November 29, 1994
TO: CLOSED-END FUND COMMITTEE No. 30-94
SEC RULES COMMITTEE No. 127-94
UNIT INVESTMENT TRUST COMMITTEE No. 79-94
RE: LETTER TO ONTARIO SECURITIES COMMISSION ON NON-RESIDENT
FUND MANAGERS
__________________________________________________________
As you know, the Institute has been working in recent months to obtain an interpretation of
Ontario law that would permit a U.S. investment adviser with no Canadian business presence to manage
a publicly-offered Canadian mutual fund. In this regard, the Institute submitted a letter to and met with
Ontario Securities Commission ("OSC") staff last June to urge a modification of the requirement that
only a Canadian resident firm may register as an investment counsel/portfolio manager and manage a
publicly-offered mutual fund.
The OSC staff recently indicated to the Institute that it will permit a U.S. resident adviser to
register as an investment counsel/portfolio manager if the adviser a) complies with all applicable
regulatory requirements and b) satisfies the OSC that an appropriate level of proficiency is met. As a
registered investment counsel/portfolio manager, a U.S. adviser could sponsor and advise a publicly-
offered Canadian fund on a cross-border basis, i.e., without establishing an office in Canada.
On January 21, the Institute sent the attached letter to the OSC staff proposing further
clarification of the specific regulatory and proficiency requirements that would apply to non-resident
U.S. advisers. Our letter addresses a) record-keeping, b) agent for service of process, and c) proficiency
requirements. Regarding record-keeping, our letter recommends that the OSC adopt a practice similar to
that set forth under Rule 204-2 under the Investment Advisers Act of 1940, and permit a non-resident
registrant to maintain records outside Ontario if the adviser agrees to furnish the records promptly to the
OSC upon request and at the adviser's expense. Our letter also suggests that U.S. resident advisers
should be required to appoint an agent for service of process and submit irrevocably to Ontario
jurisdiction. With request to proficiency, we recommend that Ontario recognize that a U.S. portfolio
manager has established equivalency if the manager has experience in the industry and has successfully
completed the Series 65 Uniform Investment Adviser Examination and the first year of a Chartered
Financial Analyst course.
A copy of our letter to the OSC is enclosed.
Angela C. Goelzer
Associate Counsel - International