000, pursuant to subsection 127(1)9 of the Act;

(n) an order requiring Campbell to pay an administrative penalty of $350,000, pursuant to subsection 127(1)9 of the Act; and

(o) an order requiring payment by the Respondents, on a joint and several basis, of $253,916.25 representing a portion of the costs incurred by the Commission in this matter, pursuant to section 127.1 of the Act.

[17] With respect to the amount of costs requested, Staff provided an Amended Bill of Costs which clarified that Staff is seeking $133,865.00 in costs which represents the costs incurred only during the litigation phase of this proceeding (from Marchto April 2009, as set out in Appendices A, B and C to Staff’s Amended Bill of Costs).

[18] With respect to administrative penalties and disgorgement, Staff requested that:

… any amounts paid to the Commission in compliance with the disgorgement and administrative penalty orders shall be allocated to or for the benefit of third parties, including investors who lost money as a result of investing in the investment schemes, in accordance with subsection 3.4(2)(b) of the Act and that such amounts are to be distributed to investors who lost money as a result of investing in the fraudulent investment schemes on such basis, on such terms and to such investors as Staff in its discretion determines to be appropriate in the circumstances.

[19] In Staff’s submission, the sanctions and costs requested are appropriate in light of the Respondents’ serious breaches of the Act and conduct contrary to the public interest.

IV. The Law on Sanctions

[20] Pursuant to section 1.1 of the Act, the Commission has the mandate to: (i) provide protection to investors from unfair, improper or fraudulent practices; and (ii) foster fair and efficient capital markets and confidence in capital markets. The Supreme Court of Canada has held that the Commission’s public interest mandate is neither remedial nor punitive; it is protective and preventative, and it is intended to prevent future harm to Ontario’s capital markets. The Supreme Court stated that:

… pursuant to s. 127(1), the OSC has the jurisdiction and a broad discretion to intervene in Ontario capital markets if it is in the public interest to do so. … In exercising its discretion, the OSC should consider the protection of investors and the efficiency of, and public confidence in, capital markets generally. In addition, s. 127(1) is a regulatory provision. The sanctions under the section are preventative in nature and prospective in orientation.

(Committee for Equal Treatment of Asbestos Minority Shareholders v. Ontario Securities Commission, [2001] 2 S.C.R. 132, at para. 45)

[21] The Commission has stated:

[…] the role of this Commission is to protect the public interest by removing from the capital markets – wholly or partially, permanently or temporarily, as the circumstances may warrant – those whose conduct in the past leads us to conclude that their conduct in the future may well be detrimental to the integrity of those capital markets. We are not here to punish past conduct; that is the role of the courts, particularly under section 118 [now 122] of the Act. We are here to restrain, as best we can, future conduct that is likely to be prejudicial to the public interest in having capital markets that are both fair and efficient. In so doing we must, of necessity, look to past conduct as a guide to what we believe a person’s future conduct might reasonably be expected to be; we are not prescient, after all.

(Re Mithras Management Inc. (1990), 13 O.S.C.B. 1600 (“Mithras”) at 1610 and 1611)

[22] General deterrence is also an important factor that the Commission should consider when determining sanctions. In Re Cartaway Resources Corp., [2004] 1 S.C.R. 672, the Supreme Court of Canada stated that “[…] it is reasonable to view general deterrence as an appropriate, and perhaps necessary, consideration in making orders that are both protective and preventative” (at para. 60).


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[23] In determining the appropriate sanctions in this matter, we must consider the specific circumstances and ensure that the sanctions imposed are proportionate to those circumstances (Re M.C.J.C. Holdings (2002), 25 O.S.C.B. 1133 at 1134).

[24] The Commission has identified the following factors as important when determining sanctions:

(a) the seriousness of the allegations;

(b) the respondent’s experience in the marketplace;

(c) the level of a respondent’s activity in the marketplace;

(d) whether or not there has been a recognition of the seriousness of the improprieties;

(e) the need to deter a respondent, and other like-minded individuals from engaging in similar abuses of the capital markets in the future;

(f) whether the violations are isolated or recurrent;

(g) the size of any profit or loss avoided from the illegal conduct;

(h) any mitigating factors, including the remorse of the respondent;

(i) the effect any sanction might have on the livelihood of the respondent;

(j) the effect any sanction might have on the ability of a respondent to participate without check in the capital markets;

(k) the reputation and prestige of the respondent;

(l) the size of any other financial sanctions imposed or any voluntary payment made by the respondent; and

(m) the shame or financial pain that any sanction would reasonably cause to the respondent.

(See: Re M.C.J.C. Holdings, supra at 1136 and Re Belteco Holdings Inc. (1998), 21 O.S.C.B. 7743 at 7746)

[25] The foregoing list of factors is not exhaustive. The applicability and importance of each factor will vary according to thefacts and circumstances of each case.

V. Appropriate Sanctions in this Matter

1. Relevant Factors in the Circumstances

[26] Overall, the sanctions we impose must protect investors and Ontario capital markets by barring or restricting the Respondents from participating in those markets in the future and by sending a clear message to the Respondents and others participating in our capital markets that the type of misconduct identified in this matter will not be tolerated.

[27] In considering the factors set out above, we find the following specific factors and circumstances to be most relevant, based on the findings in the Merits Decision:

(a) The offences in this matter are very serious and include fraud. As stated in paragraph 317 of the Merits Decision:

We find that the Corporate Respondents were solely created to defraud investors and engaged in fraudulent activity. We also find that the Individual Respondents were aware of this for the most part, or they ought to have been aware given the nature of their role as integral players in this fraudulent investment scheme. They were also aware of the scale and magnitude of the impact on investors.

(b) As a result of the Respondents’ misconduct, the following funds were misappropriated from investors:

• $615,199.50 was obtained by Al-tar;

• $33,909.53 was obtained by Alberta Energy; and

• $9,000 was obtained by Drago.


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(c) Many of the investors (there were a total of at least 125 investors involved) lost all of their investment in Al-tar, Alberta Energy and Drago. As stated in the Merits Decision at paragraph 318:

The Respondents were perpetrating a fraud on investors across Canada and the U.K. A total of $658,109.03 was raised from the sale of shares of Al-tar, Alberta Energy and Drago. We note that these investor lost all their funds and were not paid back.

(d) In carrying out their illegal activities in this matter, Campbell and Da Silva breached Commission cease trade orders previously issued against them (Merits Decision, supra at paras. 126 to 133).

(e) Campbell, Da Silva and Sylvester were uncooperative and lied to Staff during the investigation (Merits Decision, supra at paras. 243, 250, 256 to 260 and 267).

(f) Campbell and Da Silva have both previously engaged in the unregistered sale and illegal distribution of securities to the public and both have been previously sanctioned by the Commission (see Re Limelight Entertainment Inc. et al. (2008), 31 O.S.C.B. 1727 (“Limelight Merits”) and Re Allen et al. (2005), 28 O.S.C.B. 8541 (“Allen Merits”)). We note that Campbell and Da Silva have not complied with the sanctions orders in those cases. At the Sanctions Hearing, Da Silva acknowledged that he has not paid the outstanding administrative penalty ordered against him in the Allen matter. We also note that Campbell has not paid the $175,000 administrative penalty ordered against him in the Limelight matter.

(g) The Respondents breached multiple sections of the Act and acted contrary to the public interest (see Merits Decision, supra at para. 349). This conduct took place over a prolonged period of time from April 2006 to September 2007 and was structured in a “rolling nature” to avoid detection. As stated in the Merits Decision:

The investment scheme that the Corporate Respondents were involved in was of a rolling nature. The activities surrounding each of the Corporate Respondents was short lived, once one company was being wound up (i.e. Al-tar), another was getting off the ground (i.e. Alberta Energy and/or Drago). In our view, this conduct was designed so that the Respondents would avoid detection.

(Merits Decision, supra at para. 315)

(h) The Respondents did not acknowledge the seriousness of their illegal activities or accept responsibility for their actions.

2. Trading and Other Prohibitions

Trading and Market Prohibitions

[28] Staff submits that in the circumstances of this case, it would be appropriate to order that all of the Respondents cease trading securities permanently, be subject to a permanent prohibition from acquiring any securities and that exemptions contained in Ontario securities law not apply to the Respondents permanently.

[29] During the hearing, Da Silva submitted that he “would like to resolve this by taking a permanent cease trade, [and] stay out of the business forever” (Hearing Transcript, September 13, 2010, at page 60 lines 2 to 4). Campbell also submitted at the hearing that he had no intention of working in the securities industry in the future. Specifically he stated:

Now I understand that I’m a lot younger than Abel [Da Silva], I have a better chance of turning my life around, which I am. And I’m looking for jobs. And, as I said, before, I would never get back into the business.

(Hearing Transcript, September 13, 2010, at page 79 at lines 12 to 15)

[30] Accordingly, Da Silva and Campbell did not contest any sanctions that would restrict their future participation in the capital markets.

[31] We find that the public interest requires that the Respondents be restrained permanently from any future participation in the capital markets. Participation in the capital markets is a privilege, not a right (Erikson v. Ontario (Securities Commission),[2003] O.J. No. 593 (Sup. Ct.) at para. 56). The Commission has stated that:

There is no right of any individual to participate in the capital markets in Ontario. […] the Act provides certain exemptions which allow individuals to make certain trades without being


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registered, however, the OSC has explicit jurisdiction to remove the exemptions if an individual engages in conduct contrary to the letter or spirit of the Act, whether such conduct causes damage to investors or is detrimental to the integrity of the capital markets.

(Manning v. Ontario (Securities Commission), [1996] O.J. No. 3414 (Gen. Div.) at para. 6)

[32] The Respondents in this matter cannot be trusted to participate in the capital markets in the future. The following comments made by the Commission in another matter could be applied to the Respondents:

[the respondent’s] conduct involved no mere technical violation of the Act. Section 25 of the Act, requiring the registration of market intermediaries, is a key element of the scheme of the Act in protecting investors and the capital markets, and maintaining public confidence in those markets. [The respondent] knowingly ignored the requirements of the section and circumvented those requirements. Nor are the violation of the cease trade order and undertaking light matters. Nor is lying to investigating staff.

In our view [the respondent] is not a person whom we can safely trust to participate in the capital markets in any way. We have no confidence whatsoever that if she is permitted to participate as an investor for her own account, [the respondent] will not once again push the envelope by engaging in conduct which is detrimental to others and abusive to our capital markets. Accordingly we order that trading in any securities by [the respondent] cease permanently.

(Re St. John (1998), 21 O.S.C.B. 3851 at page 3867)

[33] We conclude that it is appropriate to order that all of the Respondents shall cease trading securities permanently, the acquisition of any securities by the Respondents shall be prohibited permanently, and any exemptions in Ontario securities law shall not apply permanently to the Respondents. In our view, given their egregious conduct, it is not appropriate, nor in the public interest, to provide any exception or “carve out” to permit the Individual Respondents to trade in a registered retirementsavings plan. As the Commission stated in Re Lech, (2010), 33 O.S.C.B. 4795 at paragraph 66:

Submissions were not made requesting a carve-out from the order proposed by Staff, to allow for restricted trading by Lech. In the present case, the conduct at issue is criminal fraud related to securities. Lech’s conduct was egregious and demonstrates a serious risk to the public. In this case, it is better to err on the side of caution. We therefore find that it is neither appropriate nor in the public interest to provide such a carve-out.

Director and Officer Bans

[34] Staff also requested that all of the Individual Respondents resign all positions that they may hold as a director or officer of any issuer, and that they be prohibited permanently from becoming or acting as a director or officer of any issuer or registrant.

[35] Campbell and Da Silva did not make any specific submissions with respect to director and officer bans.

[36] The misconduct in this matter was facilitated by or through companies controlled by certain of the Individual Respondents. O’Brien was the sole director and controlled Al-tar (Merits Decision, supra at paras. 324 to 327) and Sylvester was the sole director and controlled Alberta Energy and Drago (Merits Decision, supra at paras. 328 to 332). While Campbell and Da Silva were not directors of any of the three Corporate Respondents, they were both intimately involved in the investmentscheme and investor funds were distributed to companies that they controlled (which were not respondents in this matter). Accordingly, we find that it is appropriate that all the Individual Respondents resign from all positions they may hold as a directoror officer of any issuer and that they be prohibited permanently from acting as a director or officer of any issuer or registrant.

[37] Together, the permanent trading bans and permanent prohibitions on acting as a director or officer of any issuer will prevent the Respondents from participating in the capital markets and will provide general and specific deterrence to discourageothers from similar conduct.

3. Administrative Penalties

[38] Staff requested that the following administrative penalties be imposed upon the Respondents:

(a) Sylvester pay an administrative penalty of $100,000;

(b) O’Brien pay an administrative penalty of $175,000;


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(c) Da Silva pay an administrative penalty of $250,000; and

(d) Campbell pay an administrative penalty of $350,000.

[39] In Staff’s submission, the administrative penalties imposed should reflect the egregious conduct of the Respondents referred to in paragraph 27 of these reasons and the multiple breaches of the Act perpetrated by the Respondents. As stated inRe Sabourin (2010), 33 O.S.C.B. 5299 (“Sabourin Sanctions”) at para. 75:

In our view, as a matter of principle, a respondent who commits multiple breaches of the Act should know that continuing breaches of the Act will have consequences in terms of the sanctions ultimately imposed. At the same time, however, in imposing administrative penalties we must consider the specific conduct of each Respondent and the level of administrative penalties imposed in other similar cases.

[40] Staff refers us to a number of Commission decisions that dealt with sanctions ordered in the context of boiler room operations (see for example: Re Limelight (2008), 31 O.S.C.B. 12080 (“Limelight Sanctions”); Allen Sanctions, supra; and Sabourin Sanctions, supra). In addition, Staff referred us to sanctions decisions of other securities commissions in Canada where fraud was involved (see for example: Re Anderson (2003), BCSECOM 184 and Re Thow (2007), BCSECOM 758). This matter is one of the first cases where the Commission is considering imposing sanctions where there has been a finding of fraud.

[41] Campbell submits that the decisions referred to us by Staff were on the high side of the spectrum and dealt with circumstances that were much more serious than this matter. Specifically, Campbell submitted at the hearing that:

[…] $600,000/700,000 is still missing from investors. You’re comparing it to $41 million cases. Like it’s almost like comparing it to Nortel or something. I’m not that person, okay. I don’t know how to express it enough. I’m not that person. I’m not this person that is raising $41 million or even coming close to that.

(Hearing Transcript, September 13, 2010, at page 70 at lines 13 to 19)

[42] In response to the Panel’s letter dated September 15, 2010 requesting submissions on whether the Commission should impose higher sanctions than requested by Staff, Staff submits that:

In making an order under subsection 127(1) the Commission is not bound by the submissions of any party to the proceeding. In contested hearings, the Commission is regularly asked to determine sanctions in the face of conflicting submissions by Staff and the respondent(s) and, in the past, the Commission has not viewed Staff’s submissions as imposing an upward limit on sanctions, including the quantum of administrative penalties.

[43] We agree with that submission. A Commission Panel must make the orders under subsection 127(1) of the Act that it determines to be in the public interest. Sometimes this may require a Panel to order more severe sanctions than requested by Staff. At the same time, we concluded that it was appropriate to give the Respondents an opportunity to make submissions on that question.

[44] With respect to the quantum of any administrative penalty imposed, Campbell made the following statements:

I don't have a job. I applied for social assistance. I'm actually going for bankruptcy. I'm talking to a trustee right now.

(Hearing Transcript, September 13, 2010, at page 65 lines 16 to 19)

And for the fine, I can’t pay it, I’m not even sure how that would work. I really am lost here. There is no way of me actually paying that money. And I just hope you – I don’t expect you to have sympathy for me because you weren’t involved and you’re only reading what they wrote and hearing me now for the very first time, but I just hope something could be worked out where the fine is either reduced or completely forgotten.


[45] At the hearing, Da Silva stated that he didn’t have the ability to pay an administrative penalty. He said:

So simply, I do not have the funds to – or I don't have the funds to pay any administrative costs. My credit cards are maxed out. And if not for my dad's generosity, I'm getting free rent and stuff


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like that for looking after my dad, so I don't have to worry about rent or mortgages or anything like that.


[46] We give no weight to these statements. Campbell and Da Silva have lied to Staff and the Commission in the past and are not to be believed. Even if those statements are true (which we have no way of knowing), they are only one factor to be weighed in imposing sanctions.

[47] The Individual Respondents engaged in fraudulent conduct that warrants the imposition of substantial administrative penalties. We do not consider the amount of the administrative penalties requested by Staff to be sufficient to deter similar conduct in the future. In our view, to be a deterrent, the amount of an administrative penalty must bear some reference to the amount raised from investors through the investment scheme. In addition, in cases where fraud and repetitive conduct over an extended period is involved, higher administrative penalties are necessary. In order to deter, an administrative penalty must bemore than a fee for or cost of carrying out a fraudulent scheme.

[48] We find that it is in the public interest to impose a $750,000 administrative penalty on Campbell because:

(a) Campbell knowingly committed fraud in connection with the investment scheme that defrauded investors. Through his company, Canadian Oil Riggers, he misappropriated at least $217,195.93 of investor funds (Merits Decision, supra at paras. 77 and 78);

(b) Campbell played an integral and leading role in orchestrating and perpetrating that fraud. He was responsible for setting up the business arrangements for the Corporate Respondents and he contacted investors using an alias (Merits Decision, supra at paras. 238 to 253);

(c) Campbell has been sanctioned by the Commission in the past for similar illegal conduct that caused harm and financial losses to investors (see Limelight Sanctions, supra);

(d) Campbell’s fraudulent activities occurred over an extended period of time and involved multiple and numerous breaches of the Act;

(e) Campbell blatantly and knowingly breached an outstanding Commission cease trading order in carrying out the fraudulent scheme.

[49] While we considered Campbell’s submissions regarding his financial situation and ability to pay an administrative penalty, we find that the imposition of a substantial administrative penalty is required. Campbell was involved in fraudulent conduct involving all three of the Corporate Respondents. In our view, an administrative penalty of this magnitude is necessaryto deter Campbell and others in the capital markets from engaging in fraudulent conduct and multiple breaches of the Act.

[50] We find that it is in the public interest to impose a $650,000 administrative penalty on Da Silva because:

(a) Da Silva knowingly committed fraud in connection with the Al-tar investment scheme that defrauded investors. He misappropriated at least $207,030 of investor funds (Merits Decision, supra at para. 78);

(b) Da Silva played an integral and leading role in perpetrating the Al-tar fraud (Merits Decision, supra at paras. 254 to 265);

(c) Da Silva’s fraudulent activities occurred over an extended period of time and involved multiple and numerous breaches of the Act;

(d) Da Silva has been sanctioned by the Commission in the past for similar illegal conduct that caused harm and financial losses to investors (see Allen Sanctions, supra);

(e) Da Silva blatantly and knowingly breached an outstanding Commission cease trade order in carrying out the fraudulent scheme (see: Allen Sanctions, supra).

[51] There was no evidence that Da Silva had any involvement with the illegal activities of Alberta Energy or Drago. Accordingly, we find it appropriate to order an administrative penalty against him lower than the administrative penalty we impose on Campbell.

[52] While we considered Da Silva’s submissions regarding his financial situation and ability to pay an administrative penalty, we concluded that the imposition of a substantial administrative penalty is required given his fraudulent conduct.


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[53] We find that it is in the public interest to impose a $500,000 administrative penalty on O’Brien because:

(a) O’Brien committed fraud through Al-tar which misappropriated at least $615,199.50 from Al-tar investors and he received a total of approximately $147,000 (Merits Decision, supra at para. 76);

(b) O’Brien played an integral and leading role in perpetrating the Al-tar fraud (Merits Decision, supra at paras. 222 to 237);

(c) O’Brien’s fraudulent activities occurred over an extended period of time and involved multiple and numerous breaches of the Act.

[54] We note that O’Brien was not involved with the activities of Alberta Energy or Drago.

[55] We find that it is in the public interest to impose a $200,000 administrative penalty on Sylvester because:

(a) Sylvester knowingly committed fraud through Alberta Energy and Drago (Merits Decision, supra at paras. 266 to 278). He was the sole director of both Alberta Energy and Drago, together these two companies misappropriated $42,909.53 from investors;

(b) Sylvester opened bank accounts for those companies and provided access to those accounts to Campbell (Merits Decision at paragraphs 110 to 113);

(c) Completely fabricated and false information with respect to Sylvester’s experience as a senior executive and his background was included on the Alberta Energy website. In his compelled testimony, Sylvester admitted he knew nothing of the mining industry and that the only reason he got involved in the scheme was because Campbell was going to show him how to make money.

[56] We note that Sylvester did not make cold calls to investors to solicit funds and that he did not retain any investor fundsthat were raised by Alberta Energy and Drago. All of those funds were immediately transferred to Campbell’s company, Canadian Oil Riggers. Sylvester had no involvement with the activities of Al-tar. For these reasons, we are imposing a lower administrative penalty on Sylvester.

[57] In our view, the administrative penalties imposed on the Individual Respondents are proportionate to the specific misconduct of each of those Respondents, and will deter the Individual Respondents in this matter, and other like minded persons, from engaging in similar conduct in the future.

[58] Staff did not request that an administrative penalty be imposed on any of the Corporate Respondents. As a result, we have not done so.

4. Disgorgement

[59] The Commission has stated that the following factors are relevant considerations when contemplating a disgorgement order:

(a) whether an amount was obtained by a respondent as a result of non-compliance with the Act;

(b) whether the amount that a respondent obtained as a result of non-compliance with the Act is reasonably ascertainable;

(c) the seriousness of the misconduct and the breaches of the Act and whether investors were seriously harmed;

(d) whether the individuals who suffered losses are likely to be able to obtain redress by other means; and

(e) the deterrent effect of a disgorgement order on the respondents and other market participants.

(Limelight Sanctions, supra at para. 52)

[60] The burden is on Staff to prove, on a balance of probabilities, the amount obtained by a respondent as a result of that respondent’s non-compliance with the Act. The Commission has commented on determining that amount as follows:

… paragraph 10 of subsection 127(1) of the Act provides that disgorgement can be ordered with respect to “any amounts obtained” as a result of non-compliance with the Act. Thus, the legal question is not whether a respondent “profited” from the illegal activity but whether the respondent


January 14, 2011 (2011) 34 OSCB 458

“obtained amounts” as a result of that activity. In our view, this distinction is made in the Act to make clear that all money illegally obtained from investors can be ordered to be disgorged, not just the “profit” made as a result of the activity. This approach also avoids the Commission having to determine how “profit” should be calculated in any particular circumstance. Establishing how much a respondent obtained as a result of his or her misconduct is a much more straightforward test. In our view, where there is a breach of Ontario securities law that involves the widespread and illegal distribution of securities to members of the public, it is appropriate that a respondent disgorge all the funds that were obtained from investors as a result of that illegal activity. In our view, such a disgorgement order is authorized under paragraph 10 of subsection 127(1) of the Act.

(Limelight Sanctions, supra at para. 49)

[61] In this case, the Respondents fraudulently obtained funds from investors in breach of Ontario securities law. The amount of the funds obtained by the Respondents from investors is ascertainable (see paras. 69 to 79 of the Merits Decision).

[62] The Commission found that the Respondents obtained a total of $658,109.03 as a result of their illegal conduct (Merits Decision, supra at para. 73). Al-tar obtained $615,199.50, Alberta Energy obtained $33,909.53 and Drago obtained $9,000 (Merits Decision, supra at paras. 69 to 72).

[63] Staff is seeking that the full amount of investor funds obtained by the three Corporate Respondents be disgorged. Staff is also requesting that the Individual Respondents involved in the fraud committed by the respective Corporate Respondents be required to disgorge on a joint and several basis the amounts obtained by the relevant Corporate Respondent. Specifically, Staffrequests:

(a) an order that Al-tar, O’Brien, Campbell and Da Silva jointly and severally disgorge to the Commission $615,199.50 obtained as a result of their non-compliance with Ontario securities law, pursuant to subsection 127(1)10 of the Act, such amount to be allocated to or for the benefit of third parties pursuant to subsection 3.4(2)(b) of the Act, including investors who lost money as a result of the Respondents’ breaches of Ontario securities law; and

(b) an order that Alberta Energy, Drago, Campbell and Sylvester jointly and severally disgorge to the Commission $42,909.53 obtained as a result of their non-compliance with Ontario securities law, pursuant to subsection 127(1)10 of the Act, such amount to be allocated to or for the benefit of third parties pursuant to subsection 3.4(2)(b) of the Act, including investors who lost money as a result of the Respondents’ breaches of Ontario securities law.

[64] Investor funds were deposited into four bank accounts, two of which were controlled by Da Silva and two of which were controlled by Campbell. Those accounts are subject to freeze orders:

With respect to the accounts controlled by Da Silva, a total of approximately $155,000 is frozen and remains subject to the directions until further notice by the Ontario Superior Court.

With respect to the two accounts controlled by Campbell, a total of approximately $35,000 is frozen and remains subject to the directions until further notice by the Ontario Superior Court.

(Merits Decision, supra at paras. 6 and 7)

[65] Staff submits that these funds should be applied to satisfy any disgorgement orders made by the Commission against Da Silva and Campbell.

[66] Staff submits that investor funds obtained as a result of the Respondents’ contraventions of the Act, as determined in the Merits Decision, can be traced directly to the frozen accounts and Staff requests an order of the Commission that the fundsin the accounts controlled by Da Silva and Campbell were obtained as a result of the Respondents’ contraventions of the Act.

[67] At the hearing, Da Silva admitted that investor funds were deposited in the accounts controlled by him. As a mitigating factor, Da Silva submits that he did not hide the money he obtained from investors. Campbell also made submissions about the funds frozen in the bank accounts which he controlled. According to Campbell, some of those funds were from his internet café company, Zap, and from the sale of his condominium.

[68] Campbell also submits that he should not be required to disgorge the full amount that Staff requests because half of the money he received was paid to Carlos Da Silva (who was not a respondent in this matter) and funds were also paid to other third parties.


January 14, 2011 (2011) 34 OSCB 459

[69] In response to Campbell’s submissions, Staff agrees that other persons who are not respondents received investor funds and were involved in the fraudulent scheme. However, Staff submits that due to the refusal of Campbell and the other Respondents’ to cooperate, Staff was unable to obtain sufficient information about the involvement of others.

[70] The amounts credited to the accounts controlled by Campbell and Da Silva consist mostly of funds that were obtained by Campbell and Da Silva from investors as a result of their non-compliance with Ontario securities law.

[71] In our view, a disgorgement order is appropriate in this case because it ensures that none of the Respondents will benefit from their breaches of the Act and because such an order will deter them and others from similar misconduct. We find that it is appropriate to order that the Corporate Respondents disgorge the total amount of investor funds that they obtained asdetermined in the Merits Decision. The Individual Respondents made use of the Corporate Respondents to obtain investor funds and they immediately diverted those funds for their own purposes. Accordingly, we will order that the Individual Respondents involved in the fraudulent scheme with a particular Corporate Respondent, disgorge on a joint and several basis, the amounts tobe disgorged by that Corporate Respondent. That appears to us to be the appropriate approach in the circumstances before us and was requested by Staff. Therefore we order that:

(i) Al-tar, O’Brien, Campbell and Da Silva shall jointly and severally disgorge to the Commission $615,199.50, being the amount obtained by them as a result of their non-compliance with Ontario securities law, such amount to be allocated to or for the benefit of third parties pursuant to subsection 3.4(2)(b) of the Act, including investors who lost money as a result of such Respondents’ breaches of Ontario securities law; and

(ii) Alberta Energy, Drago, Campbell and Sylvester shall jointly and severally disgorge to the Commission $42,909.53, being the amount obtained by them as a result of their non-compliance with Ontario securities law, such amount to be allocated to or for the benefit of third parties pursuant to subsection 3.4(2)(b) of the Act, including investors who lost money as a result of such Respondents’ breaches of Ontario securities law.

[72] We note in this respect that O’Brien was the directing mind of Al-tar and Sylvester was the directing mind of Alberta Energy and Drago.

[73] As noted in paragraph 64 of these reasons, investor funds are frozen in four bank accounts (two of which are controlled by Campbell and two of which are controlled by Da Silva). We authorize and direct Staff to take appropriate steps to obtain thefunds frozen (together with interest). The funds obtained from the accounts controlled by Campbell shall be applied to the payment of the disgorgement orders made against him, and the funds obtained from the accounts controlled by Da Silva shall be applied to the payment of the disgorgement order made against him.

5. Allocation of Amounts for the Benefit of Third Parties

[74] Any amounts paid to the Commission in compliance with our administrative penalty and disgorgement orders shall be allocated to or for the benefit of third parties, including investors who lost money as a result of investing in the investmentscheme, in accordance with subsection 3.4(2)(b) of the Act. These amounts are to be distributed to investors who lost money as a result of investing in the investment scheme on such basis, on such terms and to such investors as Staff in its discretion determines to be appropriate in the circumstances. A distribution to investors shall be made only if Staff is satisfied that doing so is reasonably practicable in the circumstances and only if Staff concludes that there are sufficient funds available to justify doing so. If for any reason, Staff decides at any time or from time to time not to distribute any such amounts to investors, such amounts may, by further Commission order, be allocated to or for the benefit of other third parties. Any panel of the Commissionmay, on the application of Staff, make any order it considers expedient with respect to the matters addressed by this paragraph.

[75] The terms of paragraph 74 of these reasons shall not give rise to or confer upon any person, including any investor (i) any legal right or entitlement to receive, or any interest in, amounts received by the Commission under our orders for administrative penalties and disgorgement, or (ii) any right to receive notice of any application by Staff to the Commission madein connection with that paragraph or of any exercise by the Commission of any discretion granted to it under that paragraph.

VI. Costs

[76] Pursuant to section 127.1 of the Act, the Commission has the discretion to order a person or company to pay the costs of an investigation (127.1(1)) and hearing (127.1(2)) if the Commission is satisfied that the person or company has not compliedwith the Act or has not acted in the public interest.

[77] Staff requests in their Amended Bill of Costs that the Respondents be ordered to pay, jointly and severally, a total of $133,865.00 to cover the costs incurred during the litigation phase of the hearing from March to April 2009. These costs are asfollows:


January 14, 2011 (2011) 34 OSCB 460

(a) Senior Litigation Counsel – 417.50 hours at $205 per hour for a total of $85,587.50;

(b) Investigator – 133 hours at $185 per hour for a total of $24,605.00; and

(c) Law Clerk – 278.50 hours at $ 85 per hour for a total of $ 23,672.50.

[78] Staff states that its costs were calculated in accordance with Staff’s schedule of hourly rates for various members of Staff of the Enforcement Branch. In support of this request and in response to our letter dated September 15, 2010, Staff provided us with an Amended Bill of Costs, which corrected discrepancies in their original Bill of Costs. Staff also provided detailed dockets (as required by Subrule Rule 18.1(2)(b) of the Commission’s Rules of Procedure) supporting the figures claimed. These timesheets provided dates, numbers of hours worked and details of the tasks performed by each of the individuals listed in the Amended Bill of Costs.

[79] Staff is requesting costs relating to only one senior litigation counsel, one investigator and one law clerk. In addition, Staff’s Bill of Costs excludes any time spent by students-at-law and assistants. The costs sought by Staff do not include the costs of the investigation stage of this matter and do not include the time spent preparing for and attending the Sanctions Hearing.

[80] According to Staff’s Amended Bill of Costs, Staff’s total costs for this proceeding were significantly higher and amounted to $657,582.50. Staff requests costs of only $133,865.00. In our view, that amount is reasonable.

[81] Accordingly, we order that the Respondents pay costs, jointly and severally, in the amount of $133,865.00. We find it appropriate to order that costs be paid by the Respondents on a joint and several basis because all of the Respondents were knowingly involved in the fraudulent investment scheme that was the subject matter of this proceeding. For greater certainty, our order for the payment of costs shall not be satisfied in whole or in part from the banks accounts referred to in paragraph 64 ofthese reasons.

VII. Decision on Sanctions and Costs

[82] We will issue an order substantially in the form of Schedule “A” to these reasons, giving effect to this decision. In ourview, the sanctions and costs ordered are proportionate to the activities of the various Respondents in this matter and orderingsuch sanctions and costs is in the public interest.

Dated at Toronto this 6th day of January, 2011.

“James E. A. Turner” “Carol S. Perry” James E. A. Turner Carol S. Perry


January 14, 2011 (2011) 34 OSCB 461

Schedule “A”



AND

IN THE MATTER OF AL-TAR ENERGY CORP., ALBERTA ENERGY CORP.,

DRAGO GOLD CORP., DAVID C. CAMPBELL, ABEL DA SILVA, ERIC F. O’BRIEN AND JULIAN M. SYLVESTER

ORDER(Sections 127 and 127.1 of the Securities Act)

WHEREAS on February 14, 2008, a Statement of Allegations and a Notice of Hearing were issued pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the “Act”), in respect of Al-tar Energy Corp. (“Al-tar”), Alberta Energy Corp. (“Alberta Energy”), Drago Gold Corp. (“Drago”), David C. Campbell (“Campbell”), Abel Da Silva (“Da Silva”), Eric F. O’Brien (“O’Brien”) and Julian M. Sylvester (“Sylvester”) (such persons are referred to as the “Respondents”);

AND WHEREAS the Commission conducted the hearing on the merits in this matter on April 20, 21, 22, 23 and 27, 2009;

AND WHEREAS the Commission issued its Reasons and Decision on the merits in this matter on June 11, 2010 (the “Merits Decision”);

AND WHEREAS the Commission is satisfied that the Respondents carried out a fraudulent investment scheme, have not complied with Ontario securities law and have acted contrary to the public interest, as described in the Merits Decision;

AND WHEREAS the Commission conducted a hearing with respect to the sanctions and costs to be imposed in this matter on September 13, 2010;

AND WHEREAS the Commission is of the opinion that it is in the public interest to make this order;

IT IS HEREBY ORDERED THAT:

(a) pursuant to clause 2 of subsection 127(1) of the Act, each of the Respondents shall cease trading in any securities permanently;

(b) pursuant to clause 2.1 of subsection 127(1) of the Act, the acquisition of any securities by any of the Respondents is prohibited permanently;

(c) pursuant to clause 3 of subsection 127(1) of the Act, any exemptions in Ontario securities law do not apply permanently to any of the Respondents;

(d) pursuant to clause 6 of subsection 127(1) of the Act, each of Campbell, Da Silva, O’Brien and Sylvester are reprimanded;

(e) pursuant to clause 7 of subsection 127(1) of the Act, each of Campbell, Da Silva, O’Brien, and Sylvester shall immediately resign all positions they may hold as a director or officer of any issuer;

(f) pursuant to clause 8 of subsection 127(1) of the Act, each of Campbell, Da Silva, O’Brien and Sylvester are prohibited permanently from becoming or acting as a director or officer of any issuer;

(g) pursuant to clause 8.1 of subsection 127(1) of the Act, each of Campbell, Da Silva, O’Brien and Sylvester are prohibited permanently from becoming or acting as a director or officer of any registrant;

(h) pursuant to clause 9 of subsection 127(1) each of the individual respondents shall pay an administrative penalty in the following amount:

(i) Sylvester shall pay an administrative penalty of $200,000;


January 14, 2011 (2011) 34 OSCB 462

(ii) O’Brien shall pay an administrative penalty of $500,000;

(iii) Da Silva shall pay an administrative penalty of $650,000; and

(iv) Campbell shall pay an administrative penalty of $750,000;

(i) pursuant to clause 10 of subsection 127(1) of the Act, the Respondents shall disgorge to the Commission, the following amounts:

(i) Al-tar, O’Brien, Campbell and Da Silva shall jointly and severally disgorge to the Commission $615,199.50; and

(ii) Alberta Energy, Drago, Campbell and Sylvester shall jointly and severally disgorge to the Commission $42,909.53;

(j) the amounts referred to in paragraphs (h) and (i) of this Order shall be allocated by the Commission to or for the benefit of third parties, including investors who lost money as a result of investing in the investment scheme that was the subject matter of this proceeding, in accordance with subsection 3.4(2)(b) of the Act; and

(k) pursuant to section 127.1 of the Act, the Respondents shall jointly and severally pay $133,865.00 in costs to the Commission.

Dated at Toronto, Ontario this 6th day of January 2011.

James E. A. Turner

Carol S. Perry

January 14, 2011 (2011) 34 OSCB 463

Chapter 4

Cease Trading Orders

4.1.1 Temporary, Permanent & Rescinding Issuer Cease Trading Orders

Company Name Date of Temporary

Order

Date of Hearing

Date of Permanent

Order

Date of Lapse/Revoke

American Bonanza Gold Corp. 24 Dec 10 05 Jan 11 07 Jan 11

Mahdia Gold Corp. 10 Jan 11 21 Jan 11

Greengreen Capital Corp. 10 Jan 11 21 Jan 11

Rain Resources Inc. 12 Jan 11 24 Jan 11

4.2.1 Temporary, Permanent & Rescinding Management Cease Trading Orders

Company Name Date of Order or

Temporary Order

Date of Hearing

Date of Permanent

Order

Date of Lapse/ Expire

Date of Issuer

Temporary Order

Mint Technology Corp. 07 Jan 11 19 Jan 11

Pure Energy Visions Corporation 06 Dec 10 17 Dec 10 17 Dec 10 12 Jan 11

4.2.2 Outstanding Management & Insider Cease Trading Orders

Company Name Date of Order or

Temporary Order

Date of Hearing

Date of Permanent

Order

Date of Lapse/ Expire

Date of Issuer Temporary

Order

Pure Energy Visions Corporation 06 Dec 10 17 Dec 10 17 Dec 10 12 Jan 11

Cathay Forest Products Corp. 08 Dec 10 20 Dec 10 20 Dec 10

Seprotech Systems Incorporated 04 Jan 11 17 Jan 11

Mint Technology Corp. 07 Jan 11 19 Jan 11

Cease Trading Orders

January 14, 2011 (2011) 34 OSCB 464

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Chapter 7

Insider Reporting This chapter is available in the print version of the OSC Bulletin, as well as as in Carswell's internet service SecuritiesScource (see www.carswell.com). This chapter contains a weekly summary of insider transactions of Ontario reporting issuers in the System for Electronic Disclosure by Insiders (SEDI). The weekly summary contains insider transactions reported during the seven days ending Sunday at 11:59 pm. To obtain Insider Reporting information, please visit the SEDI website (www.sedi.ca).

January 14, 2011 (2011) 34 OSCB 683

Chapter 8

Notice of Exempt Financings

REPORTS OF TRADES SUBMITTED ON FORMS 45-106F1 AND 45-501F1

Transaction Date

No. of Purchasers

Issuer/Security Total PurchasePrice ($)

No. of Securities

Distributed

12/23/2010 87 49 North 2010 Resource Flow-Through Limited Partnership - Limited Partnership Units

3,980,210.00 398,021.00

12/03/2010 13 African Queen Mines Ltd. - Units 1,242,505.55 1,911,547.00

12/14/2010 1 Argonaut Exploration Inc. - Flow-Through Units

240,000.00 1,200,000.00

12/15/2010 to 12/21/2010

103 Assiniboia Farmland Limited Partnership - Limited Partnership Units

10,183,883.26

341,358.00

12/14/2010 to 12/20/2010

79 Aston Hill Energy 2010 Short Term FT Limited Partnership - Limited Partnership Units

3,852,500.00 154,100.00

12/30/2010 29 Augen Capital Corp. - Units 1,109,091.00 15,844,155.00

12/20/2010 1 Australia and New Zealand Banking Group Limited - Notes

30,534,000.00

30,534,000.00

12/22/2010 72 Australia Energy Corp. - Common Shares 6,500,000.00 3,250,000.00

12/22/2010 5 B4Checkin Limited - Common Shares 196,000.00 196,000.00

12/22/2010 11 BacTech Environmental Corporation - Units 303,200.00 2,526,666.00

12/10/2010 2 Bayfield Mill Woods Limited Partnership - Units

5,300,000.00 5,300,000.00

12/10/2010 2 Bayfield Retail (2009) LP - Units 3,740,000.00 3,740,000.00

12/21/2010 1 Birch Hill Equity Partners IV, LP - Limited Partnership Interest

10,000,000.00

10,000,000.00

11/02/2010 18 Bombardier Inc. - Notes 1,094,210,302.22

18.00

12/10/2010 17 Brant County Riverbend Development Investment Corporation - Common Shares

558,200.00 55,820.00


229,670.00 22,967.00


468,600.00 46,860.00

12/10/2010 6 Brant County Riverbend Development LP - Limited Partnership Units

914,400.00 91,440.00


1,484,913.00 161,525.00


January 14, 2011 (2011) 34 OSCB 684

Transaction Date

No. of Purchasers


No. of Securities

Distributed


477,940.00 47,794.00

11/12/2010 66 Brigadier Gold Limited - Units 1,497,929.00 8,321,828.00

12/21/2010 4 Broadsoft Inc. - Common Shares 16,792,500.00

750,000.00

12/17/2010 52 Calgary Capital Investment Trust - Units 31,208.32 70,928.00

12/17/2010 52 Calgary Capital Investment Trust - Units 31,208.32 70,928.00

12/09/2010 to 12/13/2010

12 Canadian Horizons First Mortgage Investment Corporation - Preferred Shares

662,594.00 662,594.00

12/23/2010 61 Canadian Horizons First Mortgage Investment Corporation - Preferred Shares

2,204,282.00 2,204,282.00

12/09/2010 25 CareVest Blended Mortgage Investment Corporation - Preferred Shares

985,010.00 985,010.00

12/23/2010 19 CareVest Blended Mortgage Investment Corporation - Preferred Shares

708,304.00 708,304.00

12/23/2010 17 CareVest Capital Blended Mortgage Investment Corp. - Preferred Shares

1,405,380.00 1,405,380.00

12/23/2010 3 CareVest Capital First Mortgage Investment Corp. - Preferred Shares

43,600.00 43,600.00

12/15/2010 6 CGS Flow-Through 2010 LP - Limited Partnership Units

315,000.00 12,600.00

11/25/2010 14 Chemaphor Inc. - Common Shares 192,000.00 1,920,000.00

12/23/2010 1 Clairvest Equity Partners IV Limited Partnership - Limited Partnership Units

25,000,000.00

25,000.00

12/17/2010 2 CNH Capital Canada Warehouse Trust I - Notes

123,556,643.31

2.00

12/03/2010 62 Colonial Coal International Corporation - Units 4,002,500.00 5,198,052.00

12/09/2010 1 Concho Resources, Inc. - Notes 252,450.00 250,000.00

12/10/2010 5 Conundrum Residential Property Income Fund III - Units

24,000,001.00

24,010,000.00

10/15/2010 2 Corsa Capital Ltd. - Common Shares 5,000,000.00 1,000,000.00

11/30/2010 48 Corvus Gold Inc. - Common Shares 7,040,000.00 8,000,000.00

10/08/2010 3 CRESO Exploration Inc. - Units 3,440,000.00 3,822,222.00

11/24/2010 1 Cynapsus Therapeutics Inc. - Common Shares

18,400.00 368,000.00

11/24/2010 1 Cynapsus Therapeutics Inc. - Debenture 100,000.00 1.00


January 14, 2011 (2011) 34 OSCB 685

Transaction Date

No. of Purchasers


No. of Securities

Distributed

12/03/2010 104 Detour Gold Corporation - Notes 503,000,000.00

500,000,000.00

12/23/2010 1 Duncan Park Holdings Corporation - Common Shares

0.00 2,000,000.00

12/23/2010 49 Duran Ventures Inc. - Units 6,441,890.00 49,553,000.00

12/23/2010 50 Easyhome Ltd. - Common Shares 11,499,990.00

1,352,940.00

12/08/2010 1 Emerging Markets Value Portfolio of DFA Investment Dimensions Group Inc. - Common Shares

26,299,178.00

712,328.77

12/22/2010 13 EquiGenesis 2003-II Preferred Investment LP - Units

12,324,316.00

716.53

12/22/2010 27 EquiGenesis 2004-II Preferred Investment LP - Units

30,759,104.00

1,788.32

12/31/2010 1 Exile Resources Inc. - Common Shares 1,800,000.00 9,000,000.00

12/09/2010 1 Fengate Greenfield Feeder 2 L.P. - Limited Partnership Interest

30,000,000.00

30,000,000.00

12/09/2010 2 Fengate Greenfield Feeder L.P. - Limited Partnership Interest

30,000,000.00

30,000,000.00

12/13/2010 1 First Leaside Expansion Limited Partnership - Limited Partnership Interest

45,490.00 45,490.00

12/15/2010 to 12/21/2010

4 First Leaside Expansion Limited Partnership - Limited Partnership Units

85,000.00 85,000.00

12/10/2010 to 12/14/2010

2 First Leaside Mortgage Fund - Trust Units 24,000.00 24,000.00

12/16/2010 1 First Leaside Mortgage Fund - Trust Units 500,000.00 500,000.00

12/09/2010 to 12/14/2010

4 First Leaside Ultimate Limited Partnership - Limited Partnership Interest

166,437.50 164,277.00

12/21/2010 2 First Leaside Ultimate Limited Partnership - Limited Partnership Interest

250,875.00 245,121.00

12/14/2010 1 First Leaside Universal Limited Partnership - Limited Partnership Interest

50,000.00 50,000.00

12/15/2010 to 12/21/2010

9 First Leaside Universal Limited Partnership - Limited Partnership Units

794,000.00 794,000.00

12/09/2010 to 12/14/2010

15 First Leaside Wealth Management Fund - Trust Units

736,134.00 736,134.00

12/15/2010 to 12/21/2010

25 First Leaside Wealth Management Fund - Trust Units

2,076,763.00 2,076,763.00

12/15/2010 105 FlatWorld Acquisition Corp. - Units 22,204,600.00

2,200,000.00


January 14, 2011 (2011) 34 OSCB 686

Transaction Date

No. of Purchasers


No. of Securities

Distributed

11/03/2010 1 Foran Mining Corporation - Common Shares 0.00 4,000,000.00

11/25/2010 3 Gold World Resources Inc. - Units 70,000.00 1,400,000.00

12/09/2010 17 Golden Dawn Minerals Inc. - Units 309,000.00 3,862,500.00

12/17/2010 7 Golden Hope Mines Limited - Flow-Through Shares

3,700,000.00 6,037,735.00

12/13/2010 2 Green Dot Corporation - Common Shares 22,980,225.00

4,269,051.00

11/12/2010 5 Greenock Resources Inc - Common Shares 437,531.99 6,250,457.00

11/05/2010 to 11/15/2010

15 Greenscape Capital Group Inc. - Special Warrants

703,432.41 2,557,936.00

12/06/2010 8 Guelph Hydro Electric Systems Inc. - Debentures

65,000,000.00

65,000.00

12/20/2010 59 Hard Creek Nickel Corporation - Units 2,500,000.00 10,000,000.00

12/17/2010 14 Huntington Bancshares Incorporated - Common Shares

12,760,000.00

2,000,000.00

12/13/2010 to 12/17/2010

28 IGW Real Estate Investment Trust - Units 957,707.90 957,707.90

12/17/2010 to 12/23/2010

40 IGW Real Estate Investment Trust - Units 2,496,325.67 1,158,746.00

12/16/2010 38 JOG Limited Partnership No. V - Limited Partnership Units

89,600,000.00

8,960,000.00

05/01/2010 to 10/01/2010

12 Kassirer Opportunities Limited Partnership - Limited Partnership Units

1,325,899.97 137.58

12/16/2010 40 KDC Energy Ltd. - Common Shares 2,590,000.00 857,615,863.00

12/15/2010 1 Kingwest Avenue Portfolio - Units 18,383.81 607.86

12/15/2010 1 Kingwest U.S. Equity Portfolio - Units 501,675.42 34,332.17

11/25/2010 to 11/26/2010

16 Knick Exploration Inc. - Common Shares 337,500.00 1,355,000.00

12/07/2010 17 KWG Resources Inc. - Flow-Through Shares 1,601,460.00 12,318,923.00

11/09/2010 15 La Quinta Resources Corporation - Units 400,000.00 8,000,000.00

12/22/2010 to 12/30/2010

31 Manitok Energy Inc. - Common Shares 10,356,900.00

10,356,900.00

12/22/2010 to 12/30/2010

52 Manitok Energy Inc. - Flow-Through Shares 7,737,992.35 4,141,989.00

06/02/2010 2 Manitou Gold Inc. - Common Shares 0.00 200,000.00

12/30/2010 2 Matamec Explorations Inc. - Common Shares 160,000.00 200,000.00


January 14, 2011 (2011) 34 OSCB 687

Transaction Date

No. of Purchasers


No. of Securities

Distributed

11/30/2010 15 Maya Gold & Silver Inc. - Units 1,525,000.00 5,446,427.00

11/09/2010 4 MedAssets Inc. - Notes 2,868,525.00 4.00

11/17/2010 7 Mercer International Inc. - Notes 34,704,501.38

7.00

12/30/2010 16 Mines Abcourt Inc. - Units 339,600.00 2,515,787.00

12/30/2010 17 Mines Abcourt Inc.. - Flow-Through Units 1,156,100.00 7,973,641.00

12/13/2010 3 MMS Investment Inc. - Units 18,000,000.00

18,000,000.00

12/16/2010 35 Morrison Laurier Mortgage Corporation - Preferred Shares

1,156,180.00 115,618.00

12/21/2010 7 Nalco Company - Notes 7,503,045.00 7,503,045.00

11/30/2010 to 12/06/2010

7 Newport Canadian Equity Fund - Trust Units 108,500.00 829.65

11/26/2010 to 12/06/2010

4 Newport Fixed Income Fund - Trust Units 810,000.00 7,564.31

11/26/2010 to 12/06/2010

13 Newport Global Equity Fund - Trust Units 307,542.19 5,104.12

11/26/2010 to 12/06/2010

18 Newport Strategic Yield Fund LP - Trust Units 1,032,913.32 92,323.30

11/26/2010 to 12/06/2010

25 Newport Yield Fund - Trust Units 1,562,889.86 13,400.33

12/29/2010 to 12/30/2010

19 Nuinsco Resources Limited - Units 410,981.04 2,433,228.00

12/13/2010 to 01/14/2011

4 Otis Gold Corp. - Common Shares 1,424,000.00 2,100,000.00

12/03/2010 54 Paragon Minerals Corporation - Units 3,054,400.80 19,363,740.00

11/03/2010 35 Peregrine Diamonds Ltd. - Units 12,000,000.00

4,800,000.00

12/10/2010 32 Placencia Capital Trust I - Trust Units 741,245.00 741,245.00

11/17/2010 11 Precision Drilling Corporation - Notes 663,004,774.00

11.00

12/29/2010 3 Proforma Capital Bond Corporation - Bonds 424,800.00 4,248.00

11/30/2010 46 Ratel Gold Limited - Receipts 25,000,001.00

83,333,334.00

11/23/2010 4 Rencore Resources Ltd. - Common Shares 915,000.00 3,050,000.00

12/21/2010 23 Royal Bank of Canada - Notes 3,114,567.50 3,061.00

12/16/2010 1 Royal Bank of Canada - Notes 301,680.00 300.00


January 14, 2011 (2011) 34 OSCB 688

Transaction Date

No. of Purchasers


No. of Securities

Distributed




12/03/2010 10 Russell Breweries Inc. - Debentures 158,000.00 0.00

11/05/2010 35 Sabina Gold & Silver Corp. - Flow-Through Shares

16,000,031.00

2,990,660.00

11/05/2010 8 Sabina Gold & Silver Corp. - Flow-Through Shares

640,828.35 119,781.00

11/12/2010 10 Sea Green Capital Corp. - Common Shares 0.00 8,275,000.00

12/17/2010 53 Sea Green Capital Corp. - Units 696,500.00 13,930,000.00

12/16/2010 14 Shamrock Israel Growth Fund II, L.P. - Limited Partnership Interest

21,727,440.00

21,727,440.00

11/18/2010 2 Solid Gold Resources Corp. - Units 264,999.90 933,333.00

11/08/2010 1 Solium Capital Inc. - Common Shares 11,662,500.00

7,775,000.00

11/15/2010 3 Solium Capital Inc. - Common Shares 3,282,309.00 2,188,206.00

11/30/2010 33 South American Silver Corp. - Common Shares

31,899,278.48

27,499,378.00

12/03/2010 2 Texada Software Inc. - Common Shares 235,000.00 2,350,000.00

11/30/2010 to 12/15/2010

11 The Absolute Resource Fund L.P. - Limited Partnership Interest

2,977,754.00 2,977,754.00

12/10/2010 34 TinyMassive Technologies Inc. - Units 251,000.00 1,950,000.00

11/30/2010 88 Titan Uranium Inc. - Units 6,940,713.90 20,949,352.00

12/15/2010 137 Titanium Corporation Inc. - Units 14,231,000.00

7,115,500.00

12/02/2010 50 Treasury Metals Inc. - Units 3,478,395.65 N/A

12/06/2010 2 Trelawney Mining and Exploration Inc. - Common Shares

0.00 300,000.00


0.00 500,000.00


57,134,400.00

N/A

12/16/2010 9 Tres-or Resources Ltd. - Units 550,000.00 3,666,666.00

12/16/2010 89 Trinidad Drilling Ltd. - Notes 464,035,162.50

89.00


January 14, 2011 (2011) 34 OSCB 689

Transaction Date

No. of Purchasers


No. of Securities

Distributed

12/22/2010 4 Two Harbors Investment Corp. - Common Shares

1,652,000.00 175,000.00

12/20/2010 1 Tyco Electronics Group S.A. - Notes 1,011,917.11 1,011,917.11

11/15/2010 46 Tyhee Development Corp. - Units 2,376,440.08 21,687,000.00

12/06/2010 1 UBS AG, Jersey Branch - Notes 996,567.00 1,000,000.00

12/07/2010 1 UBS AG, Jersey Branch - Notes 98,548.38 98,548.38

12/21/2010 9 VersaPay Corporation - Units 900,000.00 900,000.00

12/01/2010 14 Virgin Megals Inc. - Units 687,825.80 3,439,129.00

11/12/2010 9 Virgin Metals Inc. - Units 320,500.00 1,602,500.00

12/10/2010 9 Walton AZ Vista Bonita Investment Corporation - Common Shares

190,400.00 19,040.00


497,260.00 49,726.00


202,070.00 20,207.00

12/10/2010 9 Walton AZ Vista Bonita LP - Limited Partnership Units

387,074.21 38,256.00

12/21/2010 145 Walton Big Lake Development L.P. - Limited Partnership Units

4,644,060.00 464,406.00

12/17/2010 158 Walton DC Region Land 1 Investment Corporation - Common Shares

3,019,470.00 301,947.00

12/23/2010 34 Walton DC Region Land 1 Investment Corporation - Common Shares

813,360.00 81,336.00

12/10/2010 20 Walton DC Region Land LP 1 - Limited Partnership Units

1,004,939.82 99,568.00


1,289,004.40 126,883.00


2,966,579.81 295,329.00

12/10/2010 19 Walton Southern U.S. Land 2 Investment Corporation - Common Shares

447,780.00 44,778.00


494,280.00 49,428.00


314,310.00 31,431.00

12/23/2010 4 Walton Southern U.S. Land LP 2 - Limited Partnership Units

450,653.24 44,360.00


January 14, 2011 (2011) 34 OSCB 690

Transaction Date

No. of Purchasers


No. of Securities

Distributed

12/10/2010 2 Wesbrooke Retirement Limited Partnership - Units

60,000.00 60,000.00

12/17/2010 56 Westcan Investment Trust - Units 56,013.89 47,712.00

12/17/2010 to 12/21/2010

5 Wimberly Apartments Limited Partnership - Limited Partnership Units

155,344.68 238,738.00

12/10/2010 to 12/13/2010

3 Wimberly Fund - Trust Units 97,407.00 97,407.00

12/09/2010 1 Wimberly Fund - Trust Units 14,894.00 14,894.00

12/15/2010 1 Wimberly Fund - Trust Units 28,794.00 28,794.00

January 14, 2011 (2011) 34 OSCB 691

Chapter 11

IPOs, New Issues and Secondary Financings

Issuer Name: AlphaNorth 2011 Flow-Through Limited Partnership Principal Regulator - Ontario Type and Date: Preliminary Long Form Prospectus dated January 4, 2011 NP 11-202 Receipt dated January 5, 2011 Offering Price and Description: Maximum Offering: $25,000,000 - 2,500,000 Units; Minimum Offering: $5,000,000 - 500,000 Units Price: $10.00 per Unit - Minimum Subscription: $2,500 (250 Units)Underwriter(s) or Distributor(s): Canaccord Genuity Corp. GMP Securities L.P. National Bank Financial Inc. Scotia Capital Inc. Wellington West Capital Markets Inc. Mackie Research Capital Corporation Macquarie Capital Markets Canada Ltd. Desjardins Securities Inc. Dundee Securities Corporation Raymond James Ltd. MGI Securities Inc. Queensbury Securities Inc. Union Securities Ltd. Promoter(s):AlphaNorth Asset Management Pinetree Capital Ltd. PowerOne Asset Management Limited Project #1683315

_______________________________________________ Issuer Name: Blue Ribbon Income Fund (formerly Citadel Diversified Investment Trust) Principal Regulator - Ontario Type and Date: Preliminary Short Form Prospectus dated January 7, 2011 NP 11-202 Receipt dated January 10, 2011 Offering Price and Description: Warrants to Subscribe for up to * Units Subscription Price of $* per Unit Underwriter(s) or Distributor(s): -Promoter(s):Blue Ribbon Fund Management Ltd. Project #1684669

_______________________________________________

Issuer Name: Compass Petroleum Ltd. Principal Regulator - Alberta Type and Date: Preliminary Short Form Prospectus dated January 10, 2011 NP 11-202 Receipt dated January 10, 2011 Offering Price and Description: $15,000,000 - Common Shares Price: $ * per Offered Share Underwriter(s) or Distributor(s): Raymond James Ltd. Wellington West Capital Markets Inc. Canaccord Genuity Corp. Promoter(s):-Project #1685266

_______________________________________________ Issuer Name: First National Financial Corporation Principal Regulator - Ontario Type and Date: Preliminary Short Form Prospectus dated January 11, 2011 NP 11-202 Receipt dated January 11, 2011 Offering Price and Description: $100,000,000 - 4,000,000 Class A Preference Shares, Series 1 Price: $25.00 per Series 1 Share to yield initially 4.65% per annum Underwriter(s) or Distributor(s): RBC Dominion Securities Inc. Scotia Capital Inc. BMO Nesbitt Burns Inc. TD Securities Inc. CIBC World Markets Inc.National Bank Financial Inc. Jennings Capital Inc. Promoter(s):-Project #1685640

_______________________________________________


January 14, 2011 (2011) 34 OSCB 692

Issuer Name: Palos Equity Income Fund Principal Regulator - Quebec Type and Date: Preliminary Simplified Prospectus and Annual Information Form dated January 7, 2011 NP 11-202 Receipt dated January 10, 2011 Offering Price and Description: -Underwriter(s) or Distributor(s): -Promoter(s):-Project #1670096

_______________________________________________ Issuer Name: SMC 2011-1 Charity Flow-Through Limited Partnership Principal Regulator - Ontario Type and Date: Preliminary Long Form Prospectus dated January 4, 2011 NP 11-202 Receipt dated January 5, 2011 Offering Price and Description: $100,000,000 -1,000,000 Limited Partnership Units (Maximum Offering) $* - * Limited Partnership Units (Minimum Offering) Price: $100.00 Per Unit - Minimum Purchase: $500.00 (5 Units)Underwriter(s) or Distributor(s): Scotia Capital Inc. Promoter(s):SMC Charity Flow-Through GP, Inc Scotia Managed Companies Administration Inc. Project #1683258

_______________________________________________ Issuer Name: CC&L Balanced Growth Portfolio CC&L Balanced Income Portfolio CC&L Balanced Portfolio CC&L Growth Portfolio CC&L Money Market Fund Principal Regulator - Ontario Type and Date: Final Simplified Prospectuses dated January 7, 2011 NP 11-202 Receipt dated January 11, 2011 Offering Price and Description: Serues A, Series F, Series I, Series O, Arbour Series, PI Financial Series, Canadian First Series and Reserve Series Units @ Net Asset Value Underwriter(s) or Distributor(s): -Promoter(s):Connor Clark & Lunn Managed Portfolios Inc. Project #1674430

_______________________________________________

Issuer Name: Covington Fund II Inc. Type and Date: Final Long Form Prospectus dated December 23, 2010 Receipted on December 24, 2010 Offering Price and Description: Class A Shares Underwriter(s) or Distributor(s): -Promoter(s):Covington Capital Corporation Project #1667183

_______________________________________________ Issuer Name: Fidelity Canadian Asset Allocation Class Principal Regulator - Ontario Type and Date: Amendment #2 dated December 22, 2010 to Final Simplified Prospectus and Annual Information Form dated March 22, 2010 NP 11-202 Receipt dated January 6, 2011 Offering Price and Description: Series A, B, F, T5, T8, S5, S8, F5 and F8 shares Underwriter(s) or Distributor(s): -Promoter(s):Fidelity Investments Canada ULC Project #1533221

_______________________________________________ Issuer Name: Invesco Emerging Markets Class Invesco Emerging Markets Debt Fund Trimark Energy Class Principal Regulator - Ontario Type and Date: Final Simplified Prospectuses dated January 7, 2011 NP 11-202 Receipt dated January 7, 2011 Offering Price and Description: Series A, Series F and Series I shares Underwriter(s) or Distributor(s): -Promoter(s):Invesco Trimark Ltd. Project #1666128

_______________________________________________


January 14, 2011 (2011) 34 OSCB 693

Issuer Name: PIMCO Canadian Long Term Bond Fund PIMCO Canadian Real Return Bond Fund PIMCO Canadian Short Term Bond Fund PIMCO Canadian Total Return Bond Fund PIMCO Global Advantage Strategy Bond Fund (Canada) PIMCO Global Balanced Fund (Canada) PIMCO Monthly Income Fund (Canada) PIMCO EqS Pathfinder Fund (Canada) Principal Regulator - Ontario Type and Date: Final Simplified Prospectuses dated January 10, 2011 NP 11-202 Receipt dated January 10, 2011 Offering Price and Description: Class A, Class F, Class I and Class O units Underwriter(s) or Distributor(s): -Promoter(s):PIMCO Canada Corp. Project #1660628

_______________________________________________ Issuer Name: Premium Brands Holdings Corporation Principal Regulator - British Columbia Type and Date: Final Short Form Prospectus dated January 6, 2011 NP 11-202 Receipt dated January 6, 2011 Offering Price and Description: $50,000,000.00 - 5.75% Convertible Unsecured Subordinated Debentures Price: Per Debenture $1,000 Underwriter(s) or Distributor(s): National Bank Financial Inc. Scotia Capital Inc. BMO Nesbitt Burns Inc. CIBC World Markets Inc. TD Securities Inc. Canaccord Genuity Corp. Industrial Alliance Securities Inc. Laurentian Bank Securities Inc. PI Financial Corp. Promoter(s):-Project #1675573

_______________________________________________

Issuer Name: TransGlobe Apartment Real Estate Investment Trust Principal Regulator - Ontario Type and Date: Final Short Form Prospectus dated January 6, 2011 NP 11-202 Receipt dated January 6, 2011 Offering Price and Description: $95,499,540.00 - 9,271,800 Subscription Receipts each representing the right to receive one Unit Price: $10.30 per Subscription Receipt Underwriter(s) or Distributor(s): CIBC World Markets Inc. RBC Dominion Securities Inc. TD Securities Inc. Canaccord Genuity Corp. Scotia Capital Inc. BMO Nesbitt Burns Inc. Dundee Securities Corporation Promoter(s):-Project #1679594

_______________________________________________


January 14, 2011 (2011) 34 OSCB 694


January 14, 2011 (2011) 34 OSCB 695

Chapter 12

Registrations

12.1.1 Registrants

Type Company Category of Registration Effective Date

Name Change

From: Hartford Investments Canada Corp.

To: CI HICC Corp.

Exempt Market Dealer and Portfolio Manager

December 17, 2010

Amalgamation

GWL Investment Management Ltd. AndLondon Capital Management Ltd. AndLaketon Investment Management Ltd.

To Form: GWL Investment Management Ltd.

Portfolio Manager January 1, 2011

Name Change

From: GWL Investment Management Ltd.

To: GLC Asset Management Group Ltd.

Portfolio Manager January 1, 2011

Change in Registration Category Dundee Securities Corporation

From: Investment Dealer

To: Investment Dealer and Investment Fund Manager

January 5, 2011

Consent to Suspension (Pending Surrender)

Oxbridge Private Wealth Management (Canada) Inc. Exempt Market Dealer January 5, 2011

Consent to Suspension (Pending Surrender) Pine Point Capital Advisors Inc. Exempt Market Dealer January 5, 2011

Change in Registration Category

Creststreet Asset Management Limited

From: Portfolio Manager, Commodity Trading Manager

To: Portfolio Manager, Commodity Trading Manager and Investment Fund Manager

January 6, 2011

Registrations

January 14, 2011 (2011) 34 OSCB 696


Change in Registration Category

Broadview Capital Management Inc.

From: Exempt Market Dealer and Portfolio Manager

To: Exempt Market Dealer, Portfolio Manager and Investment Fund Manager

January 6, 2011

Change in Registration Category Navina Asset Management Inc.



January 6, 2011

Consent to Suspension (Pending Surrender) Agellan Capital Markets Inc. Exempt Market Dealer January 6, 2011

Name Change From: CI HICC Corp.

To: Castlerock Investments Corp

Exempt Market Dealer and Portfolio Manager January 7, 2011

New Registration WealthSpark Inc. Exempt Market Dealer January 7, 2011

New Registration OLOS Capital Inc. Exempt Market Dealer January 7, 2011

Change in Registration Category Qtrade Asset Management Inc.

From: Mutual Fund Dealer

To: Mutual Fund Dealer and Exempt Market Dealer

January 7, 2011

Change in Registration Category Camlin Asset Management Ltd.

From: Portfolio Manager

To: Exempt Market Dealer and Portfolio Manager

January 10, 2011

Change in Registration Category Salida Capital LP



January 11, 2011

Registrations

January 14, 2011 (2011) 34 OSCB 697


Voluntary Surrender Equity Securities Inc. Exempt Market Dealer January 11, 2011

Change in Registration Category Sevenoaks Capital Inc.



January 11, 2011

Change in Registration Category Faircourt Asset Management Inc.



January 12, 2011

Registrations

January 14, 2011 (2011) 34 OSCB 698


January 14, 2011 (2011) 34 OSCB 699

Chapter 13

SROs, Marketplaces and Clearing Agencies

13.2 Marketplaces

13.2.1 CNSX Markets Inc. – s. 15.1 of NI 21-101 Marketplace Operation

Section 15.1 of NI 21-101 – exemption granted for 2010 from the requirement in section 12.2 of NI 21-101 to annually cause to be performed an independent systems review and report.

Rules Cited

National Instrument 21-101 Marketplace Operation, ss. 12.2, 15.1.



AND

IN THE MATTER OF CNSX MARKETS INC.

ORDER(Section 15.1 of National Instrument 21-101 Marketplace Operation

(NI 21-101))

UPON the application (the “Application”) of CNSX Markets Inc. (the “Applicant”) to the Director for an order pursuant to section 15.1 of NI 21-101 exempting the Applicant in 2010 from the requirement in section 12.2 of NI 21-101 to annually cause to be performed an independent review and report (“ISR”) on the capacity, integrity and security of the Applicant’s systems thatsupport order entry, order routing, execution, trade reporting, trade comparison, data feeds, market surveillance and trade clearing, as applicable (“ISR Requirement”);

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON the Applicant having represented to the Director as follows:

1. The Applicant is a recognized stock exchange in Ontario with its head office in Toronto,

2. An ISR is a lengthy and expensive process,

3. The Applicant has planned significant system changes for 2010-11 in addition to improvements to system performance and capacity, including changes to accommodate the new order protection rule and the migration of the regulatory feed from STAMP to FIX, and a review would be more appropriate following the conclusion of these projects, and

4. The Applicant complies with the other requirements in Part 12 of NI 21-101;

AND UPON the Director being satisfied to do so would not be prejudicial to the public interest;

IT IS ORDERED by the Director pursuant to section 15.1 of NI 21-101 that for 2010 the Applicant is exempted from the ISR Requirement.

DATED this 21st day of December, 2010

“Susan Greenglass” Director, Market Regulation Ontario Securities Commission

SROs, Marketplaces and Clearing Agencies

January 14, 2011 (2011) 34 OSCB 700


January 14, 2011 (2011) 34 OSCB 701

Index

Agellan Capital Markets Inc. Consent to Suspension (Pending Surrender)..............695

Alberta Energy Corp., Notice from the Office of the Secretary .......................410

Order – ss. 127, 127.1 ................................................445 OSC Reasons .............................................................447

Al-tar Energy Corp. Notice from the Office of the Secretary .......................410


American Bonanza Gold Corp. Cease Trading Order ..................................................463

Arconti, Alexander Flavio Notice from the Office of the Secretary .......................410

Order - ss. 127(7), 127(8) ...........................................444

Arconti, Luigino Notice from the Office of the Secretary .......................410

Order - ss. 127(7), 127(8) ...........................................444

Baytex Energy Trust Decision ......................................................................438

Bell Aliant Regional Communications, Limited Partnership

Decision ......................................................................418

Broadview Capital Management Inc. Change in Registration Category ................................695

Camlin Asset Management Ltd. Change in Registration Category ................................695

Campbell, David C. Notice from the Office of the Secretary .......................410


Castlerock Investments Corp. Name Change.............................................................695

Catapult Financial Management Inc. Decision ......................................................................412

Cathay Forest Products Corp. Cease Trading Order ..................................................463

CI HICC Corp. Name Change.............................................................695

CNSX Markets Inc. Marketplaces – s. 15.1 of NI 21-101

Marketplace Operation................................................699

Continuous Disclosure Advisory Committee Members for 2011-2013

News Release ............................................................ 409

Creststreet Asset Management Limited Change in Registration Category ............................... 695

Da Silva, Abel Notice from the Office of the Secretary ...................... 410

Order – ss. 127, 127.1................................................ 445 OSC Reasons ............................................................ 447

Drago Gold Corp. Notice from the Office of the Secretary ...................... 410


Dundee Securities Corporation Change in Registration Category ............................... 695

Encana Corporation Decision...................................................................... 415

Equity Securities Inc. Voluntary Surrender ................................................... 695

Faircourt Asset Management Inc. Change in Registration Category ............................... 695

GLC Asset Management Group Ltd. Name Change ............................................................ 695

GMIncome & Growth Fund Decision...................................................................... 441

Greengreen Capital Corp. Cease Trading Order.................................................. 463

GWL Investment Management Ltd. Amalgamation ............................................................ 695Name Change ............................................................ 695

Hartford Investments Canada Corp. Name Change ............................................................ 695

Kerwin, Edward New Release .............................................................. 406

Laketon Investment Management Ltd. Amalgamation ............................................................ 695

London Capital Management Ltd. Amalgamation ............................................................ 695

Mahdia Gold Corp. Cease Trading Order.................................................. 463

Index

January 14, 2011 (2011) 34 OSCB 702

Mint Technology Corp. Cease Trading Order ..................................................463

Mulvihill Pro-AMS RSP Split Share Corp. Decision ......................................................................411

Navina Asset Management Inc. Change in Registration Category ................................695

North American Capital Inc. Notice from the Office of the Secretary .......................410

Order - ss. 127(7), 127(8) ...........................................444

North American Financial Group Inc. Notice from the Office of the Secretary .......................410

Order - ss. 127(7), 127(8) ...........................................444

O’Brien, Eric F. Notice from the Office of the Secretary .......................410


OLOS Capital Inc. New Registration.........................................................695

OSC Staff Notice 54-701 Regulatory Developments Regarding Shareholder Democracy Issues

Notice..........................................................................404 News Release.............................................................407

Oxbridge Private Wealth Management (Canada) Inc. Consent to Suspension (Pending Surrender)..............695

Peak Energy Services Trust Notice of Correction ....................................................403

PIMCO Canada Corp. Decision ......................................................................427

PIMCO Canadian Long-Term Bond Fund Decision ......................................................................427

PIMCO Canadian Real Return Bond Fund Decision ......................................................................427

PIMCO Canadian Short-Term Bond Fund Decision ......................................................................427

PIMCO Canadian Total Return Bond Fund Decision ......................................................................427

PIMCO EqS Pathfinder Fund™ (Canada) Decision ......................................................................427

PIMCO Global Advantage Strategy Bond Fund (Canada)

Decision ......................................................................427

PIMCO Global Balanced Fund (Canada) Decision ......................................................................427

PIMCO Monthly Income Fund (Canada) Decision ......................................................................427

Pine Point Capital Advisors Inc. Consent to Suspension (Pending Surrender) ............. 695

Pure Energy Visions Corporation Cease Trading Order.................................................. 463

Qtrade Asset Management Inc. Change in Registration Category ............................... 695

Rain Resources Inc. Cease Trading Order.................................................. 463

Salida Capital LP Change in Registration Category ............................... 695

Seprotech Systems Incorporated Cease Trading Order.................................................. 463

Sevenoaks Capital Inc. Change in Registration Category ............................... 695

Sylvester, Julian M. Notice from the Office of the Secretary ...................... 410


WealthSpark Inc. New Registration ........................................................ 695

Documents

OSC Bulletin - Volume 34, Issue 2 - January 14, 2011 fileThe Ontario Securities Commission OSC Bulletin January 14, 2011 Volume 34, Issue 2 (2011), 34 OSCB The Ontario Securities Commission