Submitted by nsscadmin on
The Nova Scotia Securities Commission constantly reminds Nova Scotia investors that anyone selling or advising in securities in the province must be registered, unless an exemption applies. A visitor to our website was wondering what is the exemption that allows someone to deal with a Nova Scotia resident without registration. To get an answer we went to our Manager of Registrant Regulation, Brian Murphy who provided this example of the Client Mobility Exemption to explain the most common exemption from registration.
Let’s say an individual was living in a province outside of Nova Scotia, Ontario for example, and was a client of a dealing representative or adviser who was registered only in Ontario. The individual then moved to Nova Scotia but kept their account with the representative or adviser in Ontario.
The representative/adviser tells the client that they do not need to be registered in Nova Scotia because of an exemption that is available and also tells the client that they were not subject to requirements otherwise applicable under local securities legislation.
While the client trusted their representative/adviser, they were confused how the representative/adviser is allowed to do this and checked with the Commission for an explanation.
The client is told that the rep was not doing anything wrong and many reps across the country are allowed to deal with NS residents without actually being registered in Nova Scotia as long as the representative/adviser and their firm followed these rules:
(a) the individual is registered as a dealing, advising or associate advising representative in the individual’s principal jurisdiction (in this case Ontario);
(b) the individual’s sponsoring firm is registered in the firm’s principal jurisdiction;
(c) the individual does not act as a dealer, underwriter or adviser in Nova Scotia other than as he or she is permitted to in his or her principal jurisdiction according to the individual’s registration in that jurisdiction;
(d) the individual does not act as a dealer, underwriter or adviser in Nova Scotia other than for five or fewer clients;
(e) the individual complies with Part 13 of National Instrument 31-103 - Dealing with clients – individuals and firms;
(f) the individual deals fairly, honestly and in good faith in the course of his or her dealings with the client;
(g) before first acting as a dealer or adviser for a client, the individual’s sponsoring firm has disclosed to the client that the individual, and if the firm is relying on section 8.30 of National Instrument 31-103 - Client mobility exemption – firms, the firm,
(i) is exempt from registration in the local jurisdiction, and
(ii) is not subject to requirements otherwise applicable under local securities legislation.
As long as these conditions are met the representative/adviser is exempt from the registration requirement in Nova Scotia. The Commission always recommends checking the registration of anyone offering you investment advice or trying to sell you a security. If this person says they are exempt from registration ask them what exemption they are relying on in Nova Scotia. You can also contact the Commission to check to see if an individual’s exemption has been granted by us.