Gluskin Sheff + Associates Inc. -- s. 144(1)

Headnote

Relief to vary an order of the Commission granting relief from the prospectus requirement of the Act to permit distribution of pooled fund securities to managed accounts held by non-accredited investors on an exempt basis -- variance to amend a condition requiring certain disclosure about the order be delivered to investors 60 days prior to a trade in pooled funds by a managed account by non-accredited investors -- 60 day notice requirement would impair portfolio manager's ability to deal with assets of managed account held by non-accredited investor on a timely basis -- disclosure will be provided to investors prior to trade in a pooled fund without necessity to wait 60 days -- all other terms and conditions of original order remain unchanged.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., s. 144.

February 26, 2010

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED

(the "Act")

AND

IN THE MATTER OF

GLUSKIN SHEFF + ASSOCIATES INC.

(the "Filer")

ORDER

(Subsection 144(1) of the Act)

WHEREAS the Filer has applied to the Ontario Securities Commission (the "Commission") for an order (the "Order") pursuant to section 144 of the Act varying a ruling ("Ruling") of the Commission dated February 10, 2010 made pursuant to subsection 74(1) of the Act that permits the Filer to distribute securities of the GS+A Funds (as defined below) to managed accounts ("Managed Accounts") of clients ("Clients") for which the Filer provides discretionary investment management services without being subject to the prospectus requirement under section 53 of the Act;

AND WHEREAS the Ruling permits the Filer to distribute securities of any open-ended investment fund that is not a reporting issuer and for which the Filer acts or will act as manager and portfolio manager (the "GS+A Funds") to Managed Accounts of Clients provided that (the "60 Day Condition") for each Client that becomes a Client of the Filer after the date of the Ruling (a "New Client") and invests in securities of a GS+A Fund in reliance on the Ruling, the Filer delivers written disclosure (the "Disclosure") to the New Client, 60 days prior to effecting a trade in securities of a GS+A Fund in reliance on the Ruling, advising of (i) the nature of the relief granted under the Ruling, and (ii) the fact that the Ruling permits the New Client to invest in an investment fund product which the New Client otherwise would not be allowed to invest in on an exempt basis through their Managed Account;

AND WHEREAS the Filer desires to vary the 60 Day Condition by removing the requirement that the Disclosure be provided 60 days in advance of effecting a trade in securities of a GS+A Fund on behalf of a New Client, provided that the Filer delivers the Disclosure to each New Client prior to effecting the initial trade in securities of a GS+A Fund in the Managed Account;

AND UPON the application ("Application") of the Filer to the Commission for an order pursuant to subsections 144(1) of the Act varying the Ruling as set out above;

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

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

1. The facts set out in paragraphs 1 to 22 under "Representations" of the Ruling continue to apply.

2. The 60 Day Condition prevents the Filer from properly fulfilling its fiduciary obligations to its New Clients by prohibiting it, for a significant period of time, from making an investment which the Filer has determined is in the best in interest of such clients.

3. The 60 Day Condition forces the Filer to choose between (a) not managing a New Client's account until the end of the 60 day period, or (b) attempting to invest the New Client's assets on a segregated basis, which may result in insufficient diversification and increased brokerage charges to the client, or (c) if the Managed Account has $150,000, investing the New Client in securities of one GS+A Fund, which may result in an improperly diversified portfolio.

4. Once the 60 day period has ended and the Filer is able to invest the New Client's assets in securities of the GS+A Fund, then the Filer is faced with the issue of either keeping the client's current investment in the insufficiently diversified portfolio, or triggering a tax consequence by selling the existing securities and purchasing the appropriate mix of GS+A Funds.

5. New Clients will have sufficient information about how the Filer proposes to manage their assets (including the fact that the GS+A Funds are sold pursuant to a prospectus exemption and would not otherwise be available to the client) prior to providing the Filer with discretionary authority. The overall effect of imposing the 60 Day Condition could cause greater harm or risk to a New Client than the protection it is attempting to provide.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to subsection 144(1) of the Act, that the Ruling is hereby varied to remove the 60 day period such that the 60 Day Condition of the Ruling is amended and restated as follows:

(b) for each Client that becomes a Client of the Filer after the date of the Ruling that invests in securities of one or more GS+A Funds through a Managed Account pursuant to the Ruling (as varied by this order), the Filer shall deliver to such Client, prior to effecting a trade in securities of a GS+A Fund in reliance on the Ruling (as varied by this order), written disclosure advising of:

(i) the nature of the relief granted under the Ruling, and

(ii) the fact that the Ruling permits the Client to invest in an investment fund product which the Client otherwise would not be allowed to invest in on an exempt basis through their Managed Account; and