The recent, Clifton Blake settlement agreement is yet another, clear indication that it doesn’t take a lot of distribution activity to trip the “business trigger” for registration, meaning that a firm is in the business of trading in, or advising on, securities and therefore must register with securities regulators or be able to rely on an exemption from registration. (We’ve discussed the business trigger in prior editions of our bulletin, including our discussion of the Valt.X case in October 2018 and our February 2016 review of business trigger decisions.)
In this case, a firm applied to become registered as an exempt market dealer (EMD) and, during the application process, staff of the Ontario Securities Commission (OSC) probed into activities conducted by the firm prior to that application and determined that there had been a material breach of securities laws. The result in this case also serves as important reminder that the criteria for reliance on the “friends, family and business associates” exemption from the prospectus and registration requirements must be carefully examined in every case.
