Claymore Investments, Inc. (Re), 2009 CanLII 44123

National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions -Approval of a change of control of a mutual fund manager and abridgement of the related 60 day notice requirement to 45 days – Decision subject to no changes being made to management, administration and portfolio management of the funds for a period of 60 days subsequent to notice provided to unitholders of the funds – Notice period abridgement granted based on fact specific circumstances and is not to be used as a precedent.

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

August 24, 2009

In the Matter of

the Securities Legislation of

Ontario (the Jurisdiction)

and

In the Matter of

the Process for Exemptive Relief Applications in Multiple Jurisdictions

and

In the Matter of

and their respective affiliates and associates

(collectively, the Filers)

and

the investment funds listed in Schedule “A”

(collectively, the Funds)

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for (a) approval of the change of control of Claymore Investments, Inc. (the Manager) as contemplated by subsection 5.5(2) of National Instrument 81-102 – Mutual Funds (NI 81-102) (the Approval Sought) and (b) an abridgement from 60 days to 45 days of the period for providing advance notice to the Funds’ securityholders of the change of control of the Manager required pursuant to subsection 5.8(1) of NI 81-102 (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission (OSC) is the principal regulator for this application, and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the provinces and territories of Canada other than Ontario (together with Ontario, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 – Definitions have the same meaning if used in this decision unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

The Merger

Claymore Group Inc., Claymore Holdings LLC (which is an indirect subsidiary of Guggenheim Partners, LLC) and Guggclay Acquisition, Inc. (Acquisition Corp.) have entered into an agreement and plan of merger dated as of July 17, 2009 (the Merger Agreement) pursuant to which Acquisition Corp. will merge with and into Claymore Group Inc. on or about September 30, 2009, upon which the separate corporate existence of Acquisition Corp. will cease and Claymore Group Inc. will continue as the surviving corporation (the Merger). The completion of the Merger is subject to the satisfaction of closing conditions, which include the obtaining of all required regulatory approvals. The Merger will result in a change of control of the Manager.

The Manager, Claymore Group Inc. and the Funds

The Manager is incorporated under Canada Business Corporations Act and is the manager and trustee of the Funds and is responsible for the administration of the Funds. The Manager is registered in Ontario as an advisor in the categories of investment counsel and portfolio manager and as a dealer in the category of limited market dealer, and is registered as an investment adviser with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940.
The Manager is a subsidiary of Claymore Group Inc., a financial services and asset management company based in the Chicago, Illinois area. Claymore Group Inc. and its affiliates have approximately 176 employees in North America and, as of April 30, 2009, were providing supervisory, management or distribution-related services to exchange-traded funds, closed-end funds and unit investments trusts with combined assets of approximately U.S.$11 billion.
The Funds (other than Big Bank Big Oil Split Corp., which is not in continuous distribution) are qualified for continuous distribution in each of the provinces and territories of Canada. Neither the Manager nor any of the Funds is in default of the securities legislation of any province or territory of Canada.

Ownership of Shares of Claymore Group Inc.

All the shares of Claymore Group Inc. are currently owned directly or indirectly by employees or former employees of Claymore Group Inc. or its affiliates.

Acquisition Corp.

Acquisition Corp. was incorporated as an indirect subsidiary of Guggenheim Partners, LLC under the laws of Delaware for the purpose of completing the Merger. To date, Acquisition Corp. has not engaged in any activities other than those incidental to its organization, the entering into of the Merger Agreement and the performance of its obligations thereunder.

Guggenheim Partners, LLC

Guggenheim Partners, LLC is a limited liability company formed under the laws of Delaware. It is a global, independent, privately held, diversified financial services firm with more than U.S.$100 billion in assets under supervision. Guggenheim Partners, LLC employs approximately 800 professionals located in 20 cities around the world with principal offices in Chicago, New York, Los Angeles, London, Dublin, Geneva, Dubai, Hong Kong, Singapore and Mumbai.
The business address for Guggenheim Partners, LLC is 227 W. Monroe Street, Suite 4900, Chicago, Illinois, 60606.
Guggenheim Investment Management, LLC is an indirect subsidiary of Guggenheim Partners, LLC and is registered in Ontario as an advisor in the categories of investment counsel and portfolio manager. Guggenheim Securities, LLC is an indirect subsidiary of Guggenheim Partners, LLC and is registered in Ontario as a dealer in the category of international dealer. The Filers are advised that neither Guggenheim Investment Management, LLC nor Guggenheim Securities, LLC is in default of the securities legislation of Ontario. Guggenheim Partners, LLC indirectly owns 30% of Logan Circle Partners, L.P., which is registered in Ontario in the categories of investment counsel and portfolio manager.
Following the completion of the Merger, the Manager will be a direct, wholly-owned subsidiary of the surviving Claymore Group Inc. entity, which in turn will be a direct, wholly-owned subsidiary of Claymore Holdings, LLC. Claymore Holdings, LLC is an indirect subsidiary of Guggenheim Partners, LLC.
Both Claymore Group Inc. and Guggenheim Partners, LLC have considerable experience in the asset management and investment funds industry.
Guggenheim Partners, LLC currently intends to maintain the Funds as a separately managed fund family and continue the operations of the Manager substantially as operated. It is currently anticipated that the role of the Manager as manager of the Funds will not change following the Merger. The change of control of the Manager will not materially affect the operation and administration of the Funds.
The Filers do not foresee that the Merger will give rise to any material conflicts of interest.
No changes are currently contemplated to the officers or directors of the Manager.
Upon the change of control of the Manager, all current members of the Independent Review Committee for the Funds will cease to be members of the Independent Review Committee by operation of section 3.10(1)(c) of National Instrument 81-107 - Independent Review Committee