Bill 52 - An Act to Amend the Securities Act

BILL 52

An Act to Amend the Securities Act

Her Majesty, by and with the advice and consent of the Legislative Assembly of New Brunswick, enacts as follows:

1 Section 1 of the Securities Act, chapter S-5.5 of the Acts of New Brunswick, 2004, is amended

(a) in subsection (1)

(i) in the definition “clearing agency” by striking out “or who provides centralized facilities for the clearing of trades in securities” and substituting “or who provides centralized facilities for the clearing of trades in securities or exchange contracts”;

(ii) in the definition “exchange” by striking out “purchasers and sellers of securities” and substituting “purchasers and sellers of securities or exchange contracts”;

(iii) by repealing the definition “adviser” and substituting the following:

(iv) in the definition “dealer” by striking out “who trades in securities” and substituting “who trades in securities or exchange contracts”;

(v) in subparagraph (a)(ii) of the definition “private mutual fund” by striking out “trades in securities” and substituting “trades in securities or exchange contracts”;

(vi) in the definition “related financial instrument”

(A) in paragraph (a) by striking out “an instrument, an agreement or a security” and substituting “an instrument, an agreement, a security or an exchange contract”;

(B) in paragraph (b) by striking out “in a security” and substituting “in a security or an exchange contract”;

(vii) in the definition “economic interest”

(A) in paragraph (a) by striking out “from a security” and substituting “from a security or an exchange contract”;

(B) in paragraph (b) by striking out “in respect of a security” and substituting “in respect of a security or an exchange contract”;

(viii) in the definition “trade”

(A) by adding after paragraph (a) the following:

(a.1) entering into a futures contract or an option that is an exchange contract,

(B) in paragraph (c) by striking out “a security” and substituting “a security or an exchange contract”;

(ix) in the definition “securities regulatory authority” by striking out “to regulate trading in securities or to administer or enforce laws respecting trading in securities” and substituting “to regulate trading in securities or exchange contracts or to administer or enforce laws respecting trading in securities or exchange contracts”;

(x) by repealing the definition “portfolio manager”;

(xi) by repealing the definition “salesperson”;

(xii) in the definition “security”

(A) in paragraph (o) of the English version by striking out “and” at the end of the paragraph;

(B) in paragraph (p) by adding “and” at the end of the paragraph;

(q) any item or thing not referred to in paragraphs (a) to (p) that is a futures contract or an option but is not an exchange contract.

(xiii) by adding the following definitions in alphabetical order:

“class of exchange contracts” includes a series of a class of exchange contracts. (catégorie de contrats de change)

“exchange contract” means a futures contract or an option that (contrat de change)

(a) has its performance guaranteed by a clearing agency,

(b) is traded on an exchange pursuant to standardized terms and conditions set forth in the by-laws or other regulatory instruments or practices or policies of that exchange at a price agreed on when the futures contract or option is entered into on the exchange,

and includes any instrument, or class of instruments, that meets the requirements referred to in paragraphs (a) and (b) and that is designated to be an exchange contract by regulation, but does not include any instrument, or class of instruments, designated not to be an exchange contract by regulation.

“futures contract” means a contract to make or take delivery on a specified date or during a specified period (contrat à terme)

(a) of a specified asset, or

(b) of a specified cash equivalent of the subject matter of that contract,

and includes any instrument, or class or instruments, that is designated to be an exchange contract by regulation.

(b) in subsection (8) by striking out “senior officer” wherever it appears and substituting “officer” ;

2 Section 8 of the Act is amended by adding after subsection (3) the following:

8(4) Subject to the approval of the Commission, the Chair is eligible to participate in any employee benefit program established by the Board of Management.

3 Section 14 of the Act is amended by adding after subsection (4) the following:

14(5) Subject to the approval of the Commission, employees of the Commission are eligible to participate in any employee benefit program established by the Board of Management.

4 Subsection 23(4) of the Act is amended by striking out “regulate trading in securities or commodities” and substituting “regulate trading in securities, exchange contracts or commodities”.

5 Subsection 34(1) of the Act is amended

(a) in paragraph (b) by striking out “carrying on business as a dealer”;

(b) in subparagraph (c)(i) by striking out “salesperson,”;

6 Section 35 of the Act is amended by adding after subsection (2) the following:

35(3) The Commission shall not refuse to recognize a person under this section without giving the person an opportunity to have a hearing before the Commission.

7 Section 38 of the Act is amended

(a) in subsection (1) by striking out “of its members” and substituting “of its members or participants”;

(b) by repealing subsection (2) and substituting the following:

38(2) The authority of an exchange or a self-regulatory organization to regulate operations and standards of practice and business conduct under subsection (1) extends to the regulation of

(a) a former member,

(b) a former participant,

(d) a former representative of a participant,

(e) a former representative of a former member, and

(f) a former representative of a former participant.

38(3) The authority of an exchange or a self-regulatory organization to regulate the operations and the standards of practice and business conduct of a person under subsection (2) is limited to that person’s operations and business conduct while a member of or participant in the exchange or self-regulatory organization or while a representative of a member of or participant in the exchange or self-regulatory organization, as the case may be.

8 Section 39 of the Act is amended

(a) in paragraph (b) by striking out “trading of securities” and substituting “trading of securities or exchange contracts”;

(b) by adding after paragraph (c) the following:

(c.1) any exchange contract that is traded on an exchange,

9 The heading “Registration for trading required” preceding section 45 of the Act is repealed and the following is substituted:

Registration required

10 Section 45 of the Act is repealed and the following is substituted:

45 Except where exempted under the regulations, a person shall not

(a) trade in a security or an exchange contract,

(b) act as an adviser,

(d) act as an underwriter,

unless the person is registered, in accordance with the regulations, in the category that the regulations prescribe for the activity.

11 Section 46 of the Act is amended

(a) by repealing subsection (1) and substituting the following:

46(1) The Executive Director may, for the purposes of this Part, designate as non-trading any employee or class of employees of a registered dealer that does not usually trade in securities or exchange contracts, and an employee so designated or of a class so designated need not register under this Act or the regulations.

(b) in subsection (2) by striking out “as an adviser” and substituting “under this Act or the regulations”;

(c) in subsection (3) by striking out “as a salesperson or adviser, as the case may be” and substituting “under this Act or the regulations”.

12 Paragraph 48(2)(b) of the Act is repealed and the following is substituted:

(b) the registration to trades in certain securities or exchange contracts or a certain class of securities or class of exchange contracts.

13 The Act is amended by adding after section 48 the following:

Service of notices

48.1 Except as otherwise provided in this Act, all notices under this Act or the regulations are sufficiently served for all purposes to a registrant if sent by mail or delivered to the latest address for service in New Brunswick filed by the registrant with the Executive Director.

14 Subsection 51(1) of the Act is amended by striking out “voluntary”.

15 Subsection 53(1) of the Act is repealed and the following is substituted:

53(1) Subject to subsection (2), the Executive Director may, following a hearing, make an order suspending or cancelling the registration of a registrant if the Executive Director is of the opinion that it is in the public interest to do so.

16 The heading “Standards of business conduct” preceding section 54 of the Act is repealed and the following is substituted:

Duty of Care

17 Section 54 of the Act is repealed and the following is substituted:

54(1) Subject to subsections (2) and (3), a registrant shall act fairly, honestly and in good faith with its clients.

54(2) A registrant that manages the investment portfolio of a client through discretionary authority granted by the client shall act fairly, honestly and in good faith toward the client and in the client’s best interest.

54(3) Every investment fund manager shall

(a) exercise the powers and discharge the duties of its office honestly, in good faith and in the best interests of the investment fund, and

(b) exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances.

18 Subsection 55(1) of the Act is amended by striking out “any trade, intended trade, security or person or class of trades, intended trades, securities or persons” and substituting “any trade, intended trade, security, exchange contract or person or any class of trades, intended trades, securities, exchange contracts or persons”.

19 The heading “TRADING IN SECURITIES GENERALLY” following section 55 of the Act is repealed and the following is substituted:

TRADING IN SECURITIES OR EXCHANGE CONTRACTS GENERALLY

20 The heading “Confirmation of trade” preceding section 56 of the Act is repealed.

21 Section 56 of the Act is repealed.

22 Section 57 of the Act is amended

(a) in subsection (2) in the portion preceding paragraph (a) by striking out “trading in any security or in any class of securities” and substituting “trading in any security or exchange contract or in any class of securities or class of exchange contracts”;

(b) in subsection (3)

(i) in subparagraph (a)(i) by striking out “trading in securities” and substituting “trading in securities or exchange contracts”;

(ii) in subparagraph (b)(ii) by striking out “trading in a security in respect of which” and substituting “trading in a security or an exchange contract in respect of which”;

(d) in subsection (5) by striking out “trading in securities generally, a specific security or a class of securities” and substituting “trading in securities or exchange contracts generally, a specific security or exchange contract or a class of securities or class of exchange contracts”.

23 Section 58 of the Act is amended

(a) in subsection (1)

(i) in paragraph (a) of the English version by striking out “or” at the end of the paragraph;

(ii) by striking out the period at the end of paragraph (b) and substituting a comma;

(iii) by adding after paragraph (b) the following:

(d) will assume all or part of an obligation under an exchange contract.

(b) by repealing subsection (2) and substituting the following:

58(2) No person, with the intention of effecting a trade in a security or an exchange contract, shall make any representation, orally or in writing, relating to the future value or price of the security or exchange contract that is not in accordance with the regulations.

24 The heading “Important statement” preceding section 58.1 of the Act is repealed.

25 Section 58.1 of the Act is repealed.

26 The heading “Registered dealer acting as principal” preceding section 59 of the Act is repealed.

27 Section 59 of the Act is repealed.

28 The heading “Disclosure of financial interest of registered advisers and dealers” preceding section 60 of the Act is repealed.

29 Section 60 of the Act is repealed.

30 The heading “Disclosure of underwriting liability” preceding section 61 of the Act is repealed.

31 Section 61 of the Act is repealed.

32 The heading “Representation of registration” preceding section 64 of the Act is repealed and the following is substituted:

Prohibited representation or statement

33 Section 64 of the Act is repealed and the following is substituted:

64(1) No person shall represent that the person is registered under this Act or the regulations unless

(a) the representation is true, and

(b) in making the representation, the person specifies the person’s category of registration under the regulations.

64(2) A person shall not make a statement about something that a reasonable investor would consider important in deciding whether to enter or maintain a trading or advising relationship with the person if the statement is untrue or omits information necessary to prevent the statement from being false or misleading in the circumstances in which it is made.

34 The heading “Representation respecting approval of Commission” preceding section 65 of the Act is repealed and the following is substituted:

Representation respecting approval of Commission or employee

35 Section 65 of the Act is repealed and the following is substituted:

65 No person shall make any representation, orally or in writing, that the Commission or any person employed or engaged by the Commission has expressed an opinion or in any way passed judgment on

(a) the financial standing, fitness or conduct of any registrant,

(b) the merits of any security, exchange contract or issuer, or

36 Subsection 68(1) of the Act is repealed and the following is substituted:

68(1) The Commission may, after giving a registrant or issuer an opportunity to be heard, and on being satisfied that the registrant’s or issuer’s past conduct with respect to the use of advertising and sales literature affords reasonable grounds for the belief that it is necessary for the protection of the public to do so, order that the registrant or issuer shall file, at least 7 days before it is used, copies of all advertising and sales literature which the registrant or issuer proposes to use in connection with trading in securities or exchange contracts.

37 Section 69 of the Act is amended

(a) in the portion preceding paragraph (a) by striking out “to securities” and substituting “to securities, exchange contracts”;

(b) by repealing paragraph (a) and substituting the following:

(a) results in or contributes to a misleading appearance of trading activity in, or an artificial price for, a security, an exchange contract or a derivative of a security, or

38 The Act is amended by adding after section 70 the following:

PART 5.1

EXCHANGE CONTRACTS

Trading in an exchange contract on an exchange in New Brunswick

70.1(1) No person shall trade in an exchange contract on an exchange in New Brunswick unless

(a) the exchange is recognized by the Commission under paragraph 35(1)(a), and

(b) the form of the exchange contract has been accepted by the Commission.

70.1(2) For the purposes of paragraph (1)(b), on application by an exchange, the Commission may, by order, accept the form of an exchange contract.

70.1(3) The Commission shall not refuse to accept the form of an exchange contract without giving the applicant an opportunity to have a hearing before the Commission.

Trading in an exchange contract on an exchange outside New Brunswick

70.2(1) No registrant shall trade in an exchange contract on behalf of another person on an exchange outside New Brunswick unless the exchange is recognized by the Commission under this section.

70.2(2) On receipt of the application of an exchange outside New Brunswick, the Commission may make an order recognizing the exchange for the purposes of subsection (1) if the Commission is satisfied that to do so would not be prejudicial to the public interest.

70.2(3) In deciding whether to make an order under subsection (2), the Commission shall consider whether

(a) the clearing and other arrangements made and the financial condition of the exchange, its clearing agency and their members or participants are sufficient to provide reasonable assurance that all obligations arising out of the contracts entered into on the exchange and the obligations of the exchange’s members or participants to their customers will be met,

(b) the regulations or other regulatory instruments or practices or policies applicable to the exchange’s members or participants and its clearing agency’s members or participants are in the public interest and are actively enforced,

(d) adequate measures are taken to prevent manipulation and excessive speculation, and

(e) adequate provision is made to record and publish details of trading, including volume and open interests.

70.2(4) A recognition under this section shall be made in writing and shall be subject to such terms and conditions as the Commission considers appropriate.

70.2(5) The Commission shall not refuse to recognize an exchange outside New Brunswick for the purposes of subsection (1) without giving the exchange an opportunity to have a hearing before the Commission.

70.2(6) In the case of an exchange in the United States of America that is designated by the Commodity Futures Trading Commission as a contract market, the Commission may accept that designation as constituting, while it remains in force, sufficient proof that the exchange complies with paragraphs (3)(a) to (e).

70.2(7) The Commission may, after a hearing, withdraw its recognition of an exchange if, in its opinion

(a) the exchange is no longer complying with paragraphs (3)(a) to (e), or

(b) it would for any other reason be prejudicial to the public interest to continue to recognize the exchange.

39 The heading “Definitions” preceding section 131 of the Act is repealed and the following is substituted:

Definition of “responsible person”

40 Section 131 of the Act is repealed and the following is substituted:

131 In this Part, “responsible person” means

(a) an adviser,

(b) every individual who is a partner, a director or an officer of an adviser,

(d) every individual who is a director, an officer or an employee of such affiliate or who is an employee of the adviser, if the affiliate or individual participates in the formulation of investment decisions made on behalf of the client of the adviser or in advice given to such client, or if the affiliate or individual has access to such decisions or advice before implementation.

41 The heading “Standard of care for management of investment fund” preceding section 142 is repealed.

42 Section 142 of the Act is repealed.

43 Subsection 157(5) of the Act is repealed and the following is substituted:

157(5) Any person who has access to information concerning the investment program of a mutual fund in New Brunswick or the investment portfolio managed for a client by an adviser and uses that information for the person’s direct benefit or advantage to purchase or sell securities of an issuer for the person’s account is accountable to the mutual fund or the client of the adviser for any benefit or advantage received or receivable as a result of the purchase or sale, if the portfolio securities of the mutual fund or the investment portfolio managed for the client by the adviser include securities of that issuer.

44 The heading “Rescission of contract” preceding section 159 of the Act is repealed.

45 Section 159 of the Act is repealed.

46 Subsection 163(1) of the French version of the Act is amended by striking out “désigner” and substituting “nommer”.

47 Paragraph 170(1)(a) of the Act is repealed and the following is substituted:

(a) for the administration of New Brunswick securities law,

48 Paragraph 171(1)(a) of the Act is repealed and the following is substituted:

(a) for the administration of New Brunswick securities law,

49 Paragraph 172(1)(e) of the Act is amended

(a) in subparagraph (iv) by striking out “securities or other property” and substituting “securities, exchange contracts or other property”;

(b) by striking out subparagraph (v) and substituting the following:

(v) the transfer, negotiation or holding of securities or the trading in exchange contracts,

50 The heading “Release of information” preceding section 178 of the Act is repealed.

51 Section 178 of the Act is repealed.

52 Paragraph 181(b) of the Act is amended by striking out “the market price or value of a security” and substituting “the market price or value of a security or an exchange contract”.

53 Section 183 of the Act is amended

(a) in subsection (1)

(i) in the portion preceding paragraph (a) by striking out “the administration of this Act or the regulations or to assist in the administration of the securities laws of another jurisdiction” and substituting “the administration of New Brunswick securities law or to assist in the administration of another jurisdiction’s securities laws or another jurisdiction’s laws regulating exchange contracts”;

(ii) in paragraph (a) by striking out “any funds, securities or property of any person to retain those funds, securities or property” and substituting “any funds, securities, exchange contracts or property of any person to retain those funds, securities, exchange contracts or property”;

(iii) in paragraph (b) by striking out “the person’s funds, securities or property” and substituting “the person’s funds, securities, exchange contracts or property”;

(iv) in paragraph (c) by striking out “funds, securities or property” and substituting “funds, securities, exchange contracts or property”;

(b) in subsection (3) by striking out “securities or property” and substituting “securities, exchange contracts or property”;

(c) in subsection (6) by striking out “securities or property” and substituting “securities, exchange contracts or property”;

(d) in subsection (7) by striking out “securities or property” and substituting “securities, exchange contracts or property”.

54 Section 184 of the Act is amended

(a) by repealing paragraph (1)(c) and substituting the following:

(i) trading in or purchasing cease in respect of any securities or exchange contracts specified in the order, or

(ii) a person specified in the order cease trading in or purchasing securities or exchange contracts, specified securities or exchange contracts or a class of securities or class of exchange contracts;

(b) in subsection (1.1)

(i) in paragraph (a)

(A) by repealing subparagraph (i) and substituting the following:

(i) arising from a transaction, business or course of conduct related to securities or exchange contracts, or

(B) in subparagraph (ii) by striking out “trading in securities” and substituting “trading in securities or exchange contracts”;

(ii) in paragraph (b) by striking out “trading in securities” and substituting “trading in securities or exchange contracts”;

(iii) in paragraph (c) by striking out “securities regulatory authority” and substituting “securities regulatory authority or self-regulatory organization”;

(iv) in paragraph (d) by striking out “securities regulatory authority” and substituting “securities regulatory authority or self-regulatory organization”.

55 Subsection 187(4) of the Act is amended

(a) in paragraph (d) by striking out “trading in securities, including the issuance of securities” and substituting “trading in securities or exchange contracts, including the issuance of securities or exchange contracts”;

(b) in paragraph (e) by striking out “any securities” and substituting “any securities or exchange contracts”;

(d) in paragraph (i) by striking out “securities of a security holder” and substituting “securities of a security holder or exchange contracts of a holder of exchange contracts”;

(e) by repealing paragraph (j) and substituting the following:

(j) an order directing the person to repay to a security holder or a holder of exchange contracts any part of the money paid by the holder for securities or for exchange contracts, as the case may be;

56 Section 188.2 of the Act is amended

(a) in subsection (1) by striking out “trading in a security or class of securities specified in the order” and substituting “trading in a security or an exchange contract specified in the order or in a class of securities or a class of exchange contracts specified in the order”;

(b) in subsection (2) in the portion preceding paragraph (a) by striking out “issuer of the security” and substituting “issuer of the security or exchange contract”.

57 The heading “Enforcement orders when registration has expired or been cancelled or voluntarily surrendered” preceding section 190 of the Act is amended by striking out “voluntary”.

58 Section 190 of the Act is amended

(a) by repealing the portion preceding paragraph (a) and substituting the following:

190 Notwithstanding that the registration of a registrant has expired or been cancelled or that the Executive Director has accepted the surrender of the registration of the registrant, the Commission may make an order under subsection 184(1) or (1.1) or section 185 within 2 years after the later of

(b) in paragraph (a) by striking out “voluntary”.

59 Subsection 195.1(1) of the Act is amended

(a) in the definition “extra-provincial securities commission” by striking out “to regulate trading in securities or to administer or enforce laws respecting trading in securities” and substituting “to regulate trading in securities or exchange contracts or to administer or enforce laws respecting trading in securities or exchange contracts”;

(b) in the definition “extra-provincial securities laws” by striking out “the trading in securities” and substituting “the trading in securities or exchange contracts”.

60 Section 195.4 of the Act is repealed and the following is substituted:

195.4 Subject to the regulations, the Commission may make an order exempting, in whole or in part, a person, a security, an exchange contract or a trade or a class of persons, securities, exchange contracts or trades from compliance with the requirements of New Brunswick securities law if the person, security, exchange contract or trade or class of persons, securities, exchange contracts or trades, as the case may be, satisfies the conditions set out in the order.

61 Subsection 195.5(1) of the Act is repealed and the following is substituted:

195.5(1) Subject to the regulations, if the Commission or the Executive Director is empowered to make a decision regarding a person, a trade, a security or an exchange contract, the Commission or the Executive Director may make the decision on the basis that the Commission or the Executive Director, as the case may be, considers that an extra-provincial securities commission or a self-regulatory organization has made a substantially similar decision regarding the person, trade, security or exchange contract.

62 Section 199 of the Act is amended

(a) in subsection (1)

(i) in the portion preceding paragraph a) of the French version by striking out “peuvent être envoyés par les méthodes suivantes” and substituting “peuvent lui être envoyés”;

(ii) by repealing paragraph (a) and substituting the following:

(a) served on the person in the manner in which personal service may be made under the Rules of Court,

(iii) by repealing paragraph (b) and substituting the following:

(b) sent to the person by mail, or

(iv) by adding after paragraph (b) the following:

(b) by adding after subsection (1) the following:

199(1.1) Information or material sent to a person under paragraph (1)(b) or (c) shall be sent to the person

(a) at the latest address known for that person by the sender of the information or material,

(b) at the address for service in New Brunswick filed by that person with the Executive Director, or

(c) at the address of the person’s solicitor if the person, or the solicitor, has advised that the solicitor is acting for the person.

199(4) If, on 2 consecutive occasions, information or material sent by an issuer to a security holder or holder of exchange contracts in accordance with paragraph (1)(b) or (c) is returned, the issuer is not required to send any further information or material to the security holder or holder of exchange contracts until the holder informs the issuer in writing of the holder’s new address.

63 The Act is amended by adding after section 199 the following:

Receipt and disclosure of information

199.1(1) In this section, “securities laws” means laws of a jurisdiction respecting the trading of securities or exchange contracts.

199.1(2) For the purposes of administering New Brunswick securities law or assisting in the administration of the securities laws of another jurisdiction, the Commission or any employee of the Commission may, directly or indirectly, receive information from

(a) an exchange, a quotation and trade reporting system or a clearing agency,

(b) a self-regulatory organization,

(d) a law enforcement agency, a government, a governmental authority or a securities or financial regulatory authority or other regulatory authority,

in New Brunswick or elsewhere.

199.1(3) For the purposes of administering New Brunswick securities law or assisting in the administration of the securities laws of another jurisdiction, the Commission or the Executive Director may disclose information to

(a) an exchange, a quotation and trade reporting system, a clearing agency or a self-regulatory organization recognized under section 35,

(b) a law enforcement agency, a government, a governmental authority or a securities or financial regulatory authority or other regulatory authority, or

(c) a person with whom the Commission has entered into an arrangement or agreement that relates to or includes the sharing of information,

in New Brunswick or elsewhere.

199.1(4) For the purposes of administering its by-laws or other regulatory instruments or practices or policies, assisting in the administration of the by-laws or other regulatory instruments or practices or policies of another exchange, quotation and trade reporting system, clearing agency or self-regulatory organization, or assisting in the administration of New Brunswick securities law or the securities laws of another jurisdiction, an exchange, a quotation and trade reporting system, a clearing agency or a self-regulatory organization recognized under section 35 may, directly or indirectly, receive information from

(a) an exchange, a quotation and trade reporting system or a clearing agency,

(b) a self-regulatory organization,

(d) a law enforcement agency, a government, a governmental authority or a securities or financial regulatory authority or other regulatory authority,

in New Brunswick or elsewhere.

199.1(5) For the purposes of administering its by-laws or other regulatory instruments or practices or policies, assisting in the administration of the by-laws or other regulatory instruments or practices or policies of another exchange, quotation and trade reporting system, clearing agency or self-regulatory organization, or assisting in the administration of New Brunswick securities law or the securities laws of another jurisdiction, an exchange, a quotation and trade reporting system, a clearing agency or a self-regulatory organization recognized under section 35 may disclose information to

(a) an exchange, a quotation and trade reporting system or a clearing agency,

(b) a self-regulatory organization, or

(c) a law enforcement agency, a government, a governmental authority or a securities or financial regulatory authority or other regulatory authority,

in New Brunswick or elsewhere.

199.1(6) Information received by the Commission or any employee of the Commission under subsection (2) or (4) is confidential and shall not be disclosed by any person except as provided in this section.

64 Section 200 of the Act is amended

(a) in subsection (1)

(i) in paragraph (b) by striking out “voluntary” wherever it appears;

(ii) by repealing paragraph (d) and substituting the following:

(d) prescribing categories or subcategories of registrants, prescribing capacities or conduct that require registration and that relate to another registrant’s compliance with New Brunswick securities law and classifying registrants into categories or subcategories;

(iii) in paragraph (d.1) by striking out “trading in securities” and substituting “trading in securities or exchange contracts”;

(iv) in paragraph (f) by striking out “salesperson” and substituting “representatives”;

(v) in paragraph (j) by striking out “certain securities” and substituting “certain securities or exchange contracts”;

(vi) in paragraph (k) by striking out “salespersons” and substituting “representatives”;

(vii) by adding after paragraph (l) the following:

(l.1) respecting information sharing between registrants;

(l.2) respecting referral agreements entered into by a registrant;

(viii) in paragraph (s) by striking out “for registration as a salesperson, partner or officer of the dealer” and substituting “for registration in a category prescribed by regulation”;

(ix) in paragraph (x) by striking out “trading in securities” and substituting “trading in securities or exchange contracts”;

(x) in paragraph (y) by striking out “a security” and substituting “a security or an exchange contract”;

(xi) in paragraph (z) by striking out “listing or trading of publicly traded securities” and substituting “listing or trading of securities or exchange contracts”;

(xii) in paragraph (bb) by striking out “trading or advising in securities” and substituting “trading or advising in securities or exchange contracts”;

(xiii) in paragraph (bb.1)

(A) in the portion preceding subparagraph (i) by striking out “from trading or purchasing securities or a particular security” and substituting “from trading or purchasing securities or exchange contracts or a particular security or exchange contract”;

(B) by repealing subparagraph (i) and substituting the following:

(i) a person is prohibited from trading or purchasing securities or exchange contracts or a particular security or exchange contract, or

(ii) trades or purchases of a particular security or exchange contract cease;

(xiv) in paragraph (ccc) by striking out “a security” and substituting “a security or an exchange contract”;

(xv) in paragraph (lll)

(A) in the portion preceding subparagraph (i) by striking out “any person or jurisdiction” and substituting “any person, jurisdiction or instrument”;

(B) in subparagraph (ii) of the English version by striking out “and” at the end of the subparagraph;

(C) in subparagraph (iii) by striking out the semicolon at the end of the subparagraph and substituting a comma followed by “and”;

(D) by adding after paragraph (iii) the following:

(iv) designating an instrument or class of instruments not to be a futures contract or to be or not to be an exchange contract;

(xvi) in paragraph (qqq.2) by striking out “a security acquired” and substituting “a security or an exchange contract acquired”;

(xvii) in paragraph (sss) by striking out “security holders” and substituting “security holders, holders of exchange contracts”;

(b) by repealing paragraph (2)(d) and substituting the following:

(d) respecting the practice and procedure that are to be followed by the Commission in making or amending rules;

65 Schedule A of the Act is amended

(a) by adding after

45(b)

the following:

45(c)

45(d)

(b) by striking out

56(1)
56(2)
56(3)
56(5)
56(6)
57(2)(a)
57(2)(b)
58(1)(a)
58(1)(b)

and substituting

57(2)(a)

57(2)(b)

58(1)(a)

58(1)(b)

58(1)(c)

58(1)(d)

58.1

(d) by striking out

59(1)

61(a)

61(b)

(e) by striking out

and substituting

64(1)(a)

64(1)(b)

64(2)

(f) by striking out

and substituting

65(a)

65(b)

65(c)

(g) by adding after

70(4)

the following:

70.1(1)

70.2(1)

(h) by striking out

178(2)

(i) by adding after

181

the following:

199.1(6)

CONSEQUENTIAL AMENDMENT

An Act to Amend the Securities Act

66 Section 193 of an Act to Amend the Securities Act, chapter 38 of the Acts of New Brunswick, 2007, is repealed.

COMMENCEMENT

67 Paragraph 1(a), sections 4, 5, 8 to 12, 16 to 23, 26 to 31, 34 to 45, 49 to 56 and 59 to 61, paragraph 62(c), section 63, subparagraphs 64(a)(iii) to (vi) and (viii) to (xvii) and paragraphs 65(a), (b), (d) and (f) to (i) and any provision of them come into force on a day or days to be fixed by proclamation.

EXPLANATORY NOTES

Section 1

(a)

i) Consequential amendment.

ii) Consequential amendment.

iii) The existing definition is as follows:

“adviser” means a person engaging in or holding himself, herself or itself out as engaging in the business of advising others as to the investment in or the purchase or sale of securities, regardless of whether such advice is provided in furtherance of a trade in securities or is provided in respect of specific securities. (conseiller)

iv) Consequential amendment.

v) Consequential amendment.

vi)

A) Consequential amendment.

B) Consequential amendment.

vii)

A) Consequential amendment.

B) Consequential amendment.

viii)

A) Consequential amendment.

B) Consequential amendment.

ix) Consequential amendment.

x) Consequential amendment.

xi) Consequential amendment.

xii)

A) Consequential amendment.

B) Consequential amendment.

C) Consequential amendment.

xiii) New definitions.

(b) Consequential amendment.

Section 2

New provision.

Section 3

New provision.

Section 4

Consequential amendment.

Section 5

(a) Consequential amendment.

(b) Consequential amendment.

Section 6

New provision.

Section 7

(a) Consequential amendment.

(b) The existing provision is as follows:

38(2) The authority of an exchange or a self-regulatory organization to regulate the operations and the standards of practice and business conduct of its members and their representatives under subsection (1) extends to any former member, any former representative of a member and any former representative of a former member with respect to that person’s operations and business conduct while a member of the exchange or self-regulatory organization or while a representative of a member of the exchange or self-regulatory organization, as the case may be.

Section 8

(a) Consequential amendment.

(b) Consequential amendment.

Section 9

Consequential amendment.

Section 10

The existing provision is as follows:

45 Unless exempted under this Act or the regulations, no person shall

(a) trade in a security or act as an underwriter unless the person is registered as a dealer, or is registered as a salesperson, as a partner or as an officer of a registered dealer and is acting on behalf of the dealer, or

(b) act as an adviser unless the person is registered as an adviser, or is registered as a representative, as a partner or as an officer of a registered adviser and is acting on behalf of the adviser.

Section 11

(a) Consequential amendment.

(b) Consequential amendment.

Section 12

Consequential amendment.

Section 13

New provision.

Section 14

The existing provision is as follows:

51(1) On the application of a registrant, the Executive Director may accept, subject to such terms and conditions as he or she considers appropriate, the voluntary surrender of the registration of the registrant unless the Executive Director is of the opinion that it could be prejudicial to the public interest to do so.

Section 15

The existing provision is as follows:

(a) the registrant has contravened or failed to comply with a term or condition imposed on the registration under subsection 48(2), or

(b) the registrant has contravened or failed to comply with section 54.

Section 16

Consequential amendment.

Section 17

The existing provision is as follows:

54 A registrant shall

(a) act fairly, honestly, in good faith and in the best interest of a client of the registrant,

(b) exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances,

(d) take all reasonable steps to learn the essential facts about the identity, reputation and financial circumstances of each of the clients of the registrant and to keep current the registrant’s knowledge of those essential facts, and

(e) ensure that the recommendations made to a client of the registrant are appropriate to the general investment needs and objectives of the client and the client’s risk tolerance level.

Section 18

Consequential amendment.

Section 19

Consequential amendment.

Section 20

Consequential amendment.

Section 21

Consequential amendment.

Section 22

(a) Consequential amendment.

(b)

i) Consequential amendment.

ii) Consequential amendment.

(d) Consequential amendment.

Section 23

(a)

i) Consequential amendment.

ii) Consequential amendment.

iii) New provisions.

(b) Consequential amendment.

Section 24

Consequential amendment.

Section 25

Consequential amendment.

Section 26

Consequential amendment.

Section 27

The existing provision is as follows:

59(1) Where a registered dealer, with the intention of effecting a trade in a security with any person other than another registered dealer, issues, publishes or sends a circular, pamphlet, advertisement, letter or other publication and proposes to act in the trade as a principal, the registered dealer shall so state in the circular, pamphlet, advertisement, letter or other publication or otherwise in writing before entering into a contract for the sale or purchase of the security and before accepting payment or receiving any security or other consideration under or in anticipation of the contract.

59(2) A statement made in compliance with this section or paragraph 56(1)(c) that a registered dealer proposes to act or has acted as principal in connection with a trade in a security does not prevent that registered dealer from acting as agent in connection with a trade of the security.

59(3) This section does not apply to a trade in respect of which a person is exempted under the regulations or in an order of the Commission from the requirement to be registered under this Act or the regulations.

Section 28

Consequential amendment.

Section 29

The existing provision is as follows:

60 Subject to the regulations, a registered dealer or registered adviser shall cause to be printed in a conspicuous position on every circular, pamphlet, advertisement, letter and other publication issued, published or sent by the dealer or adviser, in which the dealer or adviser recommends that a specific security be purchased, sold or held, in type not less legible than that used in the body of the publication, a full and complete statement of any financial or other interest that the dealer or adviser, or any partner, director, officer or person who, if the dealer or adviser were a reporting issuer, would be an insider of the dealer or adviser or who, if the dealer or adviser is a reporting issuer, is an insider of the dealer or adviser, may have either directly or indirectly in any securities referred to in the publication or in the sale or purchase of the securities, including without limiting the generality of the foregoing,

(a) any ownership, beneficial or otherwise, that any of them may have in respect of the securities or in any securities issued by the same issuer,

(b) any option that any of them may have in respect of the securities, and the terms of the option,

(c) any commission or other remuneration that any of them has received or may expect to receive from any person in connection with any trade in the securities,

(d) any financial arrangement relating to the securities that any of them may have with any person, and

(e) any financial arrangement that any of them may have with any underwriter or other person who has any interest in the securities.

Section 30

Consequential amendment.

Section 31

The existing provision is as follows:

61 A registered dealer that recommends a purchase, sale, exchange or hold of a security in any circular, pamphlet, advertisement, letter or other publication issued, published or sent by the registered dealer and intended for general circulation shall, in type not less legible than that used in the body of the publication, disclose

(a) whether the registered dealer or any of the registered dealer’s officers or directors has at any time during the preceding 12 months assumed an underwriting liability with respect to the security or for consideration provided financial advice to the issuer of the security, and

(b) whether the registered dealer or any of the registered dealer’s officers or directors will receive any fees as a result of the recommended action.

Section 32

Consequential amendment.

Section 33

The existing provision is as follows:

64 No person shall represent that the person is registered under this Act or the regulations unless

(a) the representation is true,

(b) in making the representation, the person specifies any terms and conditions that may apply to the person’s registration,

(d) in making the representation, the person provides to the person to whom the representation is made the information necessary to enable the person to whom the representation is made to contact the Commission to confirm the truth of the representation.

Section 34

Consequential amendment.

Section 35

The existing provision is as follows:

65 No person shall make any representation, orally or in writing, that the Commission has expressed an opinion or in any way passed judgment on the financial standing, fitness or conduct of any registrant or on the merits of any security or issuer.

Section 36

The existing provision is as follows:

68(1) The Commission may, after giving a person who is a dealer, adviser, underwriter or issuer an opportunity to be heard, and on being satisfied that the person’s past conduct with respect to the use of advertising and sales literature affords reasonable grounds for the belief that it is necessary for the protection of the public to do so, order that the person shall file at least 7 days before it is used, copies of all advertising and sales literature which the person proposes to use in connection with trading in securities.

Section 37

(a) Consequential amendment.

(b) Consequential amendment.

Section 38

New provisions.

Section 39

Consequential amendment.

Section 40

Consequential amendment.

Section 41

Consequential amendment.

Section 42

Consequential amendment.

Section 43

The existing provision is as follows:

157(5) Any person who has access to information concerning the investment program of a mutual fund in New Brunswick or the investment portfolio managed for a client by a portfolio manager or by a registered dealer acting as a portfolio manager and uses that information for the person’s direct benefit or advantage to purchase or sell securities of an issuer for the person’s account is accountable to the mutual fund or the client of the portfolio manager or registered dealer, as the case may be, for any benefit or advantage received or receivable as a result of the purchase or sale, if the portfolio securities of the mutual fund or the investment portfolio managed for the client by the portfolio manager or registered dealer include securities of that issuer.

Section 44

Consequential amendment.

Section 45

The existing provision is as follows:

159(1) If subsection 59(1) applies to a contract and the subsection is not complied with, a person who has entered into the contract may rescind the contract by sending written notice of rescission to the registered dealer within 60 days after the date of the delivery of the security to or by the person, as the case may be, but, in the case of a purchase by the person, only if the person is still the owner of the security purchased.

159(2) If paragraph 56(1)(c) applies to a contract and a registered dealer has failed to comply with the paragraph by not disclosing that the registered dealer acted as principal, a person who has entered into the contract may rescind the contract by sending written notice of rescission to the registered dealer within 7 days after the date of receipt of the written confirmation of the contract.

159(3) In an action respecting a rescission to which this section applies, the onus of proving compliance with section 56 or 59 is on the registered dealer.

159(4) No action respecting a rescission shall be commenced under this section after the expiration of a period of 90 days after the date of sending the notice of rescission under subsection (1) or (2).

Section 46

A correction is made in the French version.

Section 47

The existing provision is as follows:

170(1) The Executive Director may make an order under subsection (2)

(a) for the administration of this Act or the regulations,

Section 48

The existing provision is as follows:

171(1) The Commission may, by order, appoint a person as an investigator to make such investigation as the Commission considers expedient

(a) for the administration of this Act or the regulations,

Section 49

(a) Consequential amendment.

(b) Consequential amendment.

Section 50

Consequential amendment.

Section 51

Consequential amendment.

Section 52

Consequential amendment.

Section 53

(a)

i) Consequential amendment.

ii) Consequential amendment.

iii) Consequential amendment.

iv) Consequential amendment.

(b) Consequential amendment.

(d) Consequential amendment.

Section 54

(a) Consequential amendment.

(b)

A) Consequential amendment.

B) Consequential amendment.

ii) Consequential amendment.

iii) The existing provision is as follows:

184(1.1) In addition to the power to make orders under subsection (1), the Commission may, after providing an opportunity to be heard, make one or more of the orders referred to in paragraphs (1)(a) to (d) and (1)(g) to (i) against a person if the person ...

(c) is subject to an order made by a securities regulatory authority in Canada or elsewhere imposing sanctions, conditions, restrictions or requirements on the person, or

iv) The existing provision is as follows:

(d) has agreed with a securities regulatory authority in Canada or elsewhere to be subject to sanctions, conditions, restrictions or requirements.

Section 55

(a) Consequential amendment.

(b) Consequential amendment.

(d) Consequential amendment.

(e) Consequential amendment.

Section 56

(a) Consequential amendment.

(b) Consequential amendment.

Section 57

Consequential amendment.

Section 58

(a) The existing provision is as follows:

190 Notwithstanding that the registration of a registrant has expired or been cancelled or that the Executive Director has accepted the voluntary surrender of the registration of the registrant, the Commission may make an order under subsection 184(1) or section 185 within 2 years after the later of

(a) the date on which the registration of the registrant expired, the date on which the registration of the registrant was cancelled or the date of acceptance by the Executive Director of the voluntary surrender of the registration of the registrant, as the case may be, and

(b) the commencement of a proceeding under this Act or the regulations.

(b) Consequential amendment.

Section 59

(a) Consequential amendment.

(b) Consequential amendment.

Section 60

Consequential amendment.

Section 61

Consequential amendment.

Section 62

(a)

i) Consequential amendment.

ii) Consequential amendment.

iii) Consequential amendment.

iv) New provision.

(b) New provision.

199(4) If, on 3 consecutive occasions, information or material sent by an issuer to a security holder in accordance with paragraph (1)(b) is returned, the issuer is not required to send any further information or material to the security holder until the security holder informs the issuer in writing of the security holder’s new address.

Section 63

New provisions.

Section 64

(a)

i) Consequential amendment.

ii) The existing provision is as follows:

200(1) The Lieutenant-Governor in Council may make regulations and the Commission may make rules ...

(d) prescribing categories or subcategories of registrants and classifying registrants into categories or subcategories;

iii) Consequential amendment.

iv) Consequential amendment.

v) Consequential amendment.

vi) Consequential amendment.

vii) New regulation-making authority.

viii) The existing provision is as follows:

200(1) The Lieutenant-Governor in Council may make regulations and the Commission may make rules ...

(s) prescribing the terms and conditions under which a person who is in a contractual relationship with a dealer is deemed to be an employee of the dealer for the purposes of New Brunswick securities law and deemed to be qualified for registration as a salesperson, partner or officer of the dealer;

ix) Consequential amendment.

x) Consequential amendment.

xi) Consequential amendment.

xii) Consequential amendment.

xiii)

A) Consequential amendment.

B) Consequential amendment.

C) Consequential amendment.

xiv) Consequential amendment.

xv)

A) Consequential amendment.

B) Consequential amendment.

C) Consequential amendment.

D) Consequential amendment.

xvi) Consequential amendment.

xvii) Consequential amendment.

(b) The existing provision is as follows:

200(2) The Lieutenant-Governor in Council may make regulations ...

(d) respecting the practice and procedure that are to be followed by the Commission in making, amending and repealing rules;

Section 65

(a) Consequential amendment.

(b) Consequential amendment.

(d) Consequential amendment.

(e) Consequential amendment.

(f) Consequential amendment.

(g) Consequential amendment.

(h) Consequential amendment.

(i) Consequential amendment.

Section 66

Consequential amendment.

Section 67

Commencement provision.