Wednesday, February 4, 2009

Securities Questions

In previous posts, we've discussed some of the legal requirements for those interested in starting up their own investment funds. We've also discussed some of the exemptions available for those who do not meet the requirements. Sometimes, however, the language of the requirements and exemptions leaves itself open to interpretation. So what are your options to get the answers you need?

Depending on your requirements, there are of course lawyers available that will do the research for you, but securities lawyers can charge up to $350 per hour for this kind of work, so a start-up fund will want to avoid this course. Luckily, the securities commissions of various jurisdictions offer the public the chance to ask questions directly. In the US, one can contact the SEC directly.

In Canada, things are a bit more complicated since each province has its own securities regulator. However, the Ontario Securities Commission (OSC) has the toughest rules of the bunch and is also home to almost one third of Canadians. As such, this is probably the first commission one would want to contact for a question about securities laws. One can send a question to the OSC directly here, and if they can't answer the question, they offer a program where an individual can speak to a securities lawyer for 30 minutes for only $6 (Details here).

I recently asked the OSC for clarification on the definition of "investment fund" as well as some of the operational restrictions on "private investment clubs" and distributions within the jurisdiction. Hopefully the quality of the answers they provide match up to their advertised assertions!

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