Securities Law & Instruments

Headnote

The applicant and similarly situated persons and companies are exempted until December 31, 2010 from the adviser registration requirement and the investment fund manager registration requirement in respect of advising or investment fund management activities conducted in respect of mortgage investment entities.

August 17, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

AND

IN THE MATTER OF

TREZ CAPITAL CORPORATION

(THE LEAD FILER)

AND

OTHER PERSONS AND COMPANIES

CONDUCTING INVESTMENT FUND

MANAGEMENT ACTIVITIES OR ADVISING

IN RESPECT OF MORTGAGE INVESTMENT

ENTITIES

DECISION

Interpretation

1. Unless otherwise defined in this decision or the context otherwise requires, terms used that are defined in NI 31-103 Registration Requirements and Exemptions (NI 31-103) or National Instrument 14-101 Definitions have the same meaning in this decision.

2. In this decision, "mortgage investment entity" means a person or company whose purpose is to invest substantially all of its assets in debts owing to it that are secured by mortgages, hypothecs or in any other manner on real property and whose other assets are limited to

(a) deposits standing to its credit in the records of

(i) a bank or other corporation whose deposits are insured by the Canada Deposit Insurance Corporation or the Régie de l'assurance-dépots du Québec, or

(ii) a credit union,

(b) cash,

(c) securities listed in subsection (2) of Section 8.21 of NI 31-103, and

(d) instruments held to hedge specific risks relating to the debts owing to it that are secured by mortgages, hypothecs or in any other manner on real property.

Background

3. A mortgage investment entity, or a person or company providing services relating to the business, operations or affairs of a mortgage investment entity, may be required to register as an investment fund manager or an adviser or in both categories, and comply with all requirements applicable to such categories pursuant to the requirements of NI 31-103.

4. Each member of the Canadian Securities Administrators has agreed to review the applicability of the requirement for entities referred to in paragraph 3 to register as investment fund managers or advisers.

5. The Lead Filer acts as an adviser for, and as an investment fund manager in respect of, mortgage investment entities.

6. Because the Lead Filer also trades in the securities of mortgage investment entities, it is registered as an exempt market dealer under the Securities Act.

7. The Lead Filer is licensed under the Mortgage Brokerages, Lenders and Administrators Act, 2006.

Application

8. The Lead Filer has applied under section 74(1) of the Securities Act on behalf of itself as well as other persons and companies that act as advisers for, or as an investment fund managers in respect of, mortgage investment entities and who are licensed under the Mortgage Brokerages, Lenders and Administrators Act, 2006 (together with the Lead Filer, the Filers) for an exemption from the adviser registration requirement and the investment fund manager registration requirement in section 25 of the Securities Act.

Decision

9. The adviser registration requirement does not apply to a Filer so long as the Filer

(a) is licensed under the Mortgage Brokerages, Lenders and Administrators Act, 2006,

(b) does not act as an adviser other than in respect of securities issued by or owned by a mortgage investment entity, and

(c) does not carry out activities that would require registration under the Securities Act for a person or company that is not a mortgage investment entity.

10. The investment fund manager registration requirement does not apply to a Filer so long as the Filer

(a) is licensed under the Mortgage Brokerages, Lenders and Administrators Act, 2006,

(b) does not act as an investment fund manager other than in respect of the business, operations or affairs of a mortgage investment entity, and

(c) does not carry out activities that would require registration under the Securities Act for a person or company that is not a mortgage investment entity.

11. This order comes into effect on August 20, 2010 and ceases to have effect on December 31, 2010.

August 17 , 2010

"Kevin Kelly"
Commissioner
Ontario Securities Commission
 
"Wes Scott"
Commissioner
Ontario Securities Commission