D. E. Shaw & Co., L.P. - s. 80 of the CFA
Headnote
Section 80 of the Commodity Futures Act (Ontario) -- Renewal of previous order (granted December 23, 2003) providing an exemption from the from the adviser registration requirements of subsection 22(1)(b) of the CFA in respect of advising certain non-redeemable investment funds and similar investment vehicles established outside of Canada in respect of trades in commodity futures contracts and commodity futures options primarily traded on commodity futures exchanges outside Canada and primarily cleared through clearing corporations outside Canada, subject to certain terms and conditions.
Fees waived as application only required because amendments to or a rule under the CFA that would have a similar effect as section 7.10 of Rule 35-502 have not yet been adopted.
Statutes Cited:
Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 22(1)(b), 80.
Securities Act, R.S.O. 1990, c. S.5, as am. -- Rule 35-502 -- Non Resident Advisers.
IN THE MATTER OF
THE COMMODITY FUTURES ACT,
R.S.O. 1990, CHAPTER C.20, AS AMENDED
(the CFA)
AND
IN THE MATTER OF
D. E. SHAW & CO., L.P.
ORDER
(Section 80 of the CFA)
UPON the application (the Application) of D. E. Shaw & Co., L.P. (the Applicant) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 80 of the CFA, renewing the exemption order granted by the Commission on December 23, 2003, that the Applicant and its directors, officers, and employees acting on its behalf as an adviser (collectively, the Representatives), be exempt, for a period of three years, from the requirements of paragraph 22(1)(b) of the CFA in respect of advising certain non-redeemable investment funds and similar investment vehicles (the Funds), established outside of Canada in respect of trades in commodity futures contracts and commodity futures options primarily traded on commodity futures exchanges outside Canada and primarily cleared through clearing corporations outside Canada;
AND UPON considering the Application and the recommendation of staff of the Commission;
AND UPON the Applicant having represented to the Commission that:
1. The Applicant is a limited partnership formed under the laws of the State of Delaware and is registered with the U.S. Securities and Exchange Commission (the SEC) as an investment adviser. The Applicant is also registered with the U.S. Commodities Futures Trading Commission (the CFTC) as a commodity pool operator and is a member of the U.S. National Futures Association.
2. The Applicant is registered under the Securities Act (Ontario) (the OSA) as an international adviser in the categories of investment counsel and portfolio manager and is not registered in any capacity under the CFA. D. E. Shaw Securities, L.L.C., an affiliate of the Applicant, is registered under the OSA as an international dealer.
3. The Funds invest, or may in the future invest, in commodity futures contracts and commodity futures options primarily traded on commodity futures exchanges outside of Canada and primarily cleared through clearing corporations outside Canada.
4. The Applicant is, or in the future may be, the investment manager for the Funds. As such, the Applicant is, or will be, responsible for providing investment advisory services to the Funds.
5. The Funds advised by the Applicant will be established outside of Canada. Securities of the Funds will be primarily offered outside of Canada to institutional investors and high net worth investors. Securities of the Funds will be offered only to Ontario residents who qualify as an "accredited investor" under National Instrument 45-106 -- Prospectus and Registration Exemptions or will be offered and distributed in Ontario only in reliance upon an exemption from the prospectus requirements of the OSA and an exemption from the adviser registration requirement of the OSA under section 7.10 of OSC Rule 35-502 Non-Resident Advisers (Rule 35-502). As would be required under Rule 35-502, the securities of the Funds are or will be:
(a) primarily offered outside of Canada;
(b) only distributed in Ontario through one or more registrants under the OSA; and
(c) distributed in Ontario in reliance upon an exemption from the prospectus requirements of the OSA.
6. The Funds do not have any current intention of becoming a reporting issuer in Ontario or in any other Canadian jurisdiction.
7. Prospective investors who are Ontario residents will receive disclosure that includes:
(a) a statement that there may be difficulty in enforcing legal rights against the Funds, or the Applicant advising the Funds, because such entities are resident outside of Canada and all or substantially all of their assets are situated outside of Canada; and
(b) a statement that the Applicant is not registered with the Commission under the CFA and, accordingly, the protections available to clients of a registered adviser under the CFA will not be available to purchasers of securities of the Funds.
AND UPON being satisfied that it would not be prejudicial to public interest for the Commission to grant the exemption requested on the basis of the terms and conditions proposed,
IT IS ORDERED pursuant to section 80 of the CFA that the Applicant and its Representatives are not subject to the requirements of paragraph 22(1)(b) of the CFA in respect of their advisory activities in connection with the Funds, for a further period of three years, provided that at the time that such activities are engaged in:
a) the Applicant continues to be registered with the SEC as an investment adviser and with the CFTC as a commodity pool operator in the United States;
b) the Funds invest in commodity futures contracts and commodity futures options primarily traded on commodity futures exchanges outside Canada and primarily cleared through clearing corporations outside Canada;
c) securities of the Funds are or will be offered primarily outside of Canada and securities of the Funds will only be distributed in Ontario through one or more registrants under the OSA in reliance on a exemption from the prospectus requirements of the OSA and upon an exemption from the adviser registration requirement of the OSA under Rule 35-502; and
d) prospective investors who are Ontario residents will receive disclosure that includes, to the extent applicable:
(i) a statement that there may be difficulty in enforcing legal rights against the Funds, or the Applicant advising the Funds, because such entities are resident outside of Canada and all or substantially all of their assets are situated outside of Canada; and
(ii) a statement that the Applicant is not registered with the Commission under the CFA and, accordingly, the protections available to clients of a registered adviser under the CFA will not be available to purchasers of securities of the Funds.
Dated this 19th of December, 2006