Securities Law & Instruments

Headnote

Section 80 of the Commodity Futures Act (Ontario) (the CFA) - Relief from the adviser registration requirement of paragraph 22(1)(b) of the CFA granted to a non-resident adviser in respect of advising certain non-Canadian mutual funds regarding trades in commodity futures contracts and commodity futures options traded on commodity futures exchanges primarily outside of Canada and cleared through clearing corporations primarily outside of Canada, subject to certain terms and conditions.

Statutes Cited

Commodity Futures Act, R.S.O. 1990, c. C.20, as am., s. 22(1)(b) and s. 80.

Securities Act, R.S.O. 1990, c. S.5, as am. -- Rule 35-502 -- Non Resident Advisers.

IN THE MATTER OF

THE COMMODITY FUTURES ACT

R.S.O. 1990, CHAPTER C.20, AS AMENDED (the "ACT")

AND

IN THE MATTER OF

ROEBLING CAPITAL MANAGEMENT LLC

 

ORDER

(Section 80 of the Act)

UPON the application of Roebling Capital Management LLC (the "Applicant") to the Ontario Securities Commission (the "Commission") for an order pursuant to section 80 of the Act that the Applicant and its directors, officers and employees are exempt from the requirements of paragraph 22(1)(b) of the Act in respect of advising Roebling Capital Investments Ltd. (the "Fund") in respect of trades in commodity futures contracts and commodity futures options traded on commodity futures exchanges primarily outside of Canada and cleared through clearing corporations primarily outside of Canada (the "Proposed Advisory Business");

AND UPON considering the application and the recommendation of staff of the Commission;

AND UPON the Applicant having represented to the Commission as follows:

1. The Applicant is a limited liability company organized under the laws of the State of Delaware.

2. The Fund is an international business company formed under the law of the British Virgin Islands.

3. The Applicant is registered as a commodity pool operator and a commodity trading adviser with the Commodity Futures Trading Commission (the "CFTC") in the United States of America (the "USA") and is a member of the National Futures Association in the USA.

4. The Fund invests and will invest its assets in a wide range of stocks, bonds, debt, equity securities, managed funds, investment funds and other investment vehicles (the "Portfolio Funds") by allocating the Fund's capital among independent investment managers acting individually or through pooled entities (the "Managers"). The Fund may also directly invest in a wide range of debt securities and equity securities.

5. The Applicant, as the investment manager of the Fund, conducts and manages the business of the Fund, and provides all advisory services and makes all decisions with respect to investment in the Portfolio Funds and selection of the Managers. The Applicant may also advice the Fund in respect of commodity futures contracts and commodity futures options traded on organized exchanges located primarily outside of Canada and cleared through clearing corporations located primarily outside of Canada.

6. Certain of the Portfolio Funds, upon the advice of their Managers, may invest in commodity futures contracts and commodity futures options traded on organized exchanges located primarily outside of Canada and cleared through clearing corporations located primarily outside of Canada.

7. The Portfolio Funds, in which the Fund will from time to time invest, are managed by certain Managers outside of Canada and are investing, or will invest, in investments selected by the Managers which may include commodity future contracts and commodity futures options. The Managers are unaffiliated with the Applicant and do not, and will not in the future, provide advice directly to the Fund.

8. The Applicant will select the Portfolio Funds in which the Fund will invest, based on the investment strategies implemented by the Manager of the relevant Portfolio Fund and the investment objectives and policies of the Fund. The investment strategies implemented by the Manager may include investing in commodity futures contracts and commodity futures options.

9. As would be required under section 7.10 (Privately Placed Funds Offered Primarily Abroad) of Rule 35-502 of the Securities Act (Ontario) the Fund is non-Canadian and the securities of the Fund are:

(i) primarily offered outside of Canada;

(ii) only distributed in Ontario through one or more registrants under the Securities Act (Ontario); and

(iii) distributed in Ontario in reliance upon an exemption from the prospectus requirements under the Securities Act (Ontario).

10. Prospective investors in the Fund who are Ontario residents will receive disclosure that includes:

(a) a statement that there may be difficulty in enforcing any legal rights against the Applicant (or any of the Managers), or the directors, officers or employees of the Applicant (or any of the Managers) because they are resident outside of Canada and all or substantially all of their assets are situated outside of Canada, and

(b) a statement that the Applicant advising the Fund and, where applicable, the Managers are not, or will not be, registered with or licensed by any securities regulatory authority in Canada and, accordingly, the protections available to clients of a registered adviser will not be available to purchasers of securities of the Fund.

AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to grant the exemptions requested.

IT IS ORDERED pursuant to section 80 of the Act that the Applicant and its directors, officers and employees responsible for advising the Funds are not subject to the requirements of paragraph 22(1)(b) of the Act in respect of the Proposed Advisory Business in connection with the Fund, for a period of three years, provided that at the time such Proposed Advisory Business is engaged in:

1. the Applicant continues to be registered with the CFTC as commodity pool operator and commodity trading adviser;

2. the Fund or the Managers invest in commodity futures contracts and commodity futures options traded on organized exchanges located primarily outside of Canada and cleared through clearing corporations located primarily outside of Canada, in other derivative instruments traded over the counter primarily outside of Canada, and in securities primarily outside of Canada;

3. securities of the Fund will be offered primarily outside of Canada and will only be distributed in Ontario through Ontario-registered dealers, in reliance on an exemption from the prospectus requirements of the Securities Act (Ontario) (sections 53 and 62) and upon an exemption from the adviser registration requirement provided under section 7.10 of Commission Rule 35-502 Non-Resident Advisers; and

4. prospective investors in the Fund who are Ontario residents will receive disclosure that includes

(a) a statement that there may be difficulty in enforcing any legal rights against the Applicant, (or any of the Managers), or the directors, officers or employees of the Applicant (or any of the Managers) because they are resident outside of Canada and all or substantially all of their assets are situated outside of Canada; and

(b) a statement that the Applicant advising the Fund and, where applicable, the Managers advising the relevant Portfolio Funds are not, or will not be, registered with or licensed by any securities regulatory authority in Canada and, accordingly, the protections available to clients of a registered adviser will not be available to purchasers of securities of the Fund.

March 5, 2004.

"Paul M. Moore"
"Robert W. Davis"