U. S. registered investment adviser exempted from the adviser registration requirement of the Act in connection with its acting as adviser to clients that are resident in the U.S. -- Advising representatives acting on behalf of the U.S. adviser also exempted, provided they act through the U.S. adviser -- Both the U.S. adviser and advising representative are required to comply with U.S. securities law.
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25(3), 74(1).
United States Investment Advisers Act of 1940, s. 203.
October 30, 2009
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
SCOTIA ASSET MANAGEMENT U.S. INC. AND
SCOTIA ASSET MANAGEMENT L.P.
The principal regulator in the Jurisdiction has received an application from Scotia Asset Management U.S. Inc. (SAM US or the Filer) for a decision, under the securities legislation of the Jurisdiction of the principal regulator (the Legislation), that SAM US, and certain individuals (the SAM US Advisers) who act as advisers on behalf of SAM US and are, at the relevant time, registered to act as advisers on behalf of Scotia Asset Management L.P. (SAM LP), shall not be subject to the adviser registration requirement in the Legislation (the Requested Relief).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for the application; and
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia (the Non-principal Jurisdiction).
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 Filer:
1. SAM US is a wholly-owned subsidiary of SAM LP and is an indirect wholly-owned subsidiary of The Bank of Nova Scotia (the Bank). The registered and head office of SAM US is in Toronto, Ontario.
2. SAM US was established as a vehicle to provide advice with respect to securities to persons or companies (the U.S. Clients) that are at the relevant time resident in the United States of America. SAM US is not a registrant under the Legislation.
3. SAM US is registered as an investment adviser under section 203 of the United States Investment Advisers Act of 1940 to carry on the business of an adviser.
4. SAM LP is an Ontario limited partnership which is wholly-owned (directly or indirectly) by the Bank. The registered and head office of SAM LP is located in Toronto, Ontario.
5. SAM LP is registered in the Jurisdiction and in the Non-principal Jurisdiction as an adviser in the category of "portfolio manager".
6. None of the SAM US Advisers will act on behalf of SAM US for a U.S. Client in a jurisdiction of Canada unless, at the relevant time, SAM LP is registered as an adviser under the securities legislation of that jurisdiction, and the SAM US adviser is, in turn, also registered as an advising representative of SAM LP under the securities legislation of that jurisdiction.
7. SAM US Advisers will act on behalf of SAM US as advisers to the U.S. Clients out of the offices of SAM LP.
8. SAM US and the SAM US Advisers will comply with all registration and other requirements of applicable United States securities laws in respect of advising U.S. Clients. SAM US will not act as an adviser to any person or company that is then resident in Canada.
9. U.S. Clients of SAM US may include persons or companies who were but are no longer residents of Canada. U.S. Clients may also include persons or companies who are neither former Canadian residents nor former clients of SAM LP.
10. All U.S. Clients of SAM US will be asked to enter into an advisory agreement with SAM US, at which time written disclosure will be provided to the U.S. Client that the U.S. Client is not the responsibility of SAM LP. U.S. Clients will also receive a retail client brochure and such other documents as mandated under applicable United States securities laws. SAM US Advisers will have business cards and letterhead which will identify them to the U.S. Clients as working on behalf of SAM US, and all communication by SAM US Advisers with U.S. Clients, on behalf of SAM US, will be through SAM US.
11. U.S. Clients will be advised at the time they enter into an advisory agreement with SAM US (and periodically thereafter) that, if they return to Canada in circumstances that no longer require them to be serviced by SAM US according to United States securities legislation, their accounts must either be transferred to SAM LP or to another person or company authorized to carry on the business of an adviser in the relevant province or territory.
12. The Filer was granted exemptive relief corresponding to the Requested Relief, under a ruling of the Ontario Securities Commission dated February 18, 2003 (the Original Decision); however, under the terms of the Original Decision, the SAM US Advisers were identified as registered under the Legislation as advising representatives of Scotia Cassels Investment Counsel Limited (SCICL) and not SAM LP.
13. Pursuant to an internal reorganization (Reorganization), to be effective on November 1, 2009, involving the Filer, SAM LP, SCICL and certain of their affiliates, the portfolio management activity carried out by SCICL prior to November 1, 2009 will be transferred to and carried out by SAM LP as of November 1, 2009.
14. Prior to the Reorganization, the Filer was able to do, in Ontario, under the Original Decision, what it proposes to do under the Requested Relief; the Filer would also now propose to be able to do in British Columbia, what it proposes to do in Ontario under the Requested Relief, in reliance upon subsection 4.7(1) of MI 11-102.
15. The Filer is, to the best of its knowledge, not in default of the securities legislation of the Jurisdiction or the Non-principal Jurisdiction.
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 Requested Relief is granted to the Filer provided that:
(a) in acting as an adviser to the U.S. Clients, SAM US, and the SAM US Advisers acting on its behalf, comply with all applicable registration and other requirements of United States securities legislation; and
(b) in acting as an adviser to the U.S. Clients, SAM US acts only through SAM US Advisers.
This decision has an effective date of November 1, 2009.