Mandeville Private Client Inc. and Mandeville Private Client USA Inc. – s. 74.1

Headnote

Application for an order pursuant to section 74 of the Securities Act (Ontario) that a registered U.S. investment adviser, affiliated with an Ontario registered investment dealer, be exempted, subject to certain conditions, from requirements of subsection 25(3) of the Act in respect of advice provided by its representatives in respect of the U.S. tax-advantaged retirement savings, education or disability savings plans of clients formerly resident in the U.S.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 25.

August 31, 2021

IN THE MATTER OF THE SECURITIES ACT, RSO 1990, C S.5, AS AMENDED (the Act) AND IN THE MATTER OF MANDEVILLE PRIVATE CLIENT INC. AND MANDEVILLE PRIVATE CLIENT USA INC.

ORDER (subsection 74(1) of the Act)

WHEREAS the Ontario Securities Commission (the Commission) has received an application from Mandeville Private Client Inc. (MPC Canada) and Mandeville Private Client USA Inc. (MPC USA, and together with MPC Canada, the Filers) for a decision under subsection 74(1) of the Act exempting MPC USA and those of its individual representatives who are also registered under the Act as dealing representatives, in the approval category of portfolio management, of MPC Canada (the Dual Representatives) from the adviser registration requirement of subsection 25(3) of the Act in respect of advice provided by the Dual Representatives, acting on behalf of MPC USA, to an individual (the Ex-U.S. Client) if the advice is in respect of the Ex-U.S. Client's tax-advantaged retirement savings, education savings or disability savings plan (the U.S. Plan), and (i) the U.S. Plan is located in the United States of America (the U.S.), (ii) the Ex-U.S. Client is a holder of or contributor to the U.S. Plan, and (iii) the Ex-U.S. Client was previously resident in the U.S. (the Requested Exemptive Relief).

AND WHEREAS terms defined in National Instrument 14-101 Definitions have the same meaning if used in this order, unless otherwise defined.

AND WHEREAS the Filers having represented to the Commission that:

1. MPC Canada:

(a) carries on business in Ontario (the Jurisdiction) and each of the other provinces and territories of Canada, other than Nunavut (the Other Jurisdictions), with offices located in Ontario, British Columbia, Nova Scotia, New Brunswick and Québec;

(b) provides a broad array of wealth management services to residents of Canada, including financial planning, wills and estates planning, tax planning, insurance planning and brokerage services;

(c) is registered as an investment dealer in the Jurisdiction and in each of the Other Jurisdictions and as a derivatives dealer in Québec. It is a dealer member of the Investment Industry Regulatory Organization of Canada (IIROC); and

(d) is not in default of securities legislation in any jurisdiction of Canada.

2. MPC Canada offers clients a range of financial planning services and investment solutions, including fully managed accounts, mutual funds, private and alternative investment products and trading in individual securities.

3. MPC Canada advises certain clients resident in the U.S. (U.S. Clients) pursuant to the "de minimis exemption" from the U.S. investment adviser registration requirement, as allowed under applicable U.S. federal securities laws, including certain tax-advantaged retirement savings, education savings or disability savings plans (RSPs) held by U.S. Clients who were formerly resident in Canada and who have moved to the U.S.

4. MPC Canada is not registered under U.S. federal securities law or any other applicable securities law to (and does not) carry on the business of a registered broker-dealer or registered investment adviser in the U.S, other than as described above.

5. MPC USA:

(a) is registered as an investment adviser under the Investment Advisers Act of 1940 (United States) (the 1940 Act);

(b) currently has no physical presence in the U.S.;

(c) will carry on business initially in Ontario and intends to subsequently carry on business in each of British Columbia, Nova Scotia, New Brunswick and Québec, with offices located in the Jurisdiction and in each of the Other Jurisdictions in which MPC Canada has offices;

(d) is relying on the adviser registration exemption available in OSC Rule 32-505 Conditional Exemption from Registration for United States Broker-Dealers and Advisers Servicing U.S. Clients from Ontario in the Jurisdiction to provide investment advisory services to U.S. Clients; and

(e) is not in default of securities legislation of any jurisdiction of Canada, U.S. federal securities law or any other applicable U.S. securities law.

6. The Filers are both privately held corporations incorporated under the laws of the province of Ontario. The head office of the Filers is located in Burlington, Ontario.

7. The Filers are direct wholly-owned subsidiaries of Mandeville Holdings Inc.

8. MPC USA has engaged RBC Advisor Services, a division of RBC Capital Markets, LLC (RBCCM), for trading, custody, clearing and settlement services pursuant to the terms of an investment advisor service agreement dated April 12, 2020 (the Investment Advisor Agreement).

9. RBCCM is a Minnesota limited liability company headquartered in New York, New York, U.S., and is an indirect, wholly-owned subsidiary of the Royal Bank of Canada. RBCCM is registered as a broker-dealer and investment adviser with the U.S. Securities and Exchange Commission (SEC).

10. Each of the Dual Representatives acts (or will act) on behalf of both Filers in one of the Filers' branch offices located in the Jurisdiction. Each Dual Representative is registered as a dealing representative of MPC Canada in the Jurisdiction, in the IIROC approval category of portfolio management.

11. None of the Dual Representatives is in default of securities legislation of any jurisdiction of Canada, U.S. federal securities law, or any other applicable U.S. securities law.

12. Each Dual Representative, when acting on behalf of MPC Canada, advises only clients of MPC Canada resident in the jurisdiction(s) of his or her registration as a dealer and U.S. Clients formerly resident in Canada in respect of their RSPs.

13. When acting on behalf of MPC USA, each Dual Representative currently advises only U.S. Clients.

14. The Dual Representatives are authorized to provide advisory services to U.S. Clients of MPC USA pursuant to an exemption from registration under the 1940 Act. The Dual Representatives are subject to the full oversight and compliance requirements of the SEC.

15. MPC USA and the Dual Representatives, acting on behalf of MPC USA, desire to advise Ex-U.S. Clients with respect to the trading of securities in their U.S. Plans despite such Ex-U.S. Clients' residency in the Jurisdiction.

16. A Dual Representative, acting on behalf of MPC USA, would only advise Ex-U.S. Clients resident in the Jurisdiction if he or she is registered as a dealing representative of MPC Canada, in the IIROC approval category of portfolio management, in the Jurisdiction.

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

18. As a start-up firm, MPC USA anticipates that it will initially have a small client base consisting primarily of Ex-U.S. Clients being advised by the Dual Representatives in order to maintain long-standing client relationships between the Dual Representatives, as representatives of MPC Canada, and such Ex-U.S. Clients, despite their residency in the Jurisdiction.

19. Notwithstanding the foregoing, it is MPC USA's intention that as MPC USA's client base continues to grow, U.S. Clients will comprise most of MPC USA's total revenue and Ex-U.S. Clients will represent less than 10% of its total revenue by the date that is 18 months after the date of this Order.

20. MPC USA expects that its U.S. client base will grow by MPC Canada's hiring new dealing representatives who are currently servicing U.S. clients through their current firm. The new MPC Canada dealing representatives will be transferring these U.S. clients to MPC USA when they join MPC Canada.

21. It is MPC USA's intention that, by the date that is 18 months after the date of this Order, the advice that it will provide to Ex-U.S. Clients will be ancillary to MPC USA's principal business which is advising U.S. Clients.

22. RBCCM, with the assistance of the RBC Advisor Services division, will provide trading, custody, clearing and settlement services for all Ex-U.S. Clients of MPC USA (in respect of their U.S. Plans) pursuant to the Investment Advisor Agreement.

23. RBCCM relies upon the exemption from the dealer registration requirement of the securities laws of the Jurisdiction and the Other Jurisdictions under section 8.18 of National Instrument 31-103 (NI 31-103) Registration Requirements, Exemptions and Ongoing Registrant Obligations in connection with inter alia trades in "foreign securities" with a "permitted client" (each as defined in NI 31-103). Accordingly, MPC USA and the Dual Representatives will only advise Ex-U.S. Clients who are "permitted clients" with respect to the trading of "foreign securities" (each as defined in NI 31-103) in their U.S. Plans while RBCCM carries, and provides prime brokerage services to, those accounts (unless RBCCM registers as an investment dealer in Ontario or seeks exemptive relief sufficient to permit it to trade in Canadian securities and/or to permit it to trade with or for residents of Canada who are not "permitted clients" (as defined in NI 31-103)).

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

25. For the purposes of the Act, and as a market participant, MPC USA is required by subsection 19(1) of the Act to: (i) keep such books, records and other documents as are necessary for the proper recording of its business transactions and financial affairs, and the transactions that it executes on behalf of others; and (ii) keep such books, records and documents as may otherwise be required under the Act. MPC USA is similarly required to keep such books, records and other documents as are necessary for the proper recording of its business transactions and financial affairs, and the transactions that it executes on behalf of others, pursuant to the requirements of its registration as an investment adviser under the 1940 Act.

26. All Ex-U.S. Clients of MPC USA will enter into a customer agreement and associated account opening documentation with MPC USA. All communications with Ex-U.S. Clients will be through MPC USA and the Dual Representatives and will be under MPC USA branding.

27. To avoid client confusion, all Ex-U.S. Clients of MPC USA will receive disclosure that explains the relationship between MPC USA and MPC Canada.

28. MPC USA confirms that there are currently no regulatory actions of the type contemplated by the Notice of Regulatory Action attached as Appendix "A" hereto in respect of MPC USA or any predecessors or specified affiliates of MPC USA. MPC Canada is in compliance with its obligations under applicable securities law to report regulatory actions relating to MPC Canada and its specified affiliates to securities regulators and/or self-regulatory organizations having jurisdiction over MPC Canada.

AND WHEREAS upon being satisfied that it would not be prejudicial to the public interest for the Commission to grant the Requested Exemptive Relief on the basis of the terms and conditions proposed,

IT IS ORDERED that, pursuant to subsection 74(1) of the Act, the Requested Exemptive Relief is granted, provided that:

(a) the advice is for an individual who is ordinarily resident in Canada but previously resident in the U.S., if such dealings are in respect of the Ex-U.S. Client's U.S. Plan, and

(i) the U.S. Plan is located in the U.S.;

(ii) the Ex-U.S. Client is a holder of or contributor to the U.S. Plan; and

(iii) the Ex-U.S. Client was previously resident in the U.S.;

(b) the only physical presence or offices that MPC USA has in the Jurisdiction are the premises that it shares with MPC Canada;

(c) MPC USA does not advertise for or solicit new clients in the Jurisdiction;

(d) MPC USA remains registered as an investment adviser under the 1940 Act;

(e) MPC USA and each of the Dual Representatives are in compliance with and remain in compliance with any applicable adviser licensing or registration requirements under applicable securities legislation of the U.S.;

(f) MPC Canada remains registered under the Act as an investment dealer and is a dealer member of IIROC;

(g) Each Dual Representative providing the advice on behalf of MPC USA is registered under the Act as a dealing representative in a category that would permit it to advise Ex-U.S. Clients with respect to the trading of securities in their U.S. Plans in compliance with the Act, if the U.S. Plans were instead tax-advantaged retirement savings plan located in Canada;

(h) MPC USA notifies the Commission of any regulatory action initiated after the date of the order in respect of MPC USA, any predecessors or specified affiliates of MPC USA by completing and filing Appendix "A" hereto with the Commission within 10 days of the commencement of such action;

(i) MPC Canada complies with its obligations under applicable securities law to report regulatory actions relating to MPC Canada and its specified affiliates to securities regulators and/or self regulatory organizations having jurisdiction over MPC Canada;

(j) MPC USA discloses to the Ex-U.S. Clients that it (and the Dual Representatives providing advice on its behalf) are not subject to full regulatory requirements otherwise applicable under the Act;

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

(l) MPC USA:

(i) enters into customer agreements and associated account opening documentation with all Ex-U.S. Clients, such that all communications with Ex-U.S. Clients will be through MPC USA and the Dual Representatives, and will be under MPC USA branding;

(ii) provides all Ex-U.S. Clients with disclosure that explains the relationship between MPC USA and MPC Canada;

(m) the execution of each trade identified or recommended by MPC USA (and each Dual Representative providing the advice on its behalf) for an Ex-U.S. Client will be conducted by a person registered as a dealer under the Act in a category that would permit them to execute the trade or otherwise exempt them from the dealer registration requirement of the Act for purposes of the trade;

(n) 12 months after the date of this Order (the Notice Date), MPC USA notifies the Commission of the percentage of the revenue derived from Ex-U.S. Clients compared to its total revenue, as of the Notice Date;

(o) if the revenue MPC USA derives from Ex-U.S. Clients is expected to exceed 10% of its total revenue 18 months after the date of this Order, MPC USA takes reasonable steps to obtain registration as an adviser in the Jurisdiction by the date that is 18 months after the date of this Order (taking into consideration the Commission's service standards for reviews of registration applications for new business submissions);

(p) if this Order does not terminate pursuant to condition (q)(i), and the revenue MPC USA derives from Ex-U.S. Clients subsequently exceeds 10% of its total revenue, MPC USA files forthwith a letter to the Commission advising of same. The letter will refer to this Order and this requirement, and will also provide details with respect to the percentage of the revenue derived from Ex-U.S. Clients and the date on which the revenue exceeded 10% of its total revenue; and

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

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

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

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

Dated at Toronto this 31st day of August 2021.

File No. 2021/0021

APPENDIX A NOTICE OF REGULATORY ACTION

1. Has the firm, or any predecessors or specified affiliates of the firm entered into a settlement agreement with any financial services regulator, securities or derivatives exchange, self-regulatory organization (SRO) or similar agreement with any financial services regulator, securities or derivatives exchange, SRO or similar organization?

Yes _____ No _____

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

Name of entity
Regulator/organization
Date of settlement (yyyy/mm/dd)
Details of settlement
Jurisdiction

Has any financial services regulator, securities or derivatives exchange, SRO or similar organization: See Appendix I.

If yes, provide the following information for each action:

Name of Entity	See Appendix I
Type of Action
Regulator/organization
Date of action (yyyy/mm/dd)	Reason for action
Jurisdiction

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

Yes _____ No _____

If yes, provide the following information for each investigation:

Name of entity
Reason or purpose of investigation
Regulator/organization
Date investigation commenced (yyyy/mm/dd)
Jurisdiction

Name of firm
Name of firm's authorized signing officer or partner
Title of firm's authorized signing officer or partner
Signature
Date (yyyy/mm/dd)

Witness

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

This form is to be submitted through the Ontario Securities Commission's Electronic Filing Portal: https://www.osc.gov.on.ca/filings