Skyon Financial Corp. – s. 28
IN THE MATTER OF SKYON FINANCIAL CORP.
DECISION OF THE DIRECTOR (Section 28 of the Securities Act, R.S.O. 1990, c. S.5)
1. Skyon Financial Corp. (Skyon) is registered under the Securities Act, R.S.O. 1990, c. S.5 (the Act) as a portfolio manager. Skyon is also registered as a portfolio manager under the securities laws of Alberta and British Columbia.
2. Skyon's principal regulator is the Alberta Securities Commission (the ASC).
3. On May 5, 2021, the ASC imposed certain terms and conditions on Skyon's registration (the Alberta Terms and Conditions) to facilitate a wind-down of the firm's operations. These terms and conditions were imposed because a trading error by Skyon resulted in the firm being unable to comply with its working capital requirements under National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations.
4. The Alberta Terms and Conditions provided that upon the completion of the various measures set out therein, Skyon's registration in Alberta would be automatically terminated.
5. By virtue of Multilateral Instrument 11-102 Passport System, the Alberta Terms and Conditions were imposed on Skyon's registration in British Columbia, but not in Ontario.
6. On May 3, 2021, and pursuant to s. 28 of the Act, the Director imposed terms and conditions on Skyon's registration in Ontario that are substantially similar to the Alberta Terms and Conditions (the Ontario Terms and Conditions). The Ontario Terms and Conditions, to which Skyon consented, are set out in Appendix A to this Decision.
7. The Ontario Terms and Conditions were imposed because it appeared to the Director that it would be objectionable for Skyon's Ontario registration not to be subject to the same terms and conditions as were to be imposed in Alberta and British Columbia.
8. Like the Alberta Terms and Conditions, the Ontario Terms and Conditions provide that upon the completion of the various measures set out therein, Skyon's registration in Ontario would be automatically revoked.
9. In accordance with Ontario Terms and Conditions, Skyon's registration was revoked on June 30, 2021.
July 14, 2021
Terms and Conditions of the Registration of Skyon Financial Corp.
The registration of Skyon Financial Corp. (the Firm) under the Securities Act, R.S.O. 1990, c. S.5 (the Act) is subject to the following terms and conditions, which were imposed by the Director pursuant to section 28 of the Act.
1. For the purposes of these terms and conditions, the following terms shall have the following meanings, respectively:
a. ASC Staff means staff of the Alberta Securities Commission;
b. Compliance Monitor means the compliance monitor appointed pursuant to the 2018 Terms and Conditions;
c. Effective Date means the date on which these terms and conditions are imposed on the registration of the Firm under the Act;
d. Existing Clients means clients of the Firm as at the Effective Date;
e. New Clients means investors who are not clients of the Firm as at the Effective Date;
f. Transition Period means the period commencing on the Effective Date and ending on the Transition Period End Date;
g. Transition Period End Date means June 30, 2021, or such other date, if any, as may be designated in writing by the Director as the Transition Period End Date and accepted in writing by the Firm as the Transition Period End Date, provided such designation and acceptance occur prior to the date theretofore determined as the Transition Period End Date; and
h. 2018 Terms and Conditions means the terms and conditions placed on the Firm's registration under the Act on September 24, 2018, and elsewhere in Canada on July 11, 2018.
2. During the Transition Period:
a. the Firm shall continue to comply with the 2018 Terms and Conditions, which remain in full force and effect;
b. the Firm shall not open any accounts for New Clients;
c. the Firm shall not receive any money or securities from New Clients for portfolio management purposes;
d. the Firm shall use its reasonable efforts to assist all Existing Clients who wish to continue to receive investment advisory services after the Transition Period End Date to engage the services of another registered firm;
e. the Firm shall use its reasonable efforts to ensure that all Existing Clients who do not wish to continue to receive investment advisory services after the Transition Period End Date, and all Existing Clients that do not provide account instructions to the Firm prior to the Transition Period End Date, are notified that the Firm will no longer manage their accounts after the Transition Period End Date and are made aware of the available options for their accounts;
f. in addition to the Compliance Monitor's responsibilities under the 2018 Terms and Conditions, the Firm shall engage the Compliance Monitor to carry out the following responsibilities after the Effective Date:
i. the Compliance Monitor shall supervise the adequacy of the Firm's preparation of the monthly unaudited financial statements and each related Form 31-103F1 Calculation of Excess Working Capital required to be filed by the firm with the ASC pursuant to section 2 of the 2018 Terms and Conditions following the Effective Date, in addition to supervising the adequacy of the Firm's reporting to ASC Staff on any negative excess working capital position as required in section 3 of the 2018 Terms and Conditions;
ii. the Compliance Monitor shall provide the required Monthly Reports and information from section 1 of the 2018 Terms and Conditions to ASC Staff no later than 15 days after the end of each month, including one final report after the Transition Period End Date; and
iii. the Compliance Monitor shall supervise the Firm's adherence to these terms and conditions and shall provide monthly reporting to ASC Staff on the status of such supervision no later than 15 days after the end of each month, including one final report after the Transition Period End Date.
The Firm shall, at its own expense, enter into such additional arrangements with the Compliance Monitor as may be required in order to provide for the additional supervision and reporting required to be provided by the Compliance Monitor pursuant to this paragraph 2.
3. The registration of the Firm as a portfolio manager shall be, without any further action or formality required, automatically revoked on the Transition Period End Date pursuant to section 28 of the Act.
4. On the Transition Period End Date, the Firm shall remove or otherwise disable all internet presence and social media related to the Firm, if any, except that it must post a notice on its website and social media, as applicable, advising that its registration has been revoked. Such notice shall be publicly available for a minimum of 6 months after the Transition Period End Date.
5. The Firm acknowledges that the terms and conditions and the revocation of the Firm's registration provided for herein will be documented in the National Registration Database, and that such terms and conditions and revocation provisions will be accessible to the public through the National Registration Search.
These terms and condition of registration constitute Ontario securities law, and a failure by the Firm to comply with these terms and conditions may result in further regulatory action against the Firm.
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