Julius Baer Investment Management LLC - s. 218 of the Regulation

Order

Headnote

Application to the Commission for an order, pursuant to section 218 of Regulation 1015 of the Securities Act (Ontario), that the requirement in section 213 of the Regulation, which provides that a registered dealer that is not an individual must be a company incorporated, or a person formed or created, under the laws of Canada or a province or territory of Canada, shall not apply to the Applicant. The order sets out the terms and conditions applicable to a non-resident limited market dealer.

Applicable Statutes

Ontario Regulation 1015, R.R.O. 1990, ss. 213, 218.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, CHAPTER S.5,

AS AMENDED (the ACT)

AND

IN THE MATTER OF

R.R.O. 1990, REGULATION 1015

AS AMENDED (the REGULATION)

AND

IN THE MATTER OF

JULIUS BAER INVESTMENT MANAGEMENT LLC

 

ORDER

(Section 218 of the Regulation)

UPON the application (the Application) of Julius Baer Investment Management LLC (the Applicant) to the Ontario Securities Commission (the Commission) for an order, pursuant to section 218 of the Regulation, exempting the Applicant from the requirement in section 213 of the Regulation that the Applicant be incorporated, or otherwise formed or created, under the laws of Canada or a province or territory of Canada, in order for the Applicant to be registered under the Act as a dealer in the category of limited market dealer (LMD);

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 limited liability corporation continuing under the laws of the State of Delaware with its head office located in New York, N.Y. The Applicant is an indirect subsidiary of Julius Baer Holding Ltd., of Zurich, Switzerland.

2. The Applicant is registered as an investment adviser with the United States Securities and Exchange Commission and as a commodity pool operator and commodity trading adviser with the Commodity Futures Trading Commission and is a member of the National Futures Association.

3. The Applicant is registered with the Commission as an international adviser in the categories of investment counsel and portfolio manager. The Applicant also received an exemption, dated December 9, 2005, from the requirements of paragraph 22(1)(b) of the Commodity Futures Act (Ontario) in respect of the Applicant's advisory activities in connection with certain mutual funds managed by the Applicant.

4. The Applicant manages assets of approximately US$39 billion as at January 31, 2006, and acts as investment adviser to a number of investment funds (collectively, the Funds) including the: (i) Julius Baer International Equity Fund, Julius Baer International Equity II Fund, Julius Baer Total Return Bond Fund, Julius Baer Global High Yield Bond Fund, Julius Baer Global Equity Fund Inc. and other similar U.S. retail mutual funds; (ii) Julius Baer Institutional International Equity Fund II and other similar private non-Canadian investment funds; and (iii) Julius Baer International Equity ll Fund and Julius Baer Global Equity Fund and other similar Canadian investment funds that may be managed by the Applicant in the future.

5. The Applicant is applying to amend its current registration under the Act to include a dealer registration in the category of limited market dealer.

6. With respect to the registration of the Applicant as a dealer in the category of limited market dealer, the Applicant will only participate in the distribution of securities in Ontario pursuant to registration and prospectus exemptions set forth in the Act, Ontario Securities Commission Rule 45-501 Ontario Prospectus and Registration Exemptions and National Instrument 45-106 Prospectus and Registration Exemptions. The limited market dealer activities of the Applicant may be undertaken directly, or in conjunction with or through another registered dealer, including providing referrals to such dealer.

7. Section 213 of the Regulation provides that a registered dealer that is not an individual must be a company incorporated, or a person formed or created, under the laws of Canada or a province or territory of Canada.

8. The Applicant does not require a separate Canadian company in order to carry out its proposed limited market dealer activities in Ontario. It is more efficient and cost-effective to carry out those activities through the existing company.

9. In the absence of this Order, the Applicant would not meet the requirements of the Regulation for registration as a dealer in the category of limited market dealer as it is not a company incorporated, or a person formed or created, under the laws of Canada or a province or territory of Canada.

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

IT IS ORDERED, pursuant to section 218 of the Regulation, that, in connection with the registration of the Applicant as a dealer under the Act in the category of limited market dealer, section 213 of the Regulation shall not apply to the Applicant for a period of three years, provided that:

1. The Applicant appoints an agent for service of process in Ontario.

2. The Applicant shall provide to each client resident in Ontario a statement in writing disclosing the non-resident status of the Applicant, the Applicant's jurisdiction of residence, the name and address of the agent for service of process of the Applicant in Ontario, and the nature of risks to clients that legal rights may not be enforceable.

3. The Applicant will not change its agent for service of process in Ontario without giving the Commission 30 days' prior notice of such change by filing a new Submission to Jurisdiction and Appointment of Agent for Service of Process.

4. The Applicant and each of its registered directors, officers or partners irrevocably and unconditionally submits to the non-exclusive jurisdiction of the judicial, quasi-judicial, and administrative tribunals of Ontario and any administrative proceedings in Ontario, in any proceedings arising out of or related to or concerning its registration under the Act or its activities in Ontario as a registrant.

5. Securities, funds, and other assets of the Applicant's clients in Ontario will be held as follows:

(a) by the client; or

(b) by a custodian or sub-custodian:

(i) that meets the guidelines prescribed for acting as a sub-custodian of the portfolio securities of a mutual fund in Part 6 of National Instrument 81-102 - Mutual Funds;

(ii) that is:

(1) subject to the Bank for International Settlements standards concerning international convergence of capital measurement and capital standards; or

(2) exempt from the requirements of paragraph 3.7(1)(b)(ii) of OSC Rule 35-502 -- Non Resident Advisers; and

(iii) if such securities, funds and other assets are held by a custodian or sub-custodian that is the Applicant or an affiliate of the Applicant, that custodian holds such securities, funds and other assets in compliance with the requirements of the Regulation.

6. Ontario clients' securities may be deposited with or delivered to a recognized depository or clearing agency.

7. The Applicant will inform the Director immediately upon the Applicant becoming aware:

(a) of it ceasing to be registered as an investment adviser with the United States Securities and Exchange Commission;

(b) of its registration in any other jurisdiction not being renewed or being suspended or revoked;

(c) that it is the subject of an investigation or disciplinary action by any financial services or securities regulatory authority or self-regulatory authority;

(d) that the registration of its officers, directors, or partners who are registered in Ontario have not been renewed or has been suspended or revoked in any Canadian or foreign jurisdiction; or

(e) that any of its officers, directors, or partners who are registered in Ontario are the subject of an investigation or disciplinary action by any financial services or securities regulatory authority or self-regulatory authority in any Canadian or foreign jurisdiction.

8. The Applicant will pay the increased compliance and case assessment costs of the Commission due to the Applicant's location outside Ontario, including the cost of hiring a third party to perform a compliance review on behalf of the Commission.

9. The Applicant will make its books and records outside Ontario, including electronic records, readily accessible in Ontario, and will produce physical records for the Commission within a reasonable time if requested.

10. If the laws of the jurisdiction in which the Applicant's books and records are located prohibit production of the books and records in Ontario without the consent of the relevant client the Applicant shall, upon a request by the Commission:

(a) so advise the Commission; and

(b) use its best efforts to obtain the client's consent to the production of books and records.

11. The Applicant will, upon the Commission's request, provide a representative to assist the Commission in compliance and enforcement matters.

12. The Applicant and each of its registered directors, officers or partners will comply, at the Applicant's expense, with requests under the Commission's investigation powers and orders under the Act in relation to the Applicant's dealings with Ontario clients, including producing documents and witnesses in Ontario, submitting to audit or search and seizure process or consenting to an asset freeze, to the extent such powers would be enforceable against the Applicant if the Applicant were resident in Ontario.

13. If the laws of the Applicant's jurisdiction of residence that are otherwise applicable to the giving of evidence or production of documents prohibit the Applicant or the witnesses from giving the evidence without the consent or leave of the relevant client or any third party, including a court of competent jurisdiction, the Applicant shall:

(a) so advise the Commission; and

(b) use its best efforts to obtain the client's consent to the giving of the evidence.

14. The Applicant will maintain appropriate registration in the jurisdiction of its principal operations and, if required, in its jurisdiction of residence.

March 10, 2006

"Susan Wolburgh Jenah"

"Robert W. Davis"