CONFLICT OF INTEREST

In providing services to you, there may be situations where a conflict arises between our joint interests. Canada has comprehensive and extensive securities rules and regulations, many of which are directed at protecting clients’ interests, including dealing with conflicts of interest.  Canadian securities regulations require us to take reasonable steps to identify and respond to existing and potential material conflicts of interest, and in certain circumstances, to provide information regarding these conflicts. The Conflicts of Interest Policy is posted on OFIC’s website at www.oceanfrontwealth.com.

 

Addressing Potential or Actual Conflicts of Interest

The Canadian securities regulators have guided the conflict of interest determination and disclosure to depend on facts and circumstances. A conflict, potential or perceived, must be considered material, reasonable, and demonstrate professional judgment.

As a registered firm under Canadian securities laws, OFIC is required to take reasonable steps to identify existing material conflicts of interest and material conflicts that OFIC expects will arise between the firm and a client. A conflict of interest can generally be described as any circumstance where the interests of different parties, such as the interests of OFIC and a client, are inconsistent or divergent.

If a conflict arises that may impact our services, we will address the conflict in accordance with our fiduciary obligations, our policies and procedures, and regulatory guidelines.

Under applicable securities laws, if a client, acting as a reasonable investor, would expect to be informed of a particular conflict of interest, OFIC is required to disclose and shall disclose, in a timely manner, the nature and extent of the conflict of interest to that client. In such instances, OFIC would also be required to implement measures and procedures to control the particular conflict of interest.  These measures and policies will form part of the disclosure made by OFIC to the clients in such circumstances.

OFIC is required to avoid all conflicts of interest prohibited by law.  If there is no reasonable response, OFIC should avoid any conflict if it is sufficiently contrary to the clients’ best interests.

Overview of Client Focused Reforms and Conflicts of Interest Disclosure

The Canadian securities regulators are enhancing their rules to better support clients’ interests.  These enhanced rules are based on the fundamental concept that clients’ interests must always come first.

At OFIC, our goal is to have the clients’ best interest at the forefront of everything we do. These enhanced rules require us to disclose any conflict and offer greater visibility into our efforts to always act in your best interest.

Define Conflicts of Interest

What exactly is a conflict of interest? A conflict of interest refers to an influence that may affect our decision in our capacity as Portfolio Manager in managing your Account. Conversely, it may affect the decision you, as the client, would make regarding your Account.

How We Manage Conflicts of Interest

In general, we deal with and manage relevant conflicts as follows:

  • Avoid: This includes avoiding conflicts that are prohibited by law as well as conflicts that cannot effectively be addressed;
  • Control: We manage acceptable conflicts through means such as policies and procedures, and
  • Disclose: Providing you with information about conflicts, allowing you to assess their significance when evaluating our services.

At OFIC, we have adopted policies and procedures to assist in identifying conflicts of interest. Conflicts deemed too significant to be addressed through controls or disclosures are avoided. If the conflict cannot be avoided, we will control the conflict with policies and processes.  Where it will assist in managing the conflict, we will disclose to you and explain how we manage the conflict in your best interest. This disclosure will help you understand the nature of your relationship with OFIC.

Identified Material Conflicts of Interest

OFIC has outlined its existing or reasonably foreseeable potentially material conflicts of interest and its response to such conflicts. OFIC has also outlined potential conflicts that are avoided, providing greater clarity on how we put the clients’ best interests first.

Avoid                                                                                                                       

  1. Complete Control over client’s Financial Affairs
  • We do not accept such appointments, such as POA, Trustee, Executor, etc.
  1. Subjective Security Pricing
  • We rely on independent third-party data feeds for security pricing.

Avoid and Control

  1. Influence using Monetary / Non-Monetary Gifts

Registrants may receive monetary or non-monetary gifts or benefits from issuers, service providers, etc., that could compromise the clients’ best interest obligation.

  • Adoption of a gift policy, set at a nominal value, with explicit guidelines regarding receiving and/or issuing monetary/non-monetary gifts.
  1. Personal Trading
  • A Personal Trading Policy that requires pre-authorization of access persons before executing the trade.
  • OFIC further manages this conflict as client orders are always given priority over employees when allocating fills.

Avoid, Control and Disclose

  1. Discretionary Authority over Client Accounts

OFIC will have discretionary authority over your managed Account. Consequently, OFIC may make investment decisions without your prior approval or knowledge.

  • Discretionary authority imposes a fiduciary duty on OFIC, resulting in the highest standard of legal and ethical responsibilities.
  • Investments in related entity products will be fully disclosed, documented in writing, and obtain client approval before investing.
  • Certain types of investments are prohibited and will be identified appropriately and avoided.
  • OFIC will adjust the investment management cost schedule for investments in related products so that OFIC is not compensated at both the product and account level.
  1. Other Conflicts of Interest that May Arise from Time to Time
  • OFIC will continue to take appropriate measures to identify and respond to conflicts of interest and resolve them in the clients’ best interest.
  1. Outside Business Activities (“OBA”)

Registrants may be involved in non-business activities or hold positions of influence within the community. These OBAs could dilute the time and focus of our ability to service the client continuously.  Specific activities may result in an individual having access to material non-public information. Other activities may allow an individual to exploit their position of influence, especially if the OBA is related or involves activities similar to OFIC’s activities.

  • Each Registrant is required to fully disclose to the Chief Compliance Officer potential OBAs before participating in the OBA.
  • Each Registrant is required to disclose all OBAs to the securities regulator fully.
  • Use of restricted lists if OFIC is in possession of any material non-public information.
  • Prohibition of certain OBAs if perceived as an actual conflict.

Control and Disclose

  1. Shareholder of a Reporting Issuer

A Permitted Individual of OFIC is a shareholder of a reporting issuer.

  • OFIC manages this conflict by having specific policies and procedures regarding trading in the reporting issuer.
  • OFIC further manages this conflict by providing disclosures on the specific nature of the conflict and such issues.
  • OFIC will not act on any reporting issuer information stemming from the Permitted Individual’s relationship with the issuer.
  1. Marketing, Misleading or Inaccurate Performance Information
  • OFIC requires thorough review and approval from the Chief Compliance Officer on all marketing materials before distribution.
  • All marketing materials include the required disclaimers and/or disclosures.
  1. Portfolio Management and Performance Fees
  • A policy that all fees for portfolio management and performance fees are disclosed and agreed by the client at the time of account opening, including fees within proprietary funds, if applicable.
  • OFIC provides an annual report on charges and compensation to all clients.
  1. Pricing and Unit Holder Account Errors

Unexpected circumstances or situations may arise where atypical costs are incurred.  OFIC must decide on absorbing those costs or passing those costs on to the client. Examples of atypical costs are trading errors, the use of service providers to correct settlement or NAV errors, or interest charges resulting from a miscommunication between OFIC and the client.

  • OFIC has a policy regarding the fairness and treatment of errors.
  • OFIC recognizes its fiduciary obligation to put clients’ interests first.
  • All material errors must be presented to the Board of Directors for appropriate resolution.
  1. Referral Arrangements
  • Full written disclosure to the client of all referral arrangements before initiating any transactions.
  • Ensure that all referral arrangements take into account the clients’ best interest.
  1. Relationship with Related/Connected Issuers

“Related Issuer” is a person or company related to us if:

  • the person or company issuing securities is an influential security holder of us,
  • we are an influential security holder of the person or company issuing securities, or
  • we, and the person or company issuing securities, are each a related issuer of the same third person or company.

“Connected Issuer” means an issuer or selling security holder distributing securities where the issuer or selling security holder, or a related issuer of the issuer or selling security holder, has a relationship with any of the following persons or companies that may lead a reasonable prospective purchaser of the securities to question if we are independent of the issuer or selling security holder for the distribution:

  • us;
    • a related issuer to us;
    • a director, officer or partner employed by us; or
    • a director, officer, or partner of a related issuer to us.

OFIC provides financial advice to clients and/or offers other financial services through related entities and earns compensation by selling products, i.e., pooled funds and services, i.e., portfolio management that may result in a conflict between the client’s interests OFIC’s interests and any of its affiliates.

  • Disclose all related entities.
  • Disclose all fees and compensation arrangements for OFIC.
  • Ensure all recommendations and investment transactions are suitable for the client.
  1. Soft Dollar / Best Execution

Soft Dollar arrangements occur when brokers have agreed to provide other services relating to research and trade execution at no cost to OFIC in exchange for business derived from client accounts.  OFIC currently does not have any Soft Dollar arrangements. However, OFIC may enter into Soft Dollar arrangements when it determines that such arrangement offers Best Execution and/or the value of the research and other services exceed any incremental commission costs.

  • OFIC has adopted a Soft Dollar arrangement / Best Execution Policy.
  • Upon request, OFIC will disclose to the client when it enters into any Soft Dollar arrangement.
  • If OFIC utilizes Soft Dollar arrangements, it will assess whether execution terms still provide practical benefits to the clients.
  1. Fair Allocation

OFIC may need to allocate investment opportunities or expenses associated with investments between clients and/or employees.

  • Adoption, disclosure, and implementation of a Fair Allocation Policy.
  • Adoption of internal Code of Ethics / Personal Trading for all employees.
  • Implementation and monitoring of employee account trading/activities in accordance with internal Code of Ethics / Personal Trading.
  1. Third-Party Compensation
  • A policy whereby clients who have products in their accounts that generate trailing commissions do not pay investment management fees for the same products.  Disclosures are provided to the client at the time of account opening.
  1. Affiliations

OceanFront Wealth Inc. (“OFW”) is the parent company of OFIC.  Through its subsidiaries (“OFW Group”), OFW provides financial services such as financial planning and insurance services.

OFIC may provide advice or services related to the purchase or sale of securities of issuers related to us. Our current list of related issuers include:

  • Value Partners Investments