Conflicts of Interest Disclosure Statement
This document provides you with information about the Conflicts of Interest policies and procedures of Kingwest & Company (“Kingwest”). It is intended to assist clients’ in understanding and assessing material potential and actual conflicts of interest, and how the firm addresses them. This is an overview of a complex subject. If you ever have any questions or concerns, whether they involve conflicts of interest or anything else, you should never hesitate to say so and ask your advisor for an explanation; for more information, contact Kingwest at firstname.lastname@example.org.
Kingwest provides discretionary investment management services to individuals, families, charitable foundations, and two mutual fund families: the Kingwest Managed Portfolios, Kingwest Avenue Partners L.P. and NEI Investments on their investments in financial markets.
In carrying out its responsibilities, Kingwest and its Employees must always act honestly, in good faith, and in the best interests of clients. This means that the interests of clients must always and in every instance come ahead of the interests of Kingwest or of any personal interest of an Employee.
Kingwest & Company has written policies and procedures in place for identifying and addressing material conflicts of interest.
A “conflict of interest” is considered by the securities regulators as any circumstance where the interests of different parties, such as the interests of a client and those of a registrant, are inconsistent or divergent.
In accordance with NI 31-103, as a registered firm, Kingwest must take reasonable steps to identify existing material conflicts of interest and material conflicts of interest that the Firm, in its reasonable opinion would be expected to arise:
- Between Kingwest, including individuals acting on Kingwest’s behalf, and a client;
- Between clients as a result of competing interests;
- Within Kingwest; and
- With other entities.
Employees are subject to the Kingwest Code of Ethics. Employees are required to read and understand the Kingwest Code of Ethics and abide by both the letter and spirit of the Code.
Employees are required to certify annually that they have read and understand the Kingwest Code of Ethics and that they have complied and will continue to comply with its requirements.
Examples of situations in which a conflict of interest may arise, include but are not limited to, where:
- Kingwest has relationships with related or connected issuers (e.g. Kingwest Pooled Funds & L.P’s);
- Kingwest has relationships with other issuers;
- There are competing interests of clients;
- Kingwest Employees serve on a board of directors;
- Kingwest Employees have outside business activities; and
- Kingwest employs certain compensation
Where an Employee encounters a situation where they know, or believe, a conflict of interest exists or may arise, they should discuss that situation with the Compliance department to determine what appropriate action is to be taken.
Kingwest is an Introducing Broker and National Bank Independent Network (NBIN), is a Carrying Broker. With respect to transactions clients’ may enter into NBIN will be responsible for trade execution and settlement, custody of cash and securities, the preparation of confirmations and account statements and the financing of client account positions. Kingwest will be responsible for determining the suitability and ensuring appropriate supervision is performed for all trading activity in client accounts.
Kingwest will provide each client account with quarterly statements of the Portfolio. Representatives of Kingwest will be available to meet with the undersigned at his/her (their mutual) convenience, to report on past activities in the Portfolio and to discuss the investment philosophy and investment policy.
Kingwest must respond to each identified conflict of interest in a fair, equitable and transparent manner, and exercise responsible business judgment influenced only by the best interests of Kingwest’s clients.
Kingwest will provide prior written disclosure of a conflict of interest to a client when there is a reasonable likelihood that the client would consider the conflict important when entering into a proposed transaction and would expect to be informed.
The policy and procedures Kingwest has in place for managing conflicts allows Kingwest and Employees to identify conflicts of interest that should be avoided, to determine the materiality or level of risk that a conflict of interest raises, and to respond appropriately to conflicts of interest.
The three mechanisms that Kingwest will generally use to deal with conflicts of interest are:
- Disclosure: Kingwest will provide clients with information about any conflicts not avoided so that they are capable of independently assessing their significance when evaluating Kingwest services, products, and any actions Kingwest may take.
- Control: Kingwest manage conflicts of interest that are not avoided through oversight with means such as training and supervision, policies and procedures, and compliance monitoring
- Avoidance: Kingwest will avoid conflicts that are prohibited by law as well as conflicts that cannot effectively be addressed and is sufficiently contrary to the interests of a client or the integrity of the capital markets
Canada has comprehensive and extensive securities regulatory rules and regulations, many of which are directed at protecting client and investor interests, including dealing with conflicts of interest. Kingwest is under the jurisdiction of certain regulatory and self-regulatory organizations, including the Investment Industry Regulatory Organization of Canada (“IIROC”) and this document sets out information required by these organizations. Clients may refer to the websites and publications of the provincial securities commissions through the Canadian Securities Administrators (CSA) and Investment Industry Regulatory Organization of Canada (IIROC) for more information on how Canadian securities regulations address conflicts of interest in order to safeguard the investing public.
- The client shall place certain of the assets of the Portfolio under the management of Kingwest. Kingwest may trade, at Kingwest’s complete discretion and on a continuing basis, in securities on behalf of and for the Portfolio as if Kingwest had been instructed by the client to do so.
- In consideration for services rendered by Kingwest, the client agrees to pay a fee as set out in Schedule ‘B’ of the Investment Management Agreement. Kingwest provides other documents that inform clients of all fees, commissions and other costs that may be incurred on the operation of their account so that they know, in advance, what they will be paying. Kingwest will ensure its product and service offerings, including fees associated with such offerings, are consistent with the overall wealth building objectives of its clients. The Approved Person will ensure that the transaction, account and service fees and costs to be charged are fair and are properly disclosed to the client.
- Using borrowed money to finance the purchase of securities involves greater risk than using cash resources only. If clients borrow money to purchase securities, it is their responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities declines.
- The investments made by Kingwest on behalf of the Portfolio may be comprised, in whole or in part, of investments in one or more of the Kingwest Managed Funds and the Kingwest Avenue Partners L.P. The fees charged to the Portfolio, directly or indirectly, in respect of the portion of the Portfolio invested in such Fund(s) will form part of the total fees paid to Kingwest. Kingwest manages each of the Funds comprising the Kingwest Managed Funds and Kingwest Avenue Partners L.P. Kingwest is the distributor of the securities of such Funds and is paid management fees in respect of such Funds based on the respective net asset values as such Funds and, accordingly, each of such Funds is a “related” and “connected” issuer of Kingwest under applicable securities legislation.
- Investment funds are subject to stringent conflict of interest requirements and oversight mechanisms. Kingwest is required by securities legislation to prohibit transactions where the individual advisor may have an interest or have influence or control.
- Kingwest has no fixed methods for allocating investment opportunities among its managed portfolios other than it shall endeavour to act fairly towards each managed portfolio having regard to their respective circumstances and investment objectives.
- Kingwest in performing its duties shall operate in accordance with its best judgement provided that it shall not be liable for any error in judgement or for any loss suffered as a consequence of any action taken or omitted by it except loss suffered or resulting from its own negligence or willful misconduct.
- Where Kingwest has referral arrangements, Kingwest will fully disclose the arrangement in accordance with regulatory standards.
- The trade confirmation will disclose whether Kingwest acted as principal or agent for the transaction. In the case of fixed-income securities (which Kingwest usually sells as principal) Kingwest provide clients with a stated yield to maturity so the client can assess the competitiveness of Kingwest pricing.
The following conflict of interest situations will also be disclosed to the client by Kingwest:
- Where one client has guaranteed the account obligations of another client, such that there are potentially conflicting client interests, Kingwest & Company will disclose to the guarantor in writing that the suitability of the transactions in the guaranteed client’s account will not be reviewed in relation to the guarantor’s risk tolerance or investment objectives
- Each confirmation issued for trades involving securities:
- Of Kingwest & Company or a related issuer to Kingwest, in the course of a distribution or
- Of a connected issuer of Kingwest
- Kingwest has discretion or control over transactions in managed accounts. Kingwest has policies and procedures prohibiting recommendations solely for the purpose of generating revenue for Kingwest without any benefit to the client. When Kingwest has discretionary power to manage client accounts, regulations require that Kingwest disclose to them and obtain their specific approval to buy securities of either related or connected companies.
- Kingwest shall not, without the client’s written consent, knowingly cause the Portfolio to (a) invest in any issuer in which a responsible person is an officer or director, (b) purchase or sell securities of any issuer from or to the account of a responsible person, or (c) make a loan to a responsible person. For the purposes of the foregoing, a responsible person means Kingwest and every individual who is a partner or employee of Kingwest, if such individual participates in the formulation of, or has access prior to implementation to investment decisions made on behalf of or the advice given to clients by Kingwest.
- Kingwest is required by securities legislation to prohibit transactions where the individual advisor may have an interest or have influence or control.
- Kingwest may need to select which clients will be offered certain securities if availability is limited.
- If Client holds an applicable security, Kingwest may be paid by issuers, offerors or others to solicit client’s proxy or vote in their favour with respect to takeover bids, corporate reorganizations, solicitation of proxies and other corporate actions.
- Kingwest may have access to commercially sensitive or inside information. Confidential information that cannot be publicly disclosed is protected through internal information barriers so that it is not shared and does not influence any retail advisory activities.
Any existing or potential material conflict of interest between Kingwest and/or an Approved Person and the client that cannot be addressed in a fair, equitable and transparent manner and consistent will be avoided (see below). Unless a material conflict of interest has been avoided, the conflict interest will be disclosed to the client in all cases where a reasonable client would expect to be informed.
In addition, Kingwest will avoid material conflict of interest situations:
- Involving confidential, commercially sensitive or material, non-public information which we are prohibited from disclosing to the client and a reasonable client would expect to be provided with this information
- Inconsistent with the interests of the client and/or there is a high risk of harm to the client and the situation cannot be addressed in any fashion to reduce this inconsistency/risk of harm
- A registered representative or investment representative may not engage in another gainful occupation if the specific occupation introduces inappropriate conflicts of interest, disrupts continuous client service or is disreputable
Other Potential Conflicts of Interests:
As well as the potential conflicts of interest we have set out above, there are a number of other potential relevant conflicts that may arise:
- Gifts and entertainment from third parties with which we have active or potential business relationships;
- Directorships with other firms or other organizations;
- Connections to outside political or charitable activities;
- Other outside of Kingwest & Company activities; and
- Interests in the business of a supplier, contractor, competitor etc.
These types of potential conflicts will be monitored and supervised by Kingwest on an internal basis and, if appropriate, will be disclosed to clients.