Harbert Fund Advisors, Inc. -- s. 6.1 of OSC Rule 91-502

Headnote

Application to the Director for an exemption, pursuant to section 6.1 of OSC Rule 91-502 -- Trades in Recognized Options (Rule 91-502), exempting the Applicant and its Representative from the proficiency requirements in section 3.1 of Rule 91-502 for trades in commodity futures options. It is a condition of the exemption that the Applicant and its Representative maintain their respective registrations permitting them to trade as agent in, or give advice in respect of equity options in the United States.

Rules Cited

Ontario Securities Commission Rule 91-502 Trades in Recognized Options, ss. 3.1 and 6.1.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, CHAPTER C.20, AS AMENDED

(the Act)

AND

IN THE MATTER OF

HARBERT FUND ADVISORS, INC.

ORDER

(Section 6.1 of OSC Rule 91-502)

UPON the application (the Application) of Harbert Fund Advisors, Inc. (the Applicant) to the Ontario Securities Commission (the Commission) for an order pursuant to section 6.1 of OSC Rule 91-502 Trades in Recognized Options (Rule 91-502) exempting the Applicant and its representative (the Representative), from the proficiency requirements in section 3.1 of Rule 91-502 for so long as the Applicant relies on and complies with the terms of the international adviser exemption in section 8.26 of National Instrument 31-103 Registration Requirements and Exemptions (NI 31-103);

AND UPON the Applicant having represented to the Director that:

1. The Applicant is incorporated under the laws of the state of Alabama in the United States. The head office of the Applicant is in Birmingham, Alabama.

2. The Applicant engages in the business of an investment adviser in the United States and is registered as an investment adviser with the U. S. Securities and Exchange Commission (the SEC).

3. The Applicant is appropriately registered to advise with respect to recognized options in the United States subject to the jurisdiction of the SEC.

4. The Representative, Todd Nunnelley, has obtained the Series 7 license administered by the Financial Industry Regulatory Authority (FINRA) and is registered with and authorized by FINRA to advise in respect of equity options in the United States.

5. In Ontario, the Applicant, through the Representative, intends to provide investment advice in respect of managed accounts (each a Managed Account) of one or more permitted clients as defined in NI 31-103. As part of its investment mandate for the Managed Accounts, the Applicant may, among other securities, advise in respect of recognized options as defined in Rule 91-502.

6. The Applicant is not registered under securities legislation in Ontario, but relies on the international adviser exemption pursuant to section 8.26 of NI 31-103 when providing advice in respect of the Managed Accounts.

7. The Applicant does not have an office in Canada and has no directors, officers or employees resident in Canada. The Applicant has appointed an agent for service in Ontario and has filed a Form 31-103F2 in respect thereof.

AND UPON the Director being satisfied that it would not be prejudicial to the public interest to grant the exemption requested;

IT IS ORDERED THAT the Applicant and the Representative be exempted from the requirement in section 3.1 of Rule 91-502, for so long as:

(i) the Applicant relies on the international adviser exemption in section 8.26 of NI 31-103 when providing advice in respect of its clients in Ontario;

(ii) the Representative only provides investment advice in Ontario in respect of the Managed Accounts;

(iii) the Applicant and the Representative maintain the appropriate registrations in good standing with the SEC and FINRA which permits the Applicant and the Representative to give advice in respect of equity options in the United States.

December 21, 2010