BNY Mellon Asset Management North America Corporation
Headnote
U.S. investment advisor registered as a portfolio manager in Québec, Alberta, British Columbia, and Ontario, as commodity trading manager in Ontario, and is relying on the international fund manager exemption under Multilateral Instrument 32-102 Registration Exemptions for Non-Resident Investment Fund Managers in Ontario and Québec. -- Relief from providing comparative financial filings subsequent to expected amalgamation due to "as if" consolidated requirement for comparative year under U.S. GAAP -- Exemption granted from requirement to provide financial statements on a comparative basis for the Filer's financial year ending December 31, 2018 -- Exemption granted from requirement to file calculation of excess working capital on a comparative basis for the Filer's financial year ending December 31, 2018 -- Relief conditional upon Filer providing prompt written notice of any prior period adjustments for the Filer's financial year ending December 31, 2017.
Applicable Legislative Provisions
National Instrument 14-101 Definitions.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 12.10, 12.13.
National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards.
September 21, 2018
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF BNY MELLON ASSET MANAGEMENT NORTH AMERICA CORPORATION (the Filer)
DECISION
Background
The Ontario Securities Commission has received an application from the Filer (the Application) for a decision under the securities legislation of Ontario (the Legislation) exempting the Filer from the following requirements for its financial year ending December 31, 2018:
(a) the requirements of subsection 12.10(1) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) that the Filer prepare a statement of comprehensive income, a statement of changes in equity, a statement of cash flows and a statement of financial position, each prepared for the most recently completed financial year and the financial year immediately preceding the most recently completed financial year; and
(b) the requirements of subsection 12.13(b) of NI 31-103 that the Filer deliver a completed Form 31-103F1 Calculation of Excess Working Capital (Form 31-103F1) showing the calculation of its excess working capital as at the end of the financial year and as at the end of the immediately preceding financial year (together with (a) above, the Exemption Sought).
Under the Process of Exemptive Relief Applications in Multiple Jurisdictions:
(a) the Ontario Securities Commission is the principal regulator (the Principal Regulator) for the Application; and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-202 Passport System (MI 11-102) is intended to be relied upon in Alberta, British Columbia and Québec (together with Ontario, the Jurisdictions).
Interpretation
Terms defined in MI 11-102, National Instrument 14-101 Definitions and National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) have the same meaning if used in this decision, unless otherwise defined.
Representations
The decision is based on the following facts represented by the Filer:
1. The Filer is a corporation formed under the laws of the state of Delaware and has its principal place of business in Boston, Massachusetts. The Filer was originally formed in 1983 under the original name of Mellon Capital Management Corporation (MCM). Effective as of January 31, 2018, MCM merged with Standish Mellon Asset Management (Standish) and The Boston Company Asset Management (TBCAM) (the Merger). The Filer is the resulting entity of the Merger.
2. The Filer is registered as a portfolio manager in the Jurisdictions, as commodity trading manager in Ontario, and is relying on the international fund manager exemption under Multilateral Instrument 32-102 Registration Exemptions for Non-Resident Investment Fund Managers in Ontario and Quebec. The Filer is also registered as an investment adviser with the U.S. Securities and Exchange Commission (the SEC), as a commodity trading adviser and commodity pool operator with the U.S. Commodity Futures Trading Commission (the CFTC), and is approved as a National Futures Association (NFA) member and a swap firm.
3. The Filer is a direct subsidiary of MBC Investments Corporation, a corporation formed under the laws of the State of Delaware, which in turn is wholly-owned by The Bank of New York Mellon Corporation (BNYMC). BNYMC is a public reporting company under the U.S. Securities Exchange Act of 1934. BNYMC's common stock is traded on the New York Stock Exchange (symbol: BK).
4. With over US$560 billion in assets under management, the combined business ranks as a top 10 U.S. institutional asset manager and a top 50 manager globally. It employs more than 300 investment professionals, with U.S. offices in Boston, San Francisco and Pittsburgh, and investment staff through affiliates in London, Singapore and Hong Kong. BNYMC is an American worldwide banking and financial services holding company headquartered in New York. It is the world's largest custodian bank and asset servicing company, with US$1.9 trillion in assets under management and US$33.3 trillion in assets under custody as of December 2017.
5. The Filer currently delivers standalone annual financial statements to the Principal Regulator (the Filer's principal regulator in Canada) under sections 12.10 and 12.13 of NI 31-103. These financial statements currently present a statement of comprehensive income, a statement of changes in equity, a statement of cash flows and a statement of financial position, each prepared for the most recently completed financial year and at least one director of the Filer signs the Filer's statement of financial position, as provided under section 12.10 of NI 31-103. These financial statements are prepared in accordance with U.S. GAAP as contemplated under the financial reporting provisions of paragraph 3.15(b) of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards.
6. The Filer is not required to file its financial statements with the SEC, the CFTC or the NFA.
7. The financial year-end of MCM (a predecessor of the Filer) and of the Filer is December 31, 2017. The Merger was effective at the close of business on January 31, 2018. The financial year-end of Standish and TBCAM was December 31, 2017
8. In order for the Filer to report comparative financial information for the financial year ended December 31, 2019, U.S. GAAP requires that the comparative year end (December 31, 2018) include the financial results of MCM, Standish and TBCAM "as if" the merger and consolidation had been effective on January 1, 2018 instead of January 31, 2018. The "as if" requirement under U.S. GAAP conflicts with the financial reporting requirements for purposes of NI 31-103 and NI 52-107 which effectively do not allow "as if" reporting.
9. The Filer is requesting the Exemption Sought for the financial year ending December 31, 2018 and will submit comparative financial information in Form 31-103F1 and in its financial statements pursuant to sections 12.10 and 12.13 of NI 31-103 for the financial years ended December 31, 2019 and beyond.
10. The Filer submits that granting the Exemption Sought is not prejudicial to the public interest or otherwise objectionable for the following reasons:
(a) The Filer will require relief from filing comparative information for only the financial year ending December 31, 2018.
(b) In the absence of the Exemption Sought, the Filer would be required for the financial year ending December 31, 2018 to provide audited financial information for the financial year ending December 31, 2018 on an "as if" consolidated basis, which would be burdensome and costly in consideration of the requirement to provide non-consolidated financial information for the financial year ending December 31, 2017 pursuant to sections 12.10 and 12.13 of NI 31-103.
Decision
The Director is satisfied that the decision meets the test set out in the Legislation to make the decision.
The decision of the Director under the Legislation is that the Exemption Sought is granted provided that:
(a) the head office or principal place of business of the Filer is the United States;
(b) the Filer continues to be registered as an investment adviser with the SEC and as a commodity trading adviser and commodity pool operator with the CFTC;
(c) the Filer continues to comply with all registration and other requirements of U.S. federal securities law and all other applicable securities laws of the U.S.;
(d) the Filer delivers a completed Form 31-103F1 and financial statements for the financial year ended December 31, 2018 except that the Form 31-103F1 and the financial statements will not include comparative financial information for the financial year ending December 31, 2017;
(e) the Filer submits comparative financial information in Form 31-103F1 and in its financial statements in accordance with sections 12.10 and 12.13 of NI 31-103 for the financial years ended December 31, 2019 and beyond;
(f) the Filer provides the Commission with prompt written notice of any prior period adjustments for the financial year ending December 31, 2017.