Under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations a registered firm must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual is registered as a dealing, advising or associate advising representative of another registered firm. The Filers are affiliated entities and have valid business reasons for the individuals to be registered with multiple firms. The Filers have policies in place to handle potential conflicts of interest. The Filers are exempted from the prohibition.
Applicable Legislative Provisions
Multilateral Instrument 11-102 Passport System, s. 4.7.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1, 15.1.
October 27, 2014
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (THE "JURISDICTION") AND THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF SAGUENAY STRATHMORE CAPITAL LLC ("SSC LLC"), SAGUENAY STRATHMORE CAPITAL LLP ("SSC LLP") AND SAGUENAY STRATHMORE CAPITAL INC. ("SSC INC.") (SSC LLC, SSC LLP and SSC INC. collectively, the "Filers")
The principal regulator in the Jurisdiction (the "Decision Maker") has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for an exemption pursuant to section 15.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations ("NI 31-103") from the requirement under paragraph 4.1(1)(b) of NI 31-103 to permit current and future registered dealing, advising and associate advising representatives of one Filer to be registered as dealing, advising and/or associate advising representatives of one or more of the other Filers (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 Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102Passport System ("MI 11-102") is intended to be relied upon in all of the other Canadian jurisdictions.
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filers:
1. SSC LLC is a limited liability company incorporated under the laws of the State of Delaware. Its head office is located at 2 Manhattanville Road, Suite 403, Purchase, New York, 105577-2118.
2. SSC LLC is registered as an investment adviser with the United States Securities and Exchange Commission. It is also registered in Quebec, Ontario, Alberta, and British Columbia in the categories of portfolio manager and exempt market dealer, and in Ontario and Quebec as an investment fund manager.
3. SSC LLC provides advisory services to professional clients and acts as investment fund manager to private funds. All marketing of the Filers' services and/or products and solicitation of new clients in Ontario, Quebec, British Columbia and Ontario is conducted by SSC LLC. In addition, individuals at SSC LLC conduct research, analysis and perform pre-investment due diligence and monitoring of investments. The research, analysis and due diligence is shared by each of the Filers.
4. SSC Inc. is a corporation formed under the laws of the Province of Ontario. Its registered office address is 5700 Yonge Street, Suite 200, Toronto, Ontario, M2M 4K2.
5. SSC Inc. is registered in Ontario and Quebec in the categories of portfolio manager and exempt market dealer.
6. SSC Inc. exists to provide services to both SSC LLP and SSC LLC, who in turn provide advisory services to their clients. Individuals at SSC Inc. conduct research, analysis and perform pre-investment due diligence and monitoring of investments. The research, analysis and due diligence is shared by each of the Filers. SSC Inc. may also discuss the Filers' investment fund products.
7. SSC LLP is incorporated under the laws of England and Wales. Its head office is located at 5th Floor, Portland House, Bressenden Place, London, United Kingdom, SWIE 5BH.
8. SSC LLP is a United Kingdom Financial Conduct Authority regulated entity that has various permissions including advising on investments, arranging deals in investments, dealing in investments as agent and managing investments, among others.
9. SSC LLP is registered in Ontario in the category of portfolio manager to provide advisory services to a professional client in Ontario. Individuals at SSC LLP conduct research, analysis and perform pre-investment due diligence and monitoring of investments. The research, analysis and due diligence is shared by each of the Filers.
10. SSC LLC and SSC Inc. are wholly owned subsidiaries (indirect) of the same parent company, Saguenay Strathmore Holdings Ltd. of Jersey in the United Kingdom (the "Parent Company") and SSC LLP is a majority-owned subsidiary (indirect) of the Parent Company, and therefore, the Filers are affiliates for the purposes of the Legislation. The interests of the Filers are aligned, and as the current and future dealing, advising and/or associate advising representatives' roles would be to support the business activities and interests of each of the Filers, the potential for conflicts of interest arising from the Exemption Sought is remote.
11. The Filers are not in default of any requirement of securities or derivatives legislation in any of the Jurisdictions.
12. Consistent with the foregoing, the Filers have established a fully harmonized compliance team and structure that oversees the operations and activities of all the Filers in connection with their registration activities.
13. The Filers share the same senior management structure with the same individual acting as Ultimate Designated Person and Chief Compliance Officer of each Filer. In addition, the Filers share a unique structure with a centralized decision-making on the investment and portfolio review process.
14. The compliance structure for the Filers has been designed to ensure that all activities conducted by them are supervised according to the requirements established by all applicable regulatory bodies, regardless of which Filer is conducting registration activities.
15. The registered current and future dealing, advising and/or associate advising representatives are, or will be, under the direct supervision and control of all the Filers and they are, or will be, subject to all securities-related conflicts of interest policies and procedures of the Filers.
16. The current and future registration of dealing, advising and/or associate advising representatives of one Filer as dealing, advising and/or associate advising representatives of the other Filers will not be a source of any client confusion as the primary way that services are officially provided to clients of all the Filers is via one centralized decision-making committee for all Filers.
17. In the absence of the Exemption Sought, the Filers would be prohibited under paragraph 4.1(1)(b) of NI 31-103 from permitting a dealing, advising and/or associate advising representatives of one Filer to act as dealing, advising and/or associate advising representatives of the other Filers, even though the Filers are affiliates.
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 the Exemption Sought is granted.