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Scotia Institutional Asset Management US, Ltd. -- ss. 74(1) and 144 of the Act and ss. 78(1), 80 of the CFA
Headnote
U.S. registered investment adviser exempted from the adviser registration requirement of the Act and the Commodity Futures Act (Ontario) in connection with its acting as adviser to clients that are resident in the U.S. or other jurisdictions outside of Canada -- Advising representatives acting on behalf of the U.S. adviser also exempted, provided they act through the U.S. adviser and the advising representatives are also registered representatives of registered investment adviser parent company -- Both the U.S. adviser and advising representative are required to comply with the securities law of the U.S. or other foreign jurisdiction.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25(3), 74(1), 144(1).
Commodity Futures Act, R.S.O. 1990, c. C.20, as am., ss. 22(1)(b), 80, 78(1).
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED
(the Act)
AND
IN THE MATTER OF
THE COMMODITY FUTURES ACT,
R.S.O. 1990, CHAPTER C.20, AS AMENDED
(the CFA)
AND
IN THE MATTER OF
SCOTIA INSTITUTIONAL ASSET MANAGEMENT US, LTD.
ORDER
(Subsections 74(1) and 144(1) of the Act and
Section 80 and Subsection 78(1) of the CFA)
R.S.O. 1990, CHAPTER S.5, AS AMENDED
(the Act)
AND
IN THE MATTER OF
THE COMMODITY FUTURES ACT,
R.S.O. 1990, CHAPTER C.20, AS AMENDED
(the CFA)
AND
IN THE MATTER OF
SCOTIA INSTITUTIONAL ASSET MANAGEMENT US, LTD.
ORDER
(Subsections 74(1) and 144(1) of the Act and
Section 80 and Subsection 78(1) of the CFA)
AND
IN THE MATTER OF
THE COMMODITY FUTURES ACT,
R.S.O. 1990, CHAPTER C.20, AS AMENDED
(the CFA)
AND
IN THE MATTER OF
SCOTIA INSTITUTIONAL ASSET MANAGEMENT US, LTD.
ORDER
(Subsections 74(1) and 144(1) of the Act and
Section 80 and Subsection 78(1) of the CFA)
THE COMMODITY FUTURES ACT,
R.S.O. 1990, CHAPTER C.20, AS AMENDED
(the CFA)
AND
IN THE MATTER OF
SCOTIA INSTITUTIONAL ASSET MANAGEMENT US, LTD.
ORDER
(Subsections 74(1) and 144(1) of the Act and
Section 80 and Subsection 78(1) of the CFA)
(the CFA)
AND
IN THE MATTER OF
SCOTIA INSTITUTIONAL ASSET MANAGEMENT US, LTD.
ORDER
(Subsections 74(1) and 144(1) of the Act and
Section 80 and Subsection 78(1) of the CFA)
IN THE MATTER OF
SCOTIA INSTITUTIONAL ASSET MANAGEMENT US, LTD.
ORDER
(Subsections 74(1) and 144(1) of the Act and
Section 80 and Subsection 78(1) of the CFA)
ORDER
(Subsections 74(1) and 144(1) of the Act and
Section 80 and Subsection 78(1) of the CFA)
Section 80 and Subsection 78(1) of the CFA)
Background
The Ontario Securities Commission (the Commission) has received an application from Scotia Institutional Asset Management US, Ltd. (SIAM or the Filer) for a decision under:
(a) subsection 144(1) of the Act and subsection 78(1) of the CFA, revoking the exemption order granted by the Commission to Goodman & Company N.Y. Ltd. on October 25, 2011 (the Original Order, as described below);
(b) subsection 74(1) of the Act for an exemption from the adviser registration requirement in subsection 25(3) of the Act; and
(c) section 80 of the CFA for an exemption from the adviser registration requirement in subsection 22(1)(b) of the CFA;
with respect to SIAM, and certain individuals (the SIAM Representatives) who act as advising representatives on behalf of SIAM and, at the relevant times, are registered to act as advising representatives on behalf of 1832 Asset Management LP (1832), under the Act or the CFA, as applicable (the Requested Relief).
Representations
This decision is based on the following facts represented by the Filer:
1. 1832 is an Ontario limited partnership, which is wholly-owned, indirectly, by the Bank of Nova Scotia (BNS). The general partner of 1832 is 1832 Asset Management G.P., an Ontario corporation wholly-owned, directly, by BNS with its head office in Ontario.
2. 1832 is registered as (i) a portfolio manager in all of the provinces of Canada, and in the Yukon; (ii) an exempt market dealer in all of the provinces of Canada (except Prince Edward Island and Saskatchewan); (iii) an investment fund manager in Ontario, Quebec, and Newfoundland and Labrador; and (iv) a commodity trading manager in Ontario.
3. 1832 manages discretionary assets on behalf of mutual funds, institutions, foundations, endowments, and private clients. 1832 is the investment fund manager and/or portfolio adviser and, for funds organized as trusts, the trustee, of open-ended mutual fund trusts or corporations and closed end funds.
4. SIAM is wholly-owned, directly, by GCIC Ltd. (GCIC) and has its head office in Toronto, Ontario. SIAM is not registered under the Act or the CFA. GCIC is wholly-owned, indirectly, by BNS. SIAM is registered as an investment adviser with the United States Securities and Exchange Commission. SIAM was formerly named Goodman & Company N.Y. Ltd.
5. SIAM was established to offer DundeeWealth Inc.'s (Dundee Wealth) investment capabilities to funds domiciled in the U.S. and in other non-Canadian jurisdictions and, through managed accounts, to high net worth retail and institutional clients located in the U.S. and in other non-Canadian jurisdictions prior to Dundee Wealth's acquisition by BNS.
6. The SIAM Representatives provide portfolio management services in respect of various Canadian-domiciled hedge funds and other funds, as well as Canadian domiciled and non-Canadian domiciled accounts in their capacity as advising representatives of 1832. 1832 does not advise on any accounts domiciled in the U.S nor does any SIAM Representative, in his or her capacity as an advising representative of 1832, advise any accounts domiciled in the U.S.
7. SIAM Representatives also provide portfolio management services in respect of various U.S. and other non-Canadian domiciled funds and U.S. and other non-Canadian domiciled accounts in their capacity as advising representatives of SIAM (the SIAM Non-Canadian Clients).
8. None of the SIAM Representatives will act on behalf of SIAM for a SIAM Non-Canadian Client in the Province of Ontario unless the SIAM Representative is, at the relevant time, registered under the Act as an advising representative of 1832 or under the CFA as an advising representative of 1832, as applicable, and 1832 in turn is registered as a portfolio manager under the Act or as a commodity trading manager under the CFA, as applicable.
9. SIAM and SIAM Representatives will comply with all registration and other requirements of applicable securities legislation and commodity futures legislation in the jurisdiction of the SIAM Non-Canadian Clients.
10. The SIAM Representatives will be subject to supervision by, and the applicable compliance requirements of, the Filer and are subject to those of 1832 in their capacity as advising representatives of 1832.
11. SIAM Non-Canadian Clients will not also be clients of 1832.
12. All SIAM Non-Canadian Clients will be provided with disclosure that explains the relationship between SIAM and 1832 and that 1832 is not responsible for the SIAM Non-Canadian Clients.
13. All SIAM Representatives will have business cards and letterhead which identify them to the SIAM Non-Canadian Clients as working on behalf of SIAM and all communication by the SIAM Representatives with SIAM Non-Canadian Clients will be through SIAM.
14. To avoid client confusion with respect to 1832, the account documentation, including if necessary account statements, performance reporting, contracts and disclosure documents, of SIAM will clearly identify SIAM as the adviser to the SIAM Non-Canadian Clients.
15. SIAM Non-Canadian Clients will also be advised at the time they enter into an advising relationship with SIAM that if they relocate to a Canadian jurisdiction, their accounts will have to be transferred to 1832 or another portfolio manager or commodity trading manager, as applicable, that is appropriately registered or relying on an exemption from registration in the Canadian jurisdiction.
16. Goodman & Company N.Y. Ltd. was granted exemptive relief corresponding to the Requested Relief, under an order of the Ontario Securities Commission dated October 25, 2011 (the Original Order).
17. The Requested Relief by SIAM is in connection with an internal reorganization of BNS's asset management business (the Reorganization), to be effective November 1, 2013 (the Completion Date).
18. The Reorganization is structured as an internal consolidation of the asset management business currently conducted by certain affiliated BNS entities, namely, GCIC, WaterStreet Family Capital Counsel Inc. and CPA Securities Inc. -- each of which is wholly-owned directly or indirectly by BNS -- into 1832.
19. If the Reorganization is completed as contemplated, GCIC will cease to carry on registerable business and will have its various registrations under the Legislation revoked. Thereafter, the business of GCIC will be carried on by a separate division of 1832.
20. As a result of the Reorganization, the Filer will require the Requested Relief as the Original Order is not available to the Filer. The Filer is not able to rely on the Original Order since the Reorganization does not involve an amalgamation and, therefore, the references in the Original Order do not flow automatically through to 1832 and the Filer would be unable to comply with the conditions of the Original Order.
21. The Filer is, to the best of its knowledge, not in default of the securities legislation of Ontario.
Order
The Commission is satisfied that it would not be prejudicial to the public interest for it to grant the Requested Relief, and the Commission rules that the Requested Relief is granted, effective on the Completion Date, provided that:
(a) in acting as an adviser to a SIAM Non-Canadian Client, SIAM, and the SIAM Representatives acting on its behalf, comply with all applicable registration and other requirements of the securities legislation and commodity futures legislation of the jurisdiction of the SIAM Non-Canadian Client;
(b) in acting as an adviser to a SIAM Non-Canadian Client, SIAM acts only through SIAM Representatives;
(c) the Filer and 1832 remain affiliates and 1832 is registered as a portfolio manager under the Act and as a commodity trading manager under the CFA; and
(d) each SIAM Representative, when acting as an adviser to a SIAM Non-Canadian Client on behalf of SIAM, is registered under the Act as an advising representative of 1832 or under the CFA as an advising representative of 1832, as applicable.
October 25, 2013
"Edward Kerwin"
Commissioner
Ontario Securities Commission
"Vern Krishna"
Commissioner
Ontario Securities Commission