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Bulletin #0464-M

Membership Information
Decision of Panel of the British Columbia Securities Commission

Contact: Jason
BULLETIN #0464 – M
Corporate Secretary
January 27, 2011
Phone: 416-943-7431

MFDA Bulletin

Membership Information

For Distribution to Relevant Parties within your Firm

Decision of Panel of the British Columbia Securities Commission

On January 10, 2011 a Panel of the British Columbia Securities Commission released its Decision in
respect of a Request for Review originally filed by Partners in Planning Financial Services Ltd. in
October 2009. The review related to certain governance decisions of the MFDA's Board of Directors
following its December 2008 AGM as well as the solicitation of proxies in connection with the special
meeting of MFDA Members on October 2, 2009. The subject of both those Member meetings was
primarily By-law No. 15 relating to the MFDA's proposed governance improvements. Reference is
made to MFDA Bulletins 0401-M, 0410-M and 0418-M for further background. Partners in Planning
withdrew its application in April 2010 but in June 2010 the Panel refused the request of the Executive
Director of the BCSC and the MFDA to discontinue the hearing.

In its Decision, the Panel reviewed certain governance matters concerning the constitution of the
Board and the consideration by it and its Task Force of By-law No. 15 and related subjects. The Panel
concluded that the Board's actions with respect to those governance matters "would not lead an
objective observer to question the integrity or credibility of the MFDA". On the matter of the MFDA's
proxy solicitation process for its October 2009 special meeting the Panel concluded that the
management of such process “would have led an objective observer to question the integrity and
credibility of the MFDA” in that regard. The Panel went on to issue certain directions with respect to
the MFDA's future proxy solicitation processes. The Panel also observed that its findings were
restricted to the narrow issues at hand and it was not "making any adverse findings about the MFDA's
overall integrity or credibility as an SRO". To the contrary, the Panel stated that the Board and
executive had "built the MFDA into an effective and credible regulator of mutual fund dealers".

The Board of Directors and its Governance Committee have carefully considered the Decision. While
the MFDA is disappointed with aspects of the Decision and does not agree with some of the analysis
and findings of the Panel, it has decided that it is not in the interests of the public or the MFDA and its
Members to seek a further review or an appeal of the Decision. Instead, it proposes to refine its proxy
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solicitation processes in accordance with the tenor and intent of the Decision in consultation with the
BCSC and the MFDA's other provincial recognizing regulators. A number of the directions have
already been implemented by the MFDA.

The Panel also directed that the amendments in By-law No. 15 should not be implemented until there
is a further sanctioning vote by MFDA Members at a meeting conducted in accordance with the
Decision's directions. Accordingly, the Board intends to have its Governance Committee review all
aspects of By-law No. 15, in consultation with Members as appropriate, and make recommendations
to the Board as to whether all or part of the provisions of the By-law should be enacted and Member
approval sought.

Doc. 240825

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