D.E. Shaw & Co. Energy, L.L.C.- s. 80 of the CFA

Headnote

Subsection 80 of the Commodity Futures Act (Ontario) -- relief from the requirements of subsection 22(1)(b) of the CFA in respect of advising certain non-Canadian mutual funds related to commodity futures contracts and options traded on commodity futures exchanges outside Canada and cleared through clearing corporations outside Canada subject to certain terms and conditions.

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. ENERGY, L.L.C.

ORDER

(Section 80 of the CFA)

UPON the application (the "Application") of D. E. Shaw & Co. Energy, L.L.C. (the "Applicant", as more fully defined below) to the Ontario Securities Commission (the "Commission" or the "OSC") for an order pursuant to section 80 of the CFA that the Applicant and its respective directors, partners, officers, members and employees (the "Officers"), are exempt, for a period of three (3) 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 ("Funds"), established outside of Canada in respect of trades in commodity futures and options contracts principally traded on commodity futures exchanges outside Canada and 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 liability company organized under the laws of the State of Delaware, USA. The Applicant is a wholly-owned subsidiary of D. E. Shaw & Co., L.P. ("DESCO LP"), a limited partnership organized under the laws of the State of Delaware, USA. The Applicant may also include affiliates of, or entities organized by, the Applicant which may subsequently execute and submit to the Commission a verification certificate in the attached form confirming the truth and accuracy of the information set out in this Order with respect to that particular Applicant.

2. The Applicant provides certain energy-related trading advisory services pertaining to, inter alia, physical energy, commodity futures and options contracts and derivative instruments traded over-the-counter in which the Funds are directly or indirectly invested. The Applicant is, or may in the future serve as, the investment manager for the Funds. As the investment manager, the Applicant is or will be responsible for, inter alia, providing certain administrative services and other investment management services to the Funds.

3. The Funds advised by the Applicant are or will be established outside of Canada. Securities of the Funds are or will be primarily offered outside of Canada to institutional investors and high net worth individuals. The Funds are or will be offered only to Ontario residents who qualify as an "accredited investor" under OSC Rule 45-501 Exempt Distributions ("Rule 45-501") or will be offered and distributed in Ontario only in reliance upon an other exemption from the prospectus requirements of the Securities Act (Ontario) (the "OSA") and an exemption from the adviser registration requirement of the OSA under section 7.1 or section 7.10 of OSC Rule 35-502 Non-Resident Advisers ("Rule 35-502").

4. The Applicant is not currently registered as an investment adviser in the United States under the Investment Advisers Act of 1940, as amended (the "1940 Act").

5. The Applicant is not currently registered with the United States Commodity Futures Trading Commission (the "CFTC"). The Applicant relies upon an exemption from registration as a commodity trading advisor pursuant to the U.S. Commodity Exchange Act.

6. DESCO LP is registered under the Act as an international adviser (investment counsel and portfolio manager) and exempt from registering under the CFA. DESCO LP is also registered under the 1940 Act as an investment adviser, registered with the CFTC as a commodity pool operator, and is a member of the U.S. National Futures Association.

7. The Applicant currently provides or may in the future provide certain energy-related trading advice to the Funds with respect to commodity futures and options contracts.

8. The Applicant, where required, is or will be registered or licensed or is or will be entitled to rely on appropriate exemptions from such registrations or licences to provide advice to the Funds pursuant to the applicable legislation of its principal jurisdiction. In particular:

a. The Applicant is not registered in any capacity under the CFA or the OSA.

b. The Funds currently, or in the future will, issue securities that are offered primarily outside of Canada. None of the Funds is or has any current intention of becoming a reporting issuer in Ontario or in any other Canadian jurisdiction.

c. The Funds may, as part of their investment program, invest in futures and options contracts principally traded on organized exchanges outside of Canada and cleared through clearing corporations located outside of Canada.

9. Prospective investors who are Ontario residents will receive disclosure that includes (i) a statement that there may be difficulty in enforcing legal rights against the Funds and or the Applicant which advises 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 advising the Funds is not registered with or licensed by any securities regulatory authority in Canada and, accordingly, the protections available to clients of a registered adviser will not be available to purchasers of securities of the Funds.

AND UPON being satisfied that it would not be prejudicial to the 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 each of the Applicant and its respective Officers responsible for advising the Funds 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 period of three (3) years, provided that at the time that such activities are engaged in:

(a) any such Applicant, where required, is or will be registered or licensed, or is or will be entitled to rely on appropriate exemptions from such registrations or licences, to provide advice to the Funds pursuant to the applicable legislation of its principal jurisdiction;

(b) the Funds invest, or may in the future invest, in commodity futures and options contracts principally traded on organized exchanges outside Canada and cleared through clearing corporations located outside of Canada;

(c) securities of the Funds will be offered primarily outside of Canada and will only be distributed in Ontario in reliance on an exemption from the prospectus requirements of the OSA and upon an exemption from the adviser registration requirement of the OSA under section 7.1 or section 7.10 of Rule 35-502;

(d) prospective investors who are Ontario residents will receive disclosure that includes (i) a statement that there may be difficulty in enforcing legal rights against the applicable Funds or the Applicant advising the relevant Funds, because they 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 advising the applicable Funds is not registered with or licensed by any securities regulatory authority in Canada and, accordingly, the protections available to clients of a registered adviser will not be available to purchasers of securities of a Fund; and

(e) any Applicant whose name does not specifically appear in this Order and who proposes to rely on the exemption granted under this Order, shall, as a condition to relying on such exemption, have executed and filed with the Commission a verification certificate referencing this Order and confirming the truth and accuracy of the Application with respect to that particular Applicant.

June 18, 2004.