Morgan Stanley Hedge Fund Partners LP, Morgan Stanley Hedge Fund Partners GP LP and Zebra Capital Management LLC - s. 80 of the CFA

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 a non-resident adviser in respect of advising certain mutual funds, non-redeemable investment funds and similar investment vehicles related to commodity futures contracts and commodity futures options principally traded on commodity futures exchanges outside Canada and cleared through clearing corporations outside Canada, subject to certain terms and conditions.

Statutes Cited

Commodity Futures Act, R.S.O. 1990, c. C.20, as am., s. 22(1)(b) and s. 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 HEDGE FUND PARTNERS LP,

MORGAN STANLEY HEDGE FUND PARTNERS GP LP

AND ZEBRA CAPITAL MANAGEMENT LLC

ORDER

(SECTION 80 OF THE CFA)

UPON the application (the Application) of Morgan Stanley Hedge Fund Partners LP, Morgan Stanley Hedge Fund Partners GP LP and Zebra Capital Management LLC (the Applicants) to the Ontario Securities Commission (the Commission or the OSC) for an order pursuant to section 80 of the CFA that each of the Applicants and its directors, officers, partners, members and employees (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 mutual funds, non-redeemable investment funds and similar investment vehicles established outside of Canada in respect of trades in commodity futures contracts and commodity futures options 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 Applicants having represented to the Commission that:

1. The Applicants are Morgan Stanley Hedge Fund Partners LP, Morgan Stanley Hedge Fund Partners GP LP and Zebra Capital Management LLC. Each of Morgan Stanley Hedge Fund Partners GP LP and Morgan Stanley Hedge Fund Partners LP is a limited partnership formed under the laws of the State of Delaware. Zebra Capital Management LLC is a limited liability company organized under the laws of the State of Connecticut. The Applicants may also include affiliates of, or entities organized by, the Applicants 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. Zebra US Equity Long/Short Fund Onshore LP, a limited partnership formed under the laws of the State of Delaware, Zebra US Equity Long/Short Fund (Cayman) Offshore Ltd., an exempted company formed under the laws of the Cayman Islands, Zebra US Equity Long/Short Fund (Cayman) Offshore II Ltd., an exempted company formed under the laws of the Cayman Islands and any other feeder funds (collectively, the Feeder Funds) will co-invest in a "master" fund, Zebra US Equity Long/Short Fund LP, a limited partnership formed under the laws of the State of Delaware (the Master Fund). These funds are, or will be, organized in a "master-feeder" structure established outside of Canada. The Master Fund will serve as a master fund in which substantially all of the assets of the Feeder Funds will be invested in return for limited partnership interests of the Master Fund. The Applicants may in the future establish or advise certain other mutual funds, non-redeemable investment funds or similar investment vehicles (collectively, along with the Feeder Funds and the Master Funds, the Funds).

3. Securities of the Funds are, or will be, primarily offered outside of Canada to institutional investors and high net worth individuals. Securities of the Funds are or will be offered to a small number of Ontario residents who are institutional investors and high net worth individuals and will be distributed in Ontario through one or more registrants (as defined under the Securities Act (Ontario) (the OSA)) in reliance on an exemption from the prospectus requirements of the OSA, and in reliance on 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).

4. The Applicants may provide trading advice to the Master Fund and to certain other Funds, as part of their investment programs, with respect to investments in commodity futures contracts and commodity futures options principally traded on commodity futures exchanges outside Canada and cleared through clearing corporations outside Canada.

5. None of the Funds is or has any current intention of becoming a reporting issuer in Ontario or in any other Canadian jurisdiction.

6. Each of the Applicants, 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:

(i) Morgan Stanley Hedge Fund Partners LP is registered with the U.S. Securities and Exchange Commission (SEC) as an investment adviser under the U.S. Investment Advisers Act of 1940 (Advisers Act) and is exempt from registration with the U.S. Commodity Futures Trading Commission (the CFTC) and the National Futures Association (the NFA).

(ii) Morgan Stanley Hedge Fund Partners GP LP is registered with the SEC as an investment adviser under the Advisers Act and is exempt from registration as a commodity trading advisor and a commodity pool operator with the CFTC and the NFA pursuant to an exemption under the CFTC rules.

(iii) Zebra Capital Management LLC is registered with the SEC as an investment adviser under the Advisers Act and is exempt from registration as a commodity trading advisor with the CFTC and the NFA pursuant to an exemption under the CFTC rules.

7. None of the Applicants is registered in any capacity under the CFA or the OSA.

8. 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 any of the Applicants 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 Applicants advising the applicable Funds are not, or will not be, 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 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 and its Representatives 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 years, provided that at the time that such activities are engaged in:

(a) the Applicants, where required, are or will be, registered or licensed, or are 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 contracts and commodity futures options principally traded on commodity futures exchanges outside Canada and cleared through clearing corporations outside of Canada;

(c) securities of the Funds will be offered primarily outside of Canada and will only be distributed in Ontario through one or more registrants (as defined under the OSA) 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) 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 any of the Applicants 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 Applicants advising the applicable Funds are not, or will not be, 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.

January 28, 2005.