Securities Law & Instruments

Headnote

UBS GLOBAL ASSET MANAGEMENT (AMERICAS) INC.

Application to the Commission for an order, pursuant to section 80 of the Commodity Futures Act (the CFA), that neither UBS Global Asset Management (Americas) Inc., nor any of its directors, officers or employees acting on its behalf as an adviser, shall be subject to paragraph 22(1)(b) of the CFA in respect of advice provided for the benefit of a Trust, the principal investment adviser of which is an Ontario registrant.

IN THE MATTER OF

THE COMMODITY FUTURES ACT, RSO. 1990, c. 20

AND

IN THE MATTER OF

UBS GLOBAL ASSET MANAGEMENT (AMERICAS) INC.

 

ORDER

(Section 80)

UPON the application of UBS Asset Management (Americas) Inc. ("UBS AM") to the Ontario Securities Commission (the "Commission") for a ruling under section 80 of the Commodity Futures Act, R.S.O. 1990, c.20 (the "CFA") that UBS AM and its officers are not subject to the requirement of paragraph 22(1)(b) of the CFA;

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

AND UPON UBS AM having represented to the Commission that:

1. UBS AM is incorporated under the laws of Delaware and is resident in Illinois. It does not have a place of business in Ontario with partners or officers that are resident in Ontario who act as advisors on its behalf in Ontario;

2. UBS AM is a commodity trading advisor registered with the Commodity Futures Trading Commission and a member of the National Futures Association in the United States, which permits UBS AM to advise in respect of futures contracts and options on futures contracts in the U.S.;

3. UBS AM currently acts as an adviser providing discretionary portfolio management services to UBS Global Allocation Trust (the "Trust"), an investment trust established under the laws of Ontario, which is managed by UBS Global Asset Management (Canada) Co. ("UBS Canada"), a registered adviser under the CFA, and may in the future act as an adviser by providing such portfolio management services for the benefit of clients of one or more:

(a) registered advisers under the CFA, or

(b) registered brokers and dealers acting as a portfolio adviser pursuant to section 44 of the Regulations to the CFA,

(with UBS Canada, the "Registrants") in Ontario;

4. UBS AM has entered into a written agreement with UBS Canada which sets out the obligations and duties of UBS AM, and a similar agreement would be entered into with any other Registrants in the future;

5. UBS Canada will monitor the investment advice provided by UBS AM and its officers for the benefit of the Trust, and any Registrants in the future will be required to monitor UBS AM's investment advice provided for the benefit of their clients;

6. UBS AM now provides, and will in the future only provide, discretionary portfolio management services in circumstances where:

(a) the Registrant has agreed in a document providing rights to the client of the Registrant to be responsible for any loss that arises out of the failure of UBS AM to:

(i) exercise the powers and discharge the duties of its office honestly, in good faith and in the best interests of the client; and

(ii) exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances,

(the "Standard of Care"), and in providing portfolio management services to the Registrant's clients this responsibility cannot be waived; and

(b) disclosure is made to Ontario clients of the Registrant that the Registrant is responsible for any loss that arises out of the failure of UBS AM to meet the standard of care, that there may be difficulty in enforcing legal rights against UBS AM, and that all or substantially all of UBS AM's assets are situated outside of Ontario;

AND WHEREAS paragraph 22(1)(b) of the CFA prohibits a person or company from acting as an adviser unless the person is registered as an adviser, or is registered as a partner or an officer of a registered adviser and is acting on behalf of a registered adviser, and the registration is in accordance with the CFA and the Regulations;

AND UPON the Commission being satisfied that to make this ruling would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to section 80 of the CFA, that UBS AM and its officers are not subject to the requirements of paragraph 22(1)(b) of the CFA in respect of advice provided for the benefit of clients of a Registrant, provided that:

(a) the obligations and duties of UBS AM are set out in a written agreement with the Registrant in Ontario;

(b) the Registrant agrees in a document providing rights to the client of the Registrant to be responsible for any loss that arises out of the failure of UBS AM to meet the Standard of Care in providing advice to the client of the Registrant and this responsibility is not waived; and

(c) a client agreement or offering document discloses that the Registrant is responsible for any loss that arises out of the failure of UBS AM to meet the standard of care in providing advice to the client of the Registrant and, that there may be difficulty enforcing any legal rights against UBS AM and all or a substantial portion of UBS AM's assets are situated outside of Ontario;

(d) any Registrant in addition to UBS Canada in respect of whom UBS AM proposes to rely on the exemption granted under this Order, UBS AM shall, as a condition to relying on such exemption, have executed and filed with the Commission a verification certificate referencing this Order and confirming the truth and accuracy of the Application with respect to that particular Registrant;

and provided that this order will terminate three years from the date hereof.

August 10, 2004.

"Susan Wolburgh Jenah"
"Harold P. Hands"