Conflicts of Interest Disclosures
Introduction
Conflicts of interest exist in all businesses and in all financial services organizations. We live in a complicated world and this is reflected everywhere, nevertheless, we recognise that our business is above all based on a bond of trust between us and our clients and we are duty bound to identify and manage those conflicts.
Accordingly, we have put in place a number of policies, procedures and processes designed to identify, evaluate and manage these conflicts of interest. The purpose of this Conflicts of Interest Policy (the Policy) is to identify in a summary form those conflicts which we experience as an organization and to describe how we address the challenges such conflicts impose on us. The Policy applies in respect of all activities undertaken by employees of Roth Canada, Inc. (“Roth Canada”).
Identification of Conflicts of Duty and Interest
We recognise that, in certain circumstances, conflicts can arise between Roth Canada, its directors, officers and employees and other related companies. Conflicts of interest or potential conflicts of interest may arise, in particular, where:
• Roth Canada acts on your behalf and on behalf of another client in respect of a trade in the same security.
• The proprietary trading interests of Roth Canada or the personal investment interests of its employees may conflict with your interests with respect to the purchase and/or sale of a security.
• Roth Canada provides services to you where it is privy to or has other knowledge about the securities you are considering buying or selling.
In identifying the potential types of conflicts that may arise, and whose existence may entail a material risk of damage to your interests. Roth Canada takes into account whether it or any affiliate:
• is likely to make a financial gain, or avoid a financial loss, at your expense;
• has an interest in the outcome of a service provided to you or a transaction carried out on your behalf, which is different than yours;
• has a financial or other incentive to favour the interest of another client over your interests; or
• receives or will receive from a person other than you an inducement in relation to a service provided to you, in the form of monies, goods or services, other than the standard commission or fee for that service.
Management of conflicts of interest
To prevent and minimize the risk of such conflicts giving rise to a risk of damage to your interests and the interests of our other clients we have adopted a number of internal systems, procedures and controls, as follows:
• personal account dealing restrictions for all employees and associates;
• internal disclosure requirements which cover the giving and accepting of gifts or other inducements relating to our business for all employees and associates;
• removal of any direct link between the remuneration of employees and associates engaged in one activity and the remuneration of different employees or associates engaged in another activity, where a conflict of interest may arise;
• internal segregation of functions where their performance by the same person would increase the risk of a conflict arising;
• the maintenance of a policy of independence requiring our directors, officers and employees to act in the best interests of you and our other clients and to disregard any conflicts that may arise;
• measures to prevent or limit any person from exercising inappropriate influence over the way in which an employee or associate carries out its services or activities;
• restrictions on access to data stored electronically or in hard-copy form and procedures preventing or controlling the exchange of information between employees and associates where there is a risk of a conflict of interest; and
• our directors, officers and employees are required to maintain confidentiality of all information entrusted to them, except where disclosure is required by law. Further, employees are not permitted to use such information for their personal gain.
Acting for or on behalf of Clients
Where Roth Canada agrees to act for or on behalf of a client, Roth Canada will execute orders in accordance with its policies and procedures that comply with relevant rules and regulations in relation to transactions which are executed for or on behalf of its clients. Such policies and procedures are designed to ensure that actual or potential conflicts of interest do not influence the decisions of Roth Canada’s registered individuals and that any conflicts are appropriately managed.
Roth Canada has procedures and arrangements which provide for the prompt, fair and expeditious execution of client orders, relative to other orders or the trading interests of Roth Canada. These procedures allow for the execution of other comparable orders depending on when they are received by Roth Canada.
Roth Canada’s procedures are established to ensure that orders executed on behalf of its clients are promptly, and accurately allocated and recorded, and that it carries out other comparable orders sequentially in the same manner unless the characteristics of an order or prevailing market conditions make this impracticable, or the interests of a client requires otherwise.
Roth Canada’s procedures are established to ensure that Roth Canada, its directors, officers, employees and affiliates do not misuse information relating to a client’s pending orders.
Roth Canada will not carry out a client order or a transaction for another Client Account in aggregation with the client’s order unless the following conditions are met:
• it is unlikely that the aggregation of the client orders will disadvantage any client whose order is so aggregated; and
• it must be disclosed to each client whose order is to be so aggregated that such aggregation may not always benefit all clients in the same way.
Roth Canada’s order allocation policy is established to ensure the fair allocation of aggregated orders and transactions, including how the volume and the price of orders determines the allocations and the treatment of partial executions. When Roth Canada aggregates a client order with one or more other client orders and the aggregated order is partially executed, it allocates the related trades in accordance with its order allocation policy.
Disclosures
Where we do not consider that these arrangements will work to a client’s advantage as a result of a potential conflict, then we will typically disclose the conflict to the client to determine if they want to proceed with the applicable trade.
This type of disclosure may be made verbally or in writing before a trade is instituted on behalf of the applicable client. Specific disclosure regarding any other conflicts that we identify that may not work to a client’s advantage will also be brought to the client’s attention.
If necessary, Roth Canada may not be able to act for a client in a particular situation due to the potential conflicts involved.