Integra Capital Limited et al - s. 80
Headnote
Section 80 of the Commodity Futures Act (Ontario) -- relief from the adviser registration requirements of subsection 22(1)(b) of the CFA granted to sub-adviser's not ordinarily resident in Ontario in respect of advising certain funds, subject to certain terms and conditions. Relief mirrors exemption available in section 7.3 of OSC Rule 35-502 -- Non-Resident Advisers made under the Securities Act (Ontario).
Statutes Cited
Commodity Futures Act, R.S.O. 1990, c. C.20, as am., s. 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
COMMODITY FUTURES ACT,
R.S.O. 1990 C. 20 (THE CFA)
AND
IN THE MATTER OF
INTEGRA CAPITAL LIMITED
AND
NEWTON CAPITAL MANAGEMENT LIMITED
AND
ANALYTIC INVESTORS INC.
ORDER
(Section 80)
UPON the application of Integra Capital Limited (the Principal Adviser) to the Ontario Securities Commission (the Commission) for an order pursuant to section 80 of the CFA that neither Newton Capital Management Limited (Newton) or Analytic Investors Inc. (Analytic) (collectively the Sub-Adviser's) nor any of their directors, officers or employees (the Sub-Adviser's Representatives) acting on their behalf as an adviser, shall be subject to the adviser registration requirement in section 22(1)(b) of the CFA in respect of advice provided to the Principal Adviser for the benefit of the Integra Newton Global Bond Fund and Integra Analytic Canadian Market Neutral Fund (each a Fund, and collectively the Funds);
AND UPON considering the application and the recommendation of the staff of the Commission;
AND UPON the Principal Adviser having represented to the Commission that:
1. The Principal Adviser is a corporation formed under the laws of Ontario and is currently registered with the Commission as a dealer in the category of limited market dealer, as an adviser in the categories of investment counsel and portfolio manager and as a commodity trading manager. The Principal Advisers business office is located in Oakville, Ontario.
2. Newton is a corporation formed under the laws of England. Newton is registered as an investor adviser with the U.S. Securities & Exchange Commission and uses the resources of Newton Investment Management Limited. Newton Investment Management Limited is regulated by the UK Financial Services Authority and is currently authorized to perform asset management services in the United Kingdom and in the other member states of the European Union (EU) through EU directives. Newton's principal business office is located in London, England.
3. Newton was appointed sub-adviser of the Integra Newton Global Bond Fund pursuant to a written agreement with the Principal Adviser which sets out the duties and obligations of Newton.
4. Analytic is a corporation formed under the laws of California. Analytic is registered as an investment adviser with the U.S. Securities & Exchange Commission and files notices as a federally covered adviser with the State of California. Analytic is also registered as a Commodity Trading Advisor under the U.S. Commodity Exchange Act and is a member of the U.S. National Futures Association as a Commodity Trading Advisor. Analytic's principal business office is located in Los Angeles, California.
5. Analytic was appointed sub-advisor of the Integra Analytic Canadian Market Neutral Fund pursuant to a written agreement with the Principal Adviser that sets out the duties and obligations of Newton.
6. Neither of the Sub-Adviser's are currently registered under the CFA as either an adviser or dealer.
7. The Sub-Adviser's, pursuant to their written agreement with the Principal Adviser, will provide advice to their respective Fund relating to commodity futures contracts and commodity futures options as a sub-adviser to the Principal Adviser (the Proposed Advisory Services).
8. There is presently no rule under the CFA that provides an exemption from the adviser registration requirement in section 22(1)(b) of the CFA, for a person or company acting as an sub-adviser to another registered adviser in respect of commodity futures options and commodity futures contracts that is similar to the exemption from the adviser registration requirement in clause 25(1)(b) of the Securities Act (Ontario) available in section 7.3 of Commission Rule 35-502 - Non-Resident Advisers.
AND UPON the Commission being of the opinion that to do so would not be prejudicial to the public interest;
IT IS ORDERED, pursuant to section 80 of the CFA, that neither the Sub-Adviser, nor any of the Sub-Adviser's Representative's acting on behalf of the Sub-Adviser, is subject to section 22(1)(b) of the CFA, in respect of their acting as an adviser to the Principal Adviser, in connection with that Principal Adviser acting as an adviser to the Funds, provided that, at the relevant time and in the case of each Fund:
(a) the Principal Adviser is registered under the CFA as an adviser in the category of commodity trading manager;
(b) the duties and obligations of the Sub-Adviser are set out in a written agreement with the Principal Adviser;
(c) the Principal Adviser has contractually agreed with the Fund to be responsible for any loss that arises out of any failure of the respective Sub-Adviser:
(i) to exercise the powers and discharge the duties of its office honestly, in good faith and in the best interests of the Fund and its securityholders, or
(ii) to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances;
(d) the Principal Adviser cannot be relieved by the Fund or its securityholders from its responsibility for any loss referred to in paragraph (c), above;
(e) the securityholders of the Fund have received written disclosure, in a prospectus or other offering document to the extent applicable, disclosing:
(i) the responsibility of the Principal Adviser for losses arising out of any failure of the Sub-Adviser referred in paragraph (c), above, and
(ii) that there may be difficulty in enforcing legal rights against the Sub-Adviser because it is resident outside Canada and all or substantially all of the Sub-Adviser's assets may be situated outside of Canada; and
(f) this Order shall terminate on the day that is three years after the date of the Order.