Securities Law & Instruments

Headnote

JEFFERIES ASSET MANAGEMENT, LLC

Subsection 80 of the Commodity Futures Act (Ontario) -- relief from the requirements of subsection 22(1)(b) of the CFA in respect of advising certain non-Canadian mutual funds related to commodity futures contracts and commodity futures options traded on commodity futures exchanges outside Canada and cleared through clearing corporations outside Canada subject to certain terms and conditions.

IN THE MATTER OF

THE COMMODITY FUTURES ACT,

R.S.O. 1990, CHAPTER C.20, AS AMENDED (THE CFA)

AND

IN THE MATTER OF

JEFFERIES ASSET MANAGEMENT, LLC

 

ORDER

(Section 80 of the CFA)

UPON the application (the Application) of Jefferies Asset Management, LLC (the Applicant) to the Ontario Securities Commission (the Commission or the OSC) for an order pursuant to section 80 of the CFA that the Applicant and its directors, officers, members and employees acting on its behalf as an adviser (collectively, the Representatives), be exempt, for a period of three years, from the registration requirements of clause 22(1)(b) of the CFA in respect of advising certain mutual funds, non-redeemable investment funds and similar investment vehicles established outside of Canada in respect of investments in commodity futures contracts and commodity futures options principally traded on commodity futures exchanges outside of Canada and cleared through clearing corporations outside of Canada;

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

AND UPON the Applicant having represented to the Commission that:

1. The Applicant is a limited liability company organized under the laws of the State of Delaware in the United States of America. The Applicant serves as the manager of Jefferies Real Asset Fund, LLC (the Onshore Fund), Jefferies Real Asset Fund (Cayman) Ltd. (the Offshore Fund) and as manager and adviser to Jefferies Real Asset Master Fund Ltd. (the Master Fund)(collectively the Funds). The Onshore Fund is a limited liability company organized under the laws of Delaware, USA. The Offshore Fund and the Master Fund are both Cayman Islands exempted companies incorporated on December 22, 2003. Each of the Onshore Fund and the Offshore Fund will invest substantially all of its assets through the Master Fund in a "master-feeder" arrangement. The Funds may in the future include certain other mutual funds, non-redeemable investment funds or similar investment vehicles.

2. The Applicant is currently exempt from registration as an investment adviser under the U.S. Investment Advisers Act of 1940, as amended, and is currently exempt from registration with the U.S. Commodity Futures Trading Commission and is not subject to the rules of the U.S. National Futures Association.

3. The Applicant is, or in the future may be, the investment manager for the Funds. As the investment manager for the Funds, the Applicant is or will be responsible for providing certain administrative services, investment advice and other investment management services to the Funds.

4. Any of the Funds advised by the Applicant are or will be established outside of Canada. Securities of the Funds are or will be primarily offered outside of Canada to institutional investors and high net worth investors. Securities of the Funds are or will be offered only to Ontario residents who qualify as an "accredited investor" under OSC Rule 45-501 Exempt Distributions or will be offered and distributed in Ontario only in reliance upon an exemption from the prospectus requirements of the Securities Act (Ontario) (the OSA) and an exemption from the adviser registration requirement of the OSA under section 7.10 of OSC Rule 35-502 Non-Resident Advisers (Rule 35-502).

6. The Applicant and the Representatives, where required, are or will be registered or licensed or are or will be entitled to rely on appropriate exemptions from such registrations or licences to provide advice to the Funds pursuant to the applicable legislation of the Applicant's principal jurisdiction.

7. The Applicant is not registered in any capacity under the CFA or the OSA.

8. The Funds currently, or in the future will, issue securities that are offered primarily outside of Canada. None of the Funds is or has any current intention of becoming a reporting issuer in Ontario or in any other Canadian jurisdiction.

9. The Funds may, as part of their investment program, invest in commodity futures contracts and commodity futures options principally traded on organized exchanges outside of Canada and cleared through clearing corporations located outside of Canada.

10. Prospective investors who are Ontario residents will receive disclosure that includes (i) a statement that there may be difficulty in enforcing legal rights against the Funds or the Applicant advising the Funds because such entities are resident outside of Canada and all or substantially all of their assets are situated outside of Canada; and (ii) a statement that the Applicant advising the applicable Funds is not 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 Funds.

AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to grant the exemption requested on the basis of the terms and conditions proposed;

IT IS ORDERED pursuant to section 80 of the CFA that the Applicant and the Representatives are not subject to the requirements of clause 22(1)(b) of the CFA in respect of their advisory activities in connection with the Funds, for a period of three years, provided that:

(a) the Applicant, where required, is or will be registered or licensed or are or will be entitled to rely on appropriate exemptions from such registrations or licences to provide advice to the Funds pursuant to the applicable legislation of its principal jurisdiction;

(b) the Funds invest, or may in the future invest, in commodity futures contracts and commodity futures options principally traded on organized exchanges outside of Canada and cleared through clearing corporations located outside of Canada;

(c) securities of the Funds are and will be offered primarily outside of Canada and securities of the Funds will only be distributed in Ontario through one or more registrants under the OSA in reliance on an exemption from the prospectus requirements of the OSA and upon an exemption from the adviser registration requirement of the OSA under section 7.10 of Rule 35-502; and

(d) prospective investors who are Ontario residents will receive disclosure that includes (i) a statement that there may be difficulty enforcing legal rights against the Funds or the Applicant advising the Funds because they are resident outside of Canada and all or substantially all of their assets are situated outside of Canada; and (ii) a statement that the Applicant advising the Funds is not 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 Funds.

January 7, 2005.

"Susan Wolburgh Jenah"
"Paul K. Bates"