Morgan Stanley Alternative Investment Partners LP et al. - ss. 80, 3.1(1) of the CFA

Headnote

Section 80 of the Commodity Futures Act (Ontario) -- Renewal of previous order (granted March 23, 2004) providing an exemption from the adviser registration requirements of subsection 22(1)(b) of the CFA in respect of acting as an adviser to certain mutual funds, non-redeemable investment funds and similar investment vehicles primarily offered 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.

Subsection 3.1(1) of the Commodity Futures Act (Ontario) -- Assignment by the Commission to the Director of the powers and duties vested in the Commission under subsection 78(1) of the CFA to allow the Director to vary the present order by specifically naming an affiliate as an applicant to the order.

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 -- Non Resident Advisers have not yet been adopted.

Statutes Cited

Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 3.1(1), 22(1)(b), 78,80.

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

MORGAN STANLEY ALTERNATIVE

INVESTMENT PARTNERS LP,

MORGAN STANLEY AIP GP LP,

MORGAN STANLEY AIP (CAYMAN) LTD. AND

MORGAN STANLEY AIP (CAYMAN) GP LTD.

ORDER

(Section 80 and Subsection 3.1(1) of the CFA)

UPON the application (the Application) of Morgan Stanley Alternative Investment Partners LP (MSLP), Morgan Stanley AIP GP LP (MSGP), Morgan Stanley AIP (Cayman) Ltd. (formerly known as MSDW AIP (Cayman) Ltd.) (MS Cayman) and Morgan Stanley AIP (Cayman) GP Ltd. (MS Cayman GP) (together, the MS Entities) and on behalf of certain affiliates of, or entities organized by the MS Entities that provide notice to the Director as referred to below (the Affiliates, and together with the MS Entities, the Applicants) to the Ontario Securities Commission (the Commission) for:

(a) an order, pursuant to section 80 of the CFA, renewing the exemption order granted by the Commission on March 23, 2004, that each of the Applicants (including their respective directors, partners, officers, and employees), be exempt, for a period of three years, from the requirements of paragraph 22(1)(b) of the CFA in respect of acting as an adviser to certain mutual funds, non-redeemable investment funds and similar investment vehicles (the Funds, as defined below) primarily offered 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

(b) an assignment by the Commission to each Director, acting individually, pursuant to subsection 3.1(1) of the CFA, of the powers and duties vested in the Commission under subsection 78(1) of the CFA, to vary this Order by specifically naming any Affiliate of the MS Entities as an Applicant to this Order in the circumstances described below;

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON the Applicants having represented to the Commission that:

1. Each of the Applicants is organized under the laws of a jurisdiction other than Canada or the provinces or territories thereof. MSLP and MSGP are each limited partnerships organized under the laws of the state of Delaware. MS Cayman and MS Cayman GP are each exempted companies organized under the laws of the Cayman Islands.

2. Any Affiliate, whose name does not specifically appear in this Order, who wishes to rely on the exemption granted under this Order must execute and file with the Commission (Attention: Manager, Registrant Regulation) two copies of a notice (the Notice, in the form of Part A to the attached Schedule A), applying to the Director to vary this Order to specifically name the Affiliate as an Applicant to this Order. The Notice must be filed with the Commission at least ten (10) days prior to the date that such Affiliate wishes to begin relying on this Order.

3. If, in the Director's opinion, it would not be prejudicial to the public interest, within ten (10) days after receiving the Notice, the Director will provide the Affiliate with a written acknowledgment and consent (the Director's Consent, in the form of Part B to the attached Schedule A). The Director's Consent will allow the Affiliate to rely on the exemption granted in this Order by varying the Order to specifically name the Affiliate as an Applicant to this Order. The Affiliate may not rely on this Order until it has received the Director's Consent.

4. If, after reviewing the Notice, the Director provides a written notice of objection (the Objection Notice) to the Affiliate, the Affiliate will not be permitted to rely on the exemption granted under this Order. However, the Affiliate may, by notice in writing sent by registered mail to the Secretary of the Commission within 30 days after receiving the Objection Notice, request and be entitled to a hearing and review of such decision by the Commission.

5. Subsection 78(1) of the CFA provides that the Commission may, on the application of a person or company affected by the decision, make an order revoking or varying a decision of the Commission if, in the Commission's opinion, the order would not be prejudicial to the public interest. Further, subsection 3.1(1) of the CFA provides that a quorum of the Commission may assign any of its powers and duties under the CFA (except powers and duties under section 4 and Part IV) to the Director.

6. None of the Applicants are or will be registered in any capacity under the CFA or the Securities Act (Ontario) (the OSA).

7. MS Cayman and MS Cayman GP serve as general partners of certain offshore feeder funds (the Feeder Funds) that are established outside of North America. MS Cayman and MS Cayman GP manage the Feeder Funds and cause the assets of the Feeder Funds to be invested primarily in funds established in the United States (U.S. Funds). The Applicants may in the future establish or advise certain other mutual funds, non-redeemable investment funds or similar investment vehicles (collectively, together with the Feeder Funds and the U.S. Funds, the Funds).

8. All of the Funds are or will be "fund of funds" which will primarily invest in certain investment vehicles unaffiliated with the Applicants and which are, or will be, primarily established outside of Canada (the Underlying Funds). The Feeder Funds invest in the Underlying Funds indirectly by investing directly in the U.S. Funds that invest directly in the Underlying Funds.

9. Certain of the Underlying Funds may 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. Certain of the Funds advised by the Applicants may also invest directly in commodity futures contracts and commodity futures options primarily traded on commodity futures exchanges outside Canada and primarily cleared through clearing corporations outside Canada..

10. The Underlying Funds in which the Funds will from time to time invest are, or will be, managed by certain third party managers primarily outside of Canada (the Managers) and are investing, or will invest, in investments selected by the Managers which may include commodity futures contracts and commodity futures options. The Managers are unaffiliated with the Applicants and do not, and will not in the future, provide advice directly to the Funds.

11. One or more of the Applicants will select the Underlying Funds in which the Funds will invest based on the investment strategies implemented by the Manager of the relevant Underlying Fund and the respective investment objectives and policies of the Fund that will invest in the Underlying Fund. The investment strategies implemented by the Managers may include investing in commodity futures contracts and commodity futures options primarily traded on commodity futures exchanges outside Canada and primarily cleared through clearing corporations outside Canada.

12. The Funds advised by the Applicants are and will be established outside of Canada. Securities of the Funds are and will be primarily offered outside of Canada to institutional investors and high net worth individuals. Securities of the Funds will be offered to a small number of Ontario residents who will be, at the time of their investment, institutional investors or high net worth individuals that qualify as "accredited investors" under National Instrument 45-106 -- Prospectus and Registration Exemptions.

13. Paragraph 22(1)(b) of the CFA prohibits a person or company from acting as an adviser unless the person or company is registered as an adviser under the CFA, or is registered as a partner or an officer of a registered adviser and is acting on behalf of a registered adviser. Under the CFA, "adviser" means a person or company engaging in or holding himself, herself or itself out as engaging in the business of advising others as to trading in "contracts", and "contracts" means commodity futures contracts and commodity futures options.

14. By selecting an Underlying Fund based upon the Underlying Fund's investment strategy, where such strategy may specifically involve investing 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 by advising the Funds directly on investing in commodity futures contracts and commodity futures options primarily traded on commodity futures exchanges outside Canada and primarily cleared through clearing corporations outside Canada., the Applicants will be providing advice to Ontario investors with respect to commodity futures contracts and commodity futures options and, in the absence of being granted the requested relief, would be required to register as advisers under the CFA.

15. There is presently no rule under the CFA that provides an exemption from the adviser registration requirement in paragraph 22(1)(b) of the CFA for a person or company acting as an adviser in respect of commodity futures options and commodity futures contracts that is similar to the exemption from the adviser registration requirement in section 25(1)(c) of the OSA for acting as an adviser (as defined in the OSA) in respect of securities that is provided under section 7.10 (Privately Placed Funds Offered Primarily Abroad) of OSC Rule 35-502 -- Non Resident Advisers (Rule 35-502).

16. As would be required under section 7.10 of Rule 35-502, 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.

17. Each of the Applicants, where required, is or will be appropriately 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:

(i) MSLP is a registered investment adviser with the U.S. Securities and Exchange Commission (the SEC), a registered commodity pool operator with the U.S. Commodity Futures Trading Commission (the CFTC), and a member of the National Futures Association (the NFA);

(ii) MSGP is a registered investment adviser with the SEC, a registered commodity trading advisor with the U.S. National Futures Association, a registered commodity pool operator with the CFTC and a member of the NFA;

(iii) MS Cayman is not required to be, and accordingly is not, currently registered as an investment adviser with the SEC but is a registered commodity pool operator with the CFTC; and

(iv) MS Cayman GP is not required to be, and accordingly is not, currently registered as an investment adviser with the SEC but is a registered commodity pool operator with the CFTC and a member of the NFA.

18. All of the Funds issue securities which are offered primarily abroad. None of the Funds has any intention of becoming a reporting issuer in Ontario or in any other Canadian jurisdiction.

19. Prior to purchasing any securities in one or more of the Funds, all investors in the Funds who are Ontario residents will receive disclosure that includes:

(i) a statement that there may be difficulty in enforcing any legal rights against the relevant Fund or any of the Applicants (or the individual representatives of the Applicants) advising the relevant Fund, 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 relevant Applicant advising the relevant Fund is not, or will not be, registered with or licensed by any regulatory authority in Canada and, accordingly, the protections available to clients of a registered adviser under the CFA will not be available to purchasers of securities of the relevant Fund.

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 Applicants are exempted from the requirements of paragraph 22(1)(b) of the CFA in respect of acting as an adviser in connection with any one or more of the Funds, for a period of three years, provided that at the relevant time that such activities are engaged in:

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

(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:

(i) primarily offered outside of Canada,

(ii) only distributed in Ontario through one or more registrants under the OSA; and

(iii) 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 7.10 of Rule 35-502;

(d) prior to purchasing any securities in one or more of the Funds, all investors in the Funds who are Ontario residents received disclosure that includes:

(i) a statement that there may be difficulty in enforcing any legal rights against the relevant Fund or any of the Applicants (or the individual representatives of the Applicants) advising the relevant Fund, 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 relevant Applicant advising the relevant Fund is not, or will not be, registered with or licensed by any regulatory authority in Canada and, accordingly, the protections available to clients of a registered adviser under the CFA will not be available to purchasers of securities of the relevant Fund; and

(e) each Applicant either:

(i) is specifically named in this Order; or

(ii) has filed with the Commission the Notice and received the Director's Consent.

AND IT IS FURTHER ORDERED pursuant to subsection 3.1(1) of the CFA that the Commission assigns to each Director, acting individually, the powers and duties vested in the Commission under subsection 78(1) of the CFA, to vary this Order by specifically naming any Affiliate of the MS Entities as an Applicant to this Order (as described in paragraphs 2, 3 and 4 above) by providing such Affiliate with the Director's Consent, provided that, the Affiliate may, by notice in writing sent by registered mail to the Secretary of the Commission within 30 days after receiving the Objection Notice, request and be entitled to a hearing and review of such decision by the Commission.

March 23, 2007

Schedule A

Part A: Notice to the Ontario Securities Commission (the Commission)

The undersigned, being an authorized representative of the Affiliate, hereby represents to the Commission that:

(a) on March _____, 2007, the Commission issued the attached order (the Order), pursuant to section 80 of the Commodity Futures Act (Ontario) (the CFA), that each of the Applicants (as defined in the Order) is exempt from the requirements of paragraph 22(1)(b) of the CFA in respect of acting as an adviser in connection with any one or more of the Funds (as defined in the Order), for a period of three years;

(b) the Affiliate, is an affiliate of, or entity organized by one of the Named Applicants;

(c) the Affiliate, whose name does not specifically appear in the Order, wishes to rely on the exemption granted under the Order and hereby applies to the Director, under section 78 of the CFA, to vary the Order to specifically name the Affiliate as an Applicant to the Order;

(d) the Affiliate has attached a copy of the Order to this Notice;

(e) the Affiliate confirms the truth and accuracy of all the information set out in the Order;

(f) this Notice has been executed and filed with the Commissioner at least ten (10) days prior to the date on which the Affiliate wishes to begin relying on the Order; and

(g) the Affiliate has not, and will not, rely on this Order until it has received a written acknowledgment and consent from the Director as provided in Part B herein.

Part B: Acknowledgment and Consent by Director

I acknowledge receipt of your Notice, dated __________ _____, 20_____, providing the Commission with notice, as described in the Order, that the Affiliate, whose name does not specifically appear in the Order, wishes to rely on the exemption granted under the Order and has applied to vary the Order to specifically name the Affiliate as an Applicant to the Order.

Based on the representations contained in the Order and in your Notice, I do not consider it prejudicial to the public interest to permit the Affiliate to vary the Order to specifically name the Affiliate as an Applicant to the Order.