Securities law "exemptions". A license to steal?

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Postby admin » Mon Jun 26, 2006 8:40 am

The OSC MRRS Exemption Decision enabling the CIBC and Royal Bank mutual funds to purchase Teranet Income Fund IPO units is found at the following OSC website addresses. This decision is dated June 6, 2006, but its posted date is June 9, 2006, the same date for the posting of the final prospectus and its receipt by the OSC. This MRRS decision explicitly permits the CIBC and Royal Bank mutual funds to purchase Teranet Income Fund IPO units without requiring any public disclosure of this for 97 days after the end of the IPO distribution, which would be 97 days from about June 15th. The number of shares permitted are any fixed number that is submitted by the CIBC and Royal Bank mutual funds, of which the IPO syndicate allocated number must be purchased within five days of June 9, 2006. The remaining amount of this fixed number of units, not filled in the IPO distribution, may be filled if the underwriting syndicate exercises its Greenshoe overallotment option for up to 10.5 million units within 30 days.

There does not appear to be any restrictions on the CIBC and Royal Bank mutual funds' purchase of Teranet Income Fund units in the secondary market. It is worth noting that the Ontario Government is free to have its approximately 15 million Teranet Income Fund Units sold in an orderly manner in the secondary market by its unnamed designee after 90 days. This MRRS decision would appear to enable the CIBC and Royal Bank mutual funds to be the buyers of the Ontario Government-owned Teranet Income Fund shares in the secondary market after the 90 days, with the requirement for public disclosure on their IPO and IPO overallotment purchases not being required until 7 days later.

I note below the clauses in this MRRS decision that I find interesting. ... ndex.jsp#c

June 9, 2006 CIBC Asset Management Inc., CIBC Global Asset Management Inc. and RBC Asset Management Inc. - MRRS Decision ... casset.jsp

10. Pursuant to an underwriting agreement the Issuer and the Underwriters will enter into in respect of the Offering prior to the Issuer filing the final prospectus for the Offering, the Issuer will agree to sell to the Underwriters, and the Underwriters will agree to purchase, as principals, all of the Units offered under the Offering.

15. The first quarterly meeting of the Independent Committee of the Dealer Managed Funds of RBC Asset Management Inc., immediately following the end of the 60-day period following the completion of the Distribution (the 60-Day Period) (the Distribution and the 60-Day Period together, the Prohibition Period), is scheduled to be held on September 15, 2006.

XI. The Dealer Manager files a certified report on SEDAR (the SEDAR Report) in respect of each Dealer Managed Fund, no later than 97 days after the end of the Distribution

XIII. The Dealer Manager:
(a) expresses an interest to purchase on behalf of Dealer Managed Funds and Managed Accounts a fixed number of Units (the Fixed Number) to an Underwriter other than its Related Underwriter;

(b) agrees to purchase the Fixed Number or such lesser amount as has been allocated to the Dealer Manager no more than five business days after the final prospectus has been filed;

(c) does not place an order with an underwriter of the Offering to purchase an additional number of Units under the Offering prior to the completion of the Distribution, provided that if the Dealer Manager was allocated less than the Fixed Number at the time, the final prospectus was filed for the purposes of the Closing, the Dealer Manager may place an additional order for such number of additional Units equal to the difference between the Fixed Number and the number of Units allotted to the Dealer Manager at the time of the final prospectus in the event the Underwriters exercise the Over-Allotment Option;

Diane Urquhart

Independent Consulting Analyst

Telephone: (905) 822-7618

(advocate comment: if you are a bank who is underwriting a share sale, and if said share sale is not "going" very well, you can always apply for exemptive relief from the waiting period that ordinarily prevents you from dumping unsold shares onto your bank mutual fund clients accounts......POOF!....your problem is solved using bank mutual fund customer's money) They will never know what hit them:)
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Securities law "exemptions". A license to steal?

Postby admin » Mon Jun 26, 2006 8:39 am

while researching a story in Saskatoon I have found myself pointed to a number of legal "passports" being handed out by our trusted securities commissions.

I find that they grant exemptions to the law almost daily, to allow investment firms to operate more "easily".
I also find a relationship with the industry of an almost incestuous nature, when compared to the way that securities commissions treat abused investors or the public interest.

If you would care to look for yourself how easy and how many "passports" around the law that are granted to members of the investment industry go to the OSC web site, at and look under the heading "orders, ruings and decisions", then click on any year and any letter of the alphabet to find out how many things have gone on that the public may not know of.

I would have to say that they harm clients by a factor that outnumber decisions that help clients by one thousand to one.
Last edited by admin on Mon Jun 26, 2006 8:45 am, edited 1 time in total.
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