Stanton Asset Management Inc. - s. 80 of the CFA
Headnote
Section 80 of the Commodity Futures Act (Ontario) (the CFA) -- relief from the registration requirements of paragraph 22(1)(b) of the CFA granted to an extra-provincial adviser in respect of the provision of advisory services relating to futures contracts to certain investment funds that do not have an address in Ontario, subject to certain terms and conditions.
Statutes Cited:
Commodity Futures Act, R.S.O. 1990. c. C.20., as am., ss. 22(1)(b), 80.
Ontario Securities Commission Rule 35-502 -- Non-Resident Advisers, s. 7.4.
IN THE MATTER OF
THE COMMODITY FUTURES ACT,
R.S.O. 1990, CHAPTER C.20, AS AMENDED
(the CFA)
AND
IN THE MATTER OF
STANTON ASSET MANAGEMENT INC.
ORDER
(Section 80 of the CFA)
UPON the application (the Application) of Stanton Asset Management Inc. (the Applicant) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 80 of the CFA, that the Applicant and its directors, officers and employees acting on its behalf as an adviser (collectively, the Representatives), be exempt from the requirements of paragraph 22(1)(b) of the CFA in respect of advising certain redeemable and non-redeemable investment funds and similar investment vehicles established outside of Ontario in respect of trades in commodity futures contracts and commodity futures options (the Registration Relief);
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 corporation incorporated under the laws of Canada with its head office in Montreal, Québec. The Applicant is not ordinarily resident in Ontario.
2. The Applicant is registered under the Securities Act (Québec) (the QSA) as an adviser with an unrestricted practice and is not currently registered in any capacity under the CFA or Securities Act (Ontario) (the OSA). The Applicant's registration in Québec permits it to provide advice in Québec with respect to securities and options on commodity futures contracts and financial instrument futures contracts within the meaning of the QSA.
3. The Applicant acts as investment manager to certain private Québec-based investment funds, including, Stanton Diversified Strategies LP (the Current Fund). The Applicant may in the future manage certain other redeemable and non-redeemable investment funds or similar investment vehicles (together with the Current Fund, the Funds).
4. The Applicant, as investment manager of the Funds, will make all decisions with respect to the Funds and as such will also provide all investment advice to the Funds.
5. All of the Funds advised by the Applicant are, or will be, established outside Ontario and none of the Funds has, or will have, an address in Ontario.
6. The Funds invest, or may in the future invest, in commodity futures contracts and commodity futures options.
7. None of the Funds has any intention of becoming a reporting issuer in Ontario or in any other Canadian jurisdiction.
8. Securities of the Funds are, or will be, offered in Ontario only in reliance upon an exemption from the prospectus requirements of the OSA, including to Ontario residents who qualify as "accredited investors" under National Instrument 45-106 -- Prospectus and Registration Exemptions.
9. In advising the Funds, the Applicant is, and will be, indirectly providing advice to Ontario residents. However, the Applicant is able to rely on an exemption from the adviser registration requirement provided in section 7.4 of OSC Rule 35-502 -- Non-Resident Advisers (Rule 35-502) and, as such, is not required to register under the OSA.
10. Paragraph 22(1)(b) of the CFA prohibits a person or company from acting as an adviser unless such person or company is registered as an adviser, or is registered as a representative or as a partner or as an officer of a registered adviser and is acting on behalf of such 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 "contract" means commodity futures contracts and commodity futures options.
11. By advising the Funds on investing in commodity futures contracts and commodity futures options, the Applicant will be providing advice to the Funds, and indirectly Ontario clients, with respect to trading in contracts and, in the absence of being granted the Registration Relief, would be required to register as an adviser under the CFA.
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 the Applicant 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 Fund, for a period of three years, provided that at the time such activities are engaged in:
(a) all advice by the Applicant to the Funds is given and received, or portfolio management services are provided, outside of Ontario;
(b) the Applicant remains registered under the QSA and permitted to provide advice in Québec with respect to securities and commodity futures contracts and commodity futures options;
(c) the Applicant continues to not be ordinarily resident in Ontario;
(d) the Funds continue to not have addresses in Ontario; and
(e) the Funds are, or will be, offered in Ontario only in reliance upon an exemption from the prospectus requirements of the OSA, including to Ontario residents who qualify as "accredited investors" under National Instrument 45-106 -- Prospectus and Registration Exemptions.
January 26, 2007