ValuEngine, Inc. – s. 74(1)

Headnote

Subsection 74(1) of the Securities Act (Ontario) -- Adviser exempted from the adviser registration requirement in section 25(1)(c) of the Securities Act where such adviser will provide general investment advice in the form of research and analysis to be displayed on websites, and will not give investment advice that is, or purports to be, tailored to the needs of anyone receiving the advice -- Terms and conditions on exemption ruling correspond to the relevant terms and conditions on the comparable exemption from the adviser registration requirement available to providers of general investment advice in the form of publications or other media set out in proposed Schedule 26 of the Budget Measures Act, 2009 -- Exemption also subject to a "sunset clause" condition.

Statutes Cited

Budget Measures Act, 2009, S.O. 2009, c. 18, Sch. 26, s. 5.

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25(1)(c), 74(1)

Instruments Cited

National Instrument 45-106 Prospectus and Registration Exemptions, s. 3.7(b).

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, CHAPTER S.5, AS AMENDED \

(the Act)

AND

IN THE MATTER OF

VALUENGINE, INC.

RULING

(Subsection 74(1) of the Act)

UPON the application (the Application) of ValuEngine, Inc. (the Applicant) to the Ontario Securities Commission (the Commission) for a ruling (the Ruling), pursuant to subsection 74(1) of the Act, that the adviser registration requirement in the Act (as defined below) shall not apply to the Applicant (including its respective directors, officers, representatives and employees acting as advisers on its behalf) where the Applicant provides published advice that is not, and does not purport to be, tailored to the needs of specific clients, subject to certain terms and conditions;

AND WHEREAS, for the purposes hereof, the following terms shall have the following meanings:

"adviser registration requirement in the Act" means the provisions of section 25 of the Act that prohibit a person or company from acting as an adviser, as defined in the Act, unless the person or company satisfies the applicable provisions of section 25 of the Act;

"NI 45-106" means National Instrument 45-106 Prospectus and Registration Exemptions;

"Schedule 26" means Schedule 26 of the Budget Measures Act, 2009.

AND WHEREAS any other terms used in the Ruling that are defined in National Instrument 14-101 Definitions shall have the same meaning, unless herein otherwise specifically defined, or the context otherwise requires;

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

AND UPON the Applicant having represented to the Commission that:

The Applicant

1. The Applicant is a corporation incorporated under the laws of the State of Delaware, United States of America (U.S.), with its head office in Princeton, New Jersey, U.S.

2. The Applicant is in the business of financial research and provides research reports on a large number of U.S. and Canadian public companies. The Applicant currently offers generic "buy," "sell" or "hold" recommendations, not tailored to the needs of specific clients.

3. The Applicant provides published advice with respect to a large number of U.S. and Canadian public companies, but does not exercise control over clients' funds or securities, and does not give investment advice that is, or purports to be, tailored to the needs of specific clients.

4. The Applicant proposes to publish such advice in the form of research and analysis to be displayed on websites accessible by the public at no charge to the public.

5. The Applicant is not registered in any capacity under the Act.

Advising by the Applicant

6. By providing its published advice, the Applicant triggers the adviser registration requirement in the Act and, in the absence of an exemption, is required to register under the Act.

7. The Applicant is not able to rely on the exemptions from the adviser registration requirement in the Act available under NI 45-106. For example, the Applicant cannot rely on subsection 3.7(b) of NI 45-106, because it is not "a publisher or a writer for a newspaper, news magazine or business or financial journal or periodical, however delivered, that is of general and regular paid circulation, and only available to subscribers for value, or purchasers of it."

8. Under amendments to section 34 of the Act contained in Schedule 26 (the Amended Section 34), the Applicant would be able to act as an adviser in respect of securities without having to obtain registration under the Act as an adviser.

9. The Amended Section 34 provides that an adviser is exempt from the adviser registration requirement in the Act if the adviser provides only general investment advice in the form of publications or other media without any representation that the advice is tailored to the needs of anyone who receives it.

10. In accordance with the Amended Section 34, the Applicant:

(a) will provide general investment advice in the form of research and analysis to be displayed on websites; and

(b) will not give investment advice that is, or purports to be, tailored to the needs of specific clients.

11. The Amended Section 34 has the effect of removing the existing category of "securities adviser" as a category of registration under the Act.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS RULED, pursuant to subsection 74(1) of the Act, that the Applicant shall not be subject to the adviser registration requirement in the Act where the Applicant provides published advice, provided that, at the relevant time:

(a) the Applicant is unable to rely on the existing exemptions contained in NI 45-106;

(b) the Applicant:

(i) provides only general investment advice in the form of publications or other media; and

(ii) does not make any representation that the advice is tailored to the needs of anyone who receives it; and

(c) this Ruling, in respect of the Applicant, will terminate upon the earlier of:

(i) the Applicant being registered as an adviser under the Act;

(ii) the day on which Schedule 26 of the Budget Measures Act, 2009 is proclaimed in force;

(iii) 90 days after the Commission publishes in its Bulletin a notice or a statement to the effect that it does not propose to make an amendment to Section 34 of the Act; or

(iv) 90 days after the coming into force of Schedule 26 of the Budget Measures Act, 2009 if Schedule 26 of the Budget Measures Act, 2009 does not contain an amendment or provision substantially similar to the Amended Section 34, as defined and described in this Order.

July 31, 2009