Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval of a change of control of a mutual fund manager and abridgement of the related 60 day notice requirement to 45 days -- Decision subject to no changes being made to management, administration and portfolio management of the funds for a period of 60 days subsequent to notice provided to unitholders of the funds -- Notice period abridgement granted based on fact specific circumstances and is not to be used as a precedent.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.

August 24, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

CLAYMORE INVESTMENTS, INC.,

GUGGENHEIM PARTNERS, LLC

AND THEIR RESPECTIVE AFFILIATES

AND ASSOCIATES

(collectively, the Filers)

AND

THE INVESTMENT FUNDS LISTED IN SCHEDULE "A"

(collectively, the Funds)

 

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for (a) approval of the change of control of Claymore Investments, Inc. (the Manager) as contemplated by subsection 5.5(2) of National Instrument 81-102 -- Mutual Funds (NI 81-102) (the Approval Sought) and (b) an abridgement from 60 days to 45 days of the period for providing advance notice to the Funds' securityholders of the change of control of the Manager required pursuant to subsection 5.8(1) of NI 81-102 (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission (OSC) is the principal regulator for this application, and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than Ontario (together with Ontario, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 -- Definitions have the same meaning if used in this decision unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

The Merger

1. Claymore Group Inc., Claymore Holdings LLC (which is an indirect subsidiary of Guggenheim Partners, LLC) and Guggclay Acquisition, Inc. (Acquisition Corp.) have entered into an agreement and plan of merger dated as of July 17, 2009 (the Merger Agreement) pursuant to which Acquisition Corp. will merge with and into Claymore Group Inc. on or about September 30, 2009, upon which the separate corporate existence of Acquisition Corp. will cease and Claymore Group Inc. will continue as the surviving corporation (the Merger). The completion of the Merger is subject to the satisfaction of closing conditions, which include the obtaining of all required regulatory approvals. The Merger will result in a change of control of the Manager.

The Manager, Claymore Group Inc. and the Funds

2. The Manager is incorporated under the Canada Business Corporations Act and is the manager and trustee of the Funds and is responsible for the administration of the Funds. The Manager is registered in Ontario as an advisor in the categories of investment counsel and portfolio manager and as a dealer in the category of limited market dealer, and is registered as an investment adviser with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940.

3. The Manager is a subsidiary of Claymore Group Inc., a financial services and asset management company based in the Chicago, Illinois area. Claymore Group Inc. and its affiliates have approximately 176 employees in North America and, as of April 30, 2009, were providing supervisory, management or distribution-related services to exchange-traded funds, closed-end funds and unit investments trusts with combined assets of approximately U.S.$11 billion.

4. The Funds (other than Big Bank Big Oil Split Corp., which is not in continuous distribution) are qualified for continuous distribution in each of the provinces and territories of Canada. Neither the Manager nor any of the Funds is in default of the securities legislation of any province or territory of Canada.

Ownership of Shares of Claymore Group Inc.

5. All the shares of Claymore Group Inc. are currently owned directly or indirectly by employees or former employees of Claymore Group Inc. or its affiliates.

Acquisition Corp.

6. Acquisition Corp. was incorporated as an indirect subsidiary of Guggenheim Partners, LLC under the laws of Delaware for the purpose of completing the Merger. To date, Acquisition Corp. has not engaged in any activities other than those incidental to its organization, the entering into of the Merger Agreement and the performance of its obligations thereunder.

Guggenheim Partners, LLC

7. Guggenheim Partners, LLC is a limited liability company formed under the laws of Delaware. It is a global, independent, privately held, diversified financial services firm with more than U.S.$100 billion in assets under supervision. Guggenheim Partners, LLC employs approximately 800 professionals located in 20 cities around the world with principal offices in Chicago, New York, Los Angeles, London, Dublin, Geneva, Dubai, Hong Kong, Singapore and Mumbai.

8. The business address for Guggenheim Partners, LLC is 227 W. Monroe Street, Suite 4900, Chicago, Illinois, 60606.

9. Guggenheim Investment Management, LLC is an indirect subsidiary of Guggenheim Partners, LLC and is registered in Ontario as an advisor in the categories of investment counsel and portfolio manager. Guggenheim Securities, LLC is an indirect subsidiary of Guggenheim Partners, LLC and is registered in Ontario as a dealer in the category of international dealer. The Filers are advised that neither Guggenheim Investment Management, LLC nor Guggenheim Securities, LLC is in default of the securities legislation of Ontario. Guggenheim Partners, LLC indirectly owns 30% of Logan Circle Partners, L.P., which is registered in Ontario in the categories of investment counsel and portfolio manager.

10. Following the completion of the Merger, the Manager will be a direct, wholly-owned subsidiary of the surviving Claymore Group Inc. entity, which in turn will be a direct, wholly-owned subsidiary of Claymore Holdings, LLC. Claymore Holdings, LLC is an indirect subsidiary of Guggenheim Partners, LLC.

11. Both Claymore Group Inc. and Guggenheim Partners, LLC have considerable experience in the asset management and investment funds industry.

12. Guggenheim Partners, LLC currently intends to maintain the Funds as a separately managed fund family and continue the operations of the Manager substantially as operated. It is currently anticipated that the role of the Manager as manager of the Funds will not change following the Merger. The change of control of the Manager will not materially affect the operation and administration of the Funds.

13. The Filers do not foresee that the Merger will give rise to any material conflicts of interest.

14. No changes are currently contemplated to the officers or directors of the Manager.

15. Upon the change of control of the Manager, all current members of the Independent Review Committee for the Funds will cease to be members of the Independent Review Committee by operation of section 3.10(1)(c) of National Instrument 81-107 -- Independent Review Committee for Investment Funds (NI 81-107) and, subject to their consent, are expected to be subsequently reappointed as members of the Independent Review Committee as contemplated in the commentary to Sections 3.3(5) and 3.10 of NI 81-107.

16. A press release announcing the Merger was released on July 31, 2009. Notice of the proposed change of control of the Manager was mailed to securityholders of the Funds as soon as reasonably possible given the requirements and the time needed for conducting a mailing to securityholders, which was on August 14, 2009 (the Notice Date). The Filers believe that securityholders of the Funds have been provided with sufficient notice of the Merger.

17. While the Merger will result in a change of control of the Manager, the Merger is not expected to have any negative impact on the management of the Funds, and the Filers believe that the change of control of the Manager and the abridgement of the period for providing advance notice to Funds securityholders of the change of control of the Manager will allow the parties to meet their commercial objectives for the transaction and the Funds and will not be prejudicial to the interests of the Funds' securityholders.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that:

(a) the Approval Sought is granted; and

(b) the Exemption Sought is granted provided that:

(i) the securityholders of the Funds are given at least 45 days notice of the Change of Control; and

(ii) no changes are made to the management, administration or portfolio management of the Funds for at least 60 days following the Notice Date.

"Rhonda Goldberg"
Manager, Investment Funds Branch
Ontario Securities Commission

 

SCHEDULE "A"

CLAYMORE FUNDS

Claymore International Fundamental Index ETF
Claymore S&P/TSX Canadian Dividend ETF
 
Claymore Japan Fundamental Index ETF C$ hedged
Claymore Global Monthly Advantaged Dividend ETF
 
Claymore US Fundamental Index ETF
Claymore Canadian Financial Monthly Income ETF
 
Claymore Canadian Fundamental Index ETF
Claymore 1-5 Yr Laddered Corporate Bond ETF
 
Claymore Equal Weight Banc & Lifeco ETF
Claymore 1-5 Yr Laddered Government Bond ETF
 
Claymore Global Real Estate ETF
Claymore Premium Money Market ETF
 
Claymore Global Infrastructure ETF
Claymore S&P/TSX CDN Preferred Share ETF
 
Claymore Oil Sands Sector ETF
Claymore Balanced Income CorePortfolio ETF
 
Claymore S&P/TSX Global Mining ETF
Claymore Balanced Growth CorePortfolio ETF
 
Claymore Global Agriculture ETF
Claymore Natural Gas Commodity ETF
 
Claymore S&P Global Water ETF
Big Bank Big Oil Split Corp.
 
Claymore BRIC ETF
Claymore Broad Emerging Markets ETF