Relationship Disclosure
1.0 INTRODUCTION AND BACKGROUND. Canadian securities laws require Altema Asset Management Inc. (‘Altema’) to provide you with a disclosure document that describes our relationship with you (“Client” or “you”); the services and products we offer; the fees and expenses we charge you; how we attempt to mitigate conflicts of interest, the risks that you should consider when making investments and other important information for you to consider. If there are any material changes to the Relationship Disclosure Document, we will provide you with notice of its update. If you have any questions about this document, please contact Altema directly at:
201 Portage Ave, 18th Floor
Winnipeg MB R3B 3K6
Phone: 833-658-7600
Email: info@altemafunds.com
2.0 ABOUT ALTEMA. Altema is a registered Portfolio Manager, Investment Fund Manager and Exempt Market Dealer in Manitoba, Newfoundland & Labrador and Ontario and is registered as a Portfolio Manager and Exempt Market Dealer in British Columbia. Altema is the manager of the Altema Diversified Equity Market Neutral Fund(the ‘Fund’). The Fund seeks to provide consistent long-term capital appreciation and to provide Unitholders with an attractive risk-adjusted rate of return with less volatility than traditional equity markets and low correlation to major equity markets. Altema offerings to high-net worth individuals and families, as well as to corporations and trusts, are by way of (i) discretionary portfolio management services; and/or (ii) direct investments in the Fund.
2.1 DESCRIPTION OF SERVICES. As a portfolio manager Altema provides discretionary advice as to the investments in an account established by a Client. As an exempt market dealer Altema distributes units of its Fund pursuant to the provisions of National Instrument 45-106 Prospectus Exemptions. Altema makes a determination that every investment decision it makes is suitable for its Clients, and which places the Client’s interests first. This suitability determination is made on the basis of the Client’s personal and financial circumstances, investment needs and objectives, risk profile, investment knowledge and investment time horizon.
3.0 INVESTING IN RELATED FUNDS. Altema invests client accounts in, and distributes units of, the Fund, which is a related and connected issuer to Altema. The suitability determination conducted by Altema and its representatives will not consider the larger market of non-proprietary products or whether those non-proprietary products would be better, worse, or equal in meeting the client’s investment needs and objectives. Clients will be invested in investment funds managed by Altema and the Client consents to such purchase pursuant to the Investment Management Agreement (IMA). As the Investment Fund Manager and Portfolio Manager of the Fund, Altema will receive compensation from the Fund, primarily in the form of management and performance fees.
3.1 ALTEMA’S DUTIES. Altema has an obligation at all times to assess whether a purchase or sale of a security is suitable for the Client, and places the Client’s interests first, prior to recommending a security or executing a transaction on the Client’s behalf. Altema shall review the Client’s personal and financial circumstances, investment needs and objectives, risk profile, investment knowledge and investment time horizon, and based upon the information provided by the Client (the “Client Information”), shall gain an understanding of the Client’s personal and financial circumstances, investment needs and objectives, risk profile, investment knowledge and investment time horizon. For portfolio management Clients, pending review of the Client Information, assets deposited into the account may be invested in short term investments, provided that Altema may cause such assets to be invested in such other investments as it deems appropriate in its discretion. Upon completion of its review of the Client Information, Altema shall proceed to implement its investment plan unless the Client has otherwise instructed Altema in writing. For portfolio management Clients, the specific risks relating to the investments held by the Client will be outlined in the Client’s Investment Policy Statement.
4.0 YOUR ROLE IN OUR RELATIONSHIP. The Client confirms the accuracy and completeness of the Client Information disclosed to Altema from time to time and acknowledges that such information is material to and will be relied upon by Altema in providing its services to the Client. The Client will inform Altema, in writing, of any material changes that occur from time to time in the Client’s Information. You confirm that the information you provide us verbally, in writing, electronically or by any other means is true and complete. You agree to notify us of any change in your Client Information.
5.0 CUSTODIAN SERVICES.
For portfolio management Clients, your assets are held in Canada in a fully disclosed, segregated account at Interactive Brokers Canada Inc. (“IB”). IB’s offices are located at 1800 McGill College Avenue, Suite 2106, Montreal, Quebec. IB is a member of and regulated by the Canadian Investment Regulatory Organization (“CIRO”). IB is a qualified Canadian Custodian under applicable securities laws. IB is independent of Altema. The assets in your IB account are not co-mingled with other Clients’ assets. IB is a member Canadian Investor protection Fund (“CIPF”). CIPF, subject to condition and limits, safeguards your assets from the insolvency or bankruptcy of a CIRO member firm. You can find more information regarding CIPF at https://www.cipf.ca.
Your assets are subject to a risk of loss: (i) if IB becomes bankrupt or insolvent and CIPF coverage is insufficient to safeguard all your assets held by IB; (ii) if there is a prolonged and/or unrecoverable breakdown in IB’s information technology systems; and, (iii) due to the fraud, willful or reckless misconduct, negligence or error of IB. Altema has reviewed IB’s reputation, financial stability, relevant internal controls and ability to deliver custodial services and has concluded that IB’s system of controls and supervision is sufficient to manage risks of loss to your assets in accordance with prudent business practice.
6.0 ACCOUNT STATEMENTS AND REPORTING. For exempt market dealer Clients, you will receive a confirmation statement after making any investment and a quarterly statement summarizing your investment in the Fund.
For portfolio management Clients, you will receive a monthly statement from IB in any month in which there is a transaction which shall contain the name, quantity and total market value of each security held in your IB account, along with the total market value of all cash and securities held in the Client custodial account. If there were no transactions, you will only receive a quarterly report from IB.
For all Clients, on an annual basis at the end of each calendar year Altema will provide a summary of all compensation paid to Altema, respectively, regarding your account(s) for the preceding year and Altema will provide a report on the investment performance within your account.
7.0 FEES FOR PORTFOLIO MANAGEMENT SERVICES. In consideration of the portfolio management services to be rendered by Altema, the Client shall pay or cause to be paid to Altema a Portfolio Management Fee, plus any applicable taxes, including GST, calculated in accordance with the Fee Schedule attached as Schedule ‘A’ of your IMA you have signed with Altema. The Client is also responsible for any trading commissions or account fees as may be charged by the Custodian, and which has been disclosed in the Custodian’s account opening documentation. The Client directs and authorizes the Portfolio Management Fees payable to Altema hereunder to be withdrawn, when due, from the Account or from any other account in respect of which the Client and Altema have entered into an IMA.
From time to time, Altema may invest in ETFs as part of its Investment Management Services. Fees may also be charged within ETFs invested within the Client’s account, which fees will vary based upon the constituent ETFs invested within the account and which typically consist of fees payable to service providers of the ETF and expenses associated with the operations of the ETF. These fees are not charged to the client account and will not be reflect on client statements as they are embedded within the applicable ETF.
If we invest your account in investment funds managed by Altema, Altema will ensure that there is no duplication of management fees payable by you.
7.1 FEES FOR THE ALTEMA FUND. The Fund contains management and performance fees charged within the Fund as follows:
Series | Management Fee | Performance Fee |
Series A Units | 2.5% per annum | 20% subject to HWM |
Series F Units | 2.0% per annum | 20% subject to HWM |
Series I Units | 2.0% per annum or as otherwise agreed to by the Manager and the holders of Series I Units | 20% subject to HWM |
Series O Units | 2.0% per annum or as otherwise agreed to by the Manager and the holders of Series I Units | 20% or as otherwise agreed to by the Manager and the holders of Series O units, subject to HWM |
A performance fee is calculated and accrued daily in respect of each Series of Units outstanding prior to giving effect to redemptions on such date in an amount equal to the percentage specified above of the positive amount by which the Adjusted Net Asset Value of each such Unit on the Performance Valuation Date exceeds the High Water Mark of such Unit. The Performance Fee in respect of a fiscal year is payable on the last business day of such fiscal year, except in respect of Units that are redeemed prior to the last business day of the fiscal year. If any Units are redeemed prior to the last business day of the fiscal year, a Performance Fee will be payable on the relevant Redemption Date in respect of each such Unit in the same manner as described above.
High Water Mark for a Unit as at any date means, initially, its subscription price, and thereafter will be adjusted from time to time to equal its Net Asset Value immediately following the payment of a Performance Fee in respect of that Unit. The High Water Mark of a Unit will be appropriately adjusted in the event of a consolidation, subdivision, redesignation or conversion of Units.
These fees are included in the net performance of the Fund.
7.2 IMPACT OF FEES ON INVESTMENT RETURNS.Ongoing fees can reduce the value of your investment portfolio. This is particularly true over time, because not only is your investment balance reduced by the fee, but you also lose any return you would have earned on that fee. Over time, even ongoing fees that are small can have an impact on the value of your investment portfolio.
8.0 INVESTMENT RISKS TO CONSIDER WHEN MAKING AN INVESTMENT DECISION
8.1 LIQUIDITY. The Fund is an exempt security and does not provide daily liquidity.
8.2 DERIVATIVES.Altema may from time-to-time employ the use of derivatives as part of its trading strategy. Derivative products are highly specialized instruments that require investment techniques and risk analyses which may differ from those associated with stocks and bonds. Derivatives are subject to a number of risks, such as interest rate risk and market risk. They also involve the risk of mispricing or improper valuation, the risk that changes in the value of the derivative may not correlate perfectly with the underlying reference security and the risk that the counterparty may not honour its obligation. Derivatives may be highly illiquid and the use of derivatives could result in a loss of more than the principal amount invested.
8.3 LEVERAGING/BORROWING TO INVEST. Using borrowed money to finance the purchase of securities involves greater risk than a purchase using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remain the same even if the value of the securities purchased declines. Borrowing money to invest is risky. The Client acknowledges borrowing to invest should only be considered if the Client has stable income, is comfortable with taking risk, is comfortable taking on debt to buy investments that may go up or down in value and is investing for the long term. Conversely, the Client acknowledges that borrow to invest should not be considered if the Client has a low tolerance for risk, is investing for a short period of time, intends to rely on income from investments to pay living expenses or repay the loan.
8.4 ALTEMA FUNDS. The Fund is an exempt security, which are by their nature investments that have a greater deal of risk than other investments. Investment in an exempt security is not guaranteed in any way. There is no market for the exempt securities offered by Altema and such exempt securities are subject to certain restrictions on re-sale and you may be unable to dispose of such exempt securities.
8.5 RISKS ASSOCIATED WITH INVESTMENTS. Attached as schedule ‘A’ is a list of risk factors associated with investments in the Fund and for investing in general.
9.0 USE OF BENCHMARKS. Altema will provide relevant benchmark comparisons in our individual Client portfolios, upon request.
10.0 FAIRNESS IN ALLOCATIONS. Altema confirms that in the event that securities are purchased for the accounts of more than one Client of Altema (a ‘block trade’) and an insufficient number of securities are available to satisfy the purchase order, the securities available will be allocated to the extent possible pro rata to the size of the Client’s accounts taking into consideration the Client Information.
11.0 SOFT DOLLARS:Altema does not enter into any soft dollar arrangements.
12.0 PRIVACY. Altema will use its best efforts to ensure that it does not disclose to any third parties the confidential information of its clients, except as authorized and required to provide clients with their desired services. Altema uses Microsoft Office 365’s OneDrive Cloud service to store all electronic files. Your personal data may be stored at a secure location in Canada or the United States and may be subject to review by Canadian or United States regulators. For further information, please discuss with the Privacy Officer at info@altemafunds.comor by calling 833-658-7600. Altema’s privacy policy can be found on the website at: altemafunds.com
13.0 CONFLICTS OF INTEREST. From time to time Altema may be involved in matters where its interests are conflicted to the interests of its Clients. Altema has developed policies and procedures in order to identify, assess and address conflict and potential conflict of interest matters in the best interests of clients. Once a conflict has been identified Altema has developed guidelines that involve taking steps to remove the conflict, or, if not possible, to take steps to minimize the impact of the conflict and provide appropriate disclosure to all affected parties. See schedule B for the Conflicts of Interest Statement of Disclosure.
14.0 COMPLAINT HANDLING AND DISPUTE RESOLUTION. If the Client has a complaint or concern regarding Altema’s services, the Client is to forward these to the Altema Chief Compliance Officer. Altema will provide an initial response within 5 days of receipt, will advise you of the availability ofthe Ombudsman for Banking Services and Investments (“OBSI”), a free and independent dispute resolution service, and will provide you with a final decision or proposed resolution within 90 days of receipt. Should the Client not be satisfied with Altema’s decision or proposed resolution, Altema will then advise that the Client may be eligible to use OBSI. OBSI may be contacted by email at ombudsman@obsi.ca or by telephone at 1-888-451-4519. OBSI works confidentially, in an informal manner and a lawyer is not required. OBSI will investigate your matter and may interview the Client and representatives of Altema. Altema will cooperate with OBSI’s investigations. OBSI will then provide its recommendation which is not binding on Altema. For more information regarding OBSI, please view the OBSI website at www.obsi.ca.
15.0 TRUSTED CONTACT PERSON AND TEMPORARY HOLDS. By choosing to provide information about a trusted contact person, you authorize Altema to contact the trusted contact person and disclose information about your accounts to that person in the following circumstances:
(a) possible financial exploitation of yourself;
(b) concerns about your mental capacity as it relates to your financial decision making or lack of decision making;
(c) the name and contact information of any of the following:
- a legal guardian of yourself,
- an executor of an estate under which you are a beneficiary;
- a trustee of a trust under which you are a beneficiary, or
- any other personal or legal representative of yourself; or
(d) your current contact information.
Temporary Holds. A temporary hold means a hold that is placed by Altema on the purchase or sale of a security on your behalf or on the withdrawal or transfer of cash or securities from your account. Altema will only place a temporary hold on your accounts if we reasonably believe that:
(a) you are a vulnerable Client; and
(b) you have been financially exploited, financial exploitation is occurring, has been attempted or will be attempted; or
(c) we reasonably believe that you do not have the mental capacity to make decisions involving financial matters.
Should a temporary hold be placed on your accounts we will provide you notice of the temporary hold and the reasons for the temporary hold as soon as possible. We will continue to review the relevant facts on an ongoing basis in order to determine if continuing the hold is appropriate. Within 30 days of placing the temporary hold and, until the hold is revoked, we will update you on a monthly basis to inform you if we have revoked the temporary hold or provide you with notice of our decision to continue the hold, and the reasons for that decision.
SCHEDULE A - RISKS ASSOCIATED WITH INVESTMENTS
You could lose all the money you invest. Only investors who can reasonably afford the risk of loss of their entire investment should consider the purchase of units in the Fund. Certain risks associated with the purchase of Units are described below.
Risks Associated with an Investment in the Altema Funds
Certain US Taxation Risk
Pursuant to new US tax rules, Unitholders of the Fund may be required to provide identity and residency information to the Fund, which may be provided by the Fund to US tax authorities in order to avoid a US withholding tax being imposed on US and certain non-US source income and on proceeds of disposition received by the Fund or on certain amounts (including distributions) paid by the Fund to certain Unitholders.
Changes in Investment Strategy
The Manager may alter the Fund’s investment strategies and restrictions without prior approval by Unitholders to adapt to changing circumstances.
Dependence of Manager on Key Personnel
The Manager will initially depend, to a great extent, on the services of Salvatore (Sam) Pellettieri. The loss of such individual for any reason could impair the ability of the Manager to perform its management activities on behalf of the Fund.
Fees and Expenses
The Fund is obligated to pay fees, brokerage commissions and legal, accounting, filing and other expenses regardless of whether or not it realizes profits.
General Investment Risk
The Net Asset Value of the Fund and the Series Net Asset Value of the Units will vary directly with the market value and return of the investment portfolio of the Fund. There can be no assurance that the Fund will not incur losses. There is no guarantee that the Fund will earn a return.
Income
An investment in the Fund is not suitable for an investor seeking cash distributions from such investment.
Lack of Independent Experts Representing Unitholders
Each prospective investor should consult his or her own legal, tax and financial advisors regarding the desirability of purchasing Units and the suitability of investing in the Fund.
Limited Ability to Liquidate Units
There is no formal market for Units and one is not expected to develop. This offering of Units is not qualified by way of prospectus, and consequently the resale of Units is subject to restrictions under applicable securities legislation. In addition, Units may not be assigned, encumbered, pledged, hypothecated or otherwise transferred except with the prior written consent of the Manager, which may be withheld in the Manager’s sole and absolute discretion. Accordingly, it is possible that Unitholders may not be able to resell their Units other than by way of redemption of their Units at any Valuation Date which redemption will be subject to the limitations described under “Redemptions”. Unitholders may not be able to liquidate their investments in a timely manner. As a result, an investment in the Units is suitable only for sophisticated investors who do not require liquidity for their investment and are able to bear the financial risk of the investment for an extended period of time.
Nature of Units
The Units are neither fixed income nor equity securities. An investment in Units does not constitute an investment by Unitholders in the securities included in the portfolio of the Fund. Unitholders will not own the securities held by the Fund by virtue of owning Units of the Fund. Unitholders will not have the statutory rights normally associated with ownership of shares of a corporation including, for example, the right to bring “oppression” or “derivative” actions.
Not a Public Mutual Fund
The Fund is not subject to the restrictions placed on public mutual funds to ensure diversification and liquidity of the Fund’s portfolio.
Not a Trust Company
The Fund is not a trust company and, accordingly, is not registered under the trust company legislation of any jurisdiction. Units are not “deposits” within the meaning of the Canada Deposit Insurance Corporation Act (Canada) and are not insured under provisions of that statute or any other legislation.
Operating History for the Fund
Although persons involved in the management of the Fund and the service providers to the Fund have had long experience in their respective fields of specialization, the Fund had no operating or performing history before October 2018. Investors should be aware that the past performance by those involved in the investment management of the Fund should not be considered as an indication of future results.
Possible Effect of Performance Fees
The Manager may receive a Performance Fee based on the performance of the Fund’s investment portfolio. Such Performance Fee arrangements may create an incentive to make investments that are riskier or more speculative than would be the case if such arrangements were not in effect. In addition, because a performance-based fee will be calculated on a basis which includes unrealized appreciation of portfolio assets, it may be greater than if such fee were based solely on realized gains.
Possible Effect of Redemptions
Substantial redemptions of Units from the Fund could require the Fund to liquidate positions more rapidly than otherwise desirable to raise the necessary cash to fund redemptions and achieve a market position appropriately reflecting a smaller asset base. Such factors could adversely affect the value of the Units redeemed and of the Units remaining.
Possible Negative Impact of Regulation of Hedge Funds
The regulatory environment for hedge funds is evolving and changes to it may adversely affect the Fund. To the extent that regulators adopt practices of regulatory oversight in the area of hedge funds that create additional compliance, transaction, disclosure or other costs for hedge funds, returns of the Fund may be negatively affected. In addition, the regulatory or tax environment for derivative and related instruments is evolving and may be subject to modification by government or judicial action that may adversely affect the value of the investments held by the Fund. The effect of any future regulatory or tax change on the portfolio of the Fund is impossible to predict.
Potential Indemnification Obligations
Under certain circumstances, the Fund might be subject to significant indemnification obligations in favour of the Manager and other service providers. The Fund will not carry any insurance to cover such potential obligations and, to the Manager’s knowledge, none of the foregoing parties will be insured for losses for which the Fund has agreed to indemnify them. Any indemnification paid by the Fund would reduce the Net Asset Value of the Fund and, by extension, the Series Net Asset Value of the Units.
Potential Liability of Unitholders
The Trust Agreement provides that no Unitholder shall be subject to any liability whatsoever, in tort, contract or otherwise, to any person in connection with the investment obligations, affairs or assets of the Fund and all such persons shall look solely to the Fund’s assets for satisfaction of claims of any nature arising out of or in connection therewith. There is a risk, which is considered by the Manager to be remote in the circumstances, that a Unitholder could be held personally liable, notwithstanding the foregoing statement in the Trust Agreement, for obligations of the Fund to the extent that claims are not satisfied out of the assets of the Fund. It is intended that the operations of the Fund will be conducted in such manner so as to minimize such risk. In the event that a Unitholder should be required to satisfy any obligation of the Fund, such Unitholder will be entitled to reimbursement from any available assets of the Fund.
Reliance on Manager
Unitholders will be relying on the ability of the Manager to actively manage the Fund. The Manager will make the actual trading decisions upon which the success of the Fund will depend significantly. No assurance can be given that the trading approaches utilized by the Manager will prove successful. There can be no assurance that satisfactory replacements for the Manager will be available, if the Manager ceases to act as such. Termination of the Manager will expose investors to the risks involved in whatever new investment management arrangements can be made.
Tax Liability
The Fund is not required to, and does not intend to, distribute its income in cash. If the Fund has taxable income for Canadian federal income tax purposes for a fiscal year, such income will be distributed to Unitholders in accordance with the provisions of the Trust Agreement and reinvested in additional Units unless a Unitholder specifically requests that distributions be paid in cash. Unitholders will be required to include all such distributions in computing their income for tax purposes, even if cash may not have been distributed to such Unitholders. Since Units may be acquired or redeemed on a monthly basis and distributions of taxable income of the Fund to Unitholders are anticipated only to be made on annual basis, such distributions to a particular. Unitholder may not correspond to the economic gains and losses which such Unitholder may experience.
Unitholders not Entitled to Participate in Management
Unitholders are not entitled to participate in the management or control of the Fund or its operations. Unitholders do not have any input into the Fund’s trading. The success or failure of the Fund will ultimately depend on the indirect investment of the assets of the Fund by the Manager, with which Unitholders will not have any direct dealings.
Valuation of the Fund’s Investments
Valuation of the portfolio securities and other investments may involve uncertainties and judgmental determinations and, if such valuations should prove to be incorrect, the Net Asset Value of the Fund and the Series Net Asset Value per Unit could be adversely affected. Independent pricing information may not at times be available regarding certain of the Fund’s securities and other investments. Valuation determinations will be made in good faith in accordance with the Trust Agreement.
Risks Associated with the Altema Funds Underlying Investments
Availability of Investment Strategies
The identification and exploitation of the investment strategies pursued by the Fund involves a high degree of uncertainty. No assurance can be given that the Manager will be able to locate suitable investment opportunities in which to deploy all of the Fund’s capital.
Commodity Price Risk
The price of commodities can be affected by a variety of factors, such as the global economy, weather, politics, and OPEC policy. The Manager employs a number of approaches to mitigate these risks.
However, there can be no assurances that losses due to unexpected commodity price fluctuations will not occur.
Composition of Portfolio
The composition of the securities held by the Fund, taken as a whole, may vary widely from time to time and may be concentrated by commodity, industry or geography, resulting in the securities held by the Fund being less diversified than anticipated. Overweighting investments in certain sectors or industries involves risk that the Fund will suffer a loss because of declines in the prices of securities in those sectors or industries.
Concentration
To the extent that the Fund takes concentrated positions, there is less diversification and therefore greater risk of loss to the Fund from any one position.
Counterparty and Settlement Risk
Although the counterparties with which the Fund effect transactions are primarily regulated entities and are subject to independent credit evaluation and regulatory oversight, a large majority of the markets in which the Fund will effect its transactions may be “over the counter” or “interdealer” markets. This exposes the Fund to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the contract or because of a credit or liquidity problem, thus causing the Fund to suffer a loss. In addition, in the case of a default, the Fund could become subject to adverse market movements while replacement transactions are executed. Such “counterparty risk” is accentuated for contracts with longer maturities where events may intervene to prevent settlement, or where the Fund has concentrated its transactions with a single or small group of counterparties. The Fund is not restricted from dealing with any particular counterparty or from concentrating any or all of its transactions with one counterparty, however the Manager intends to effect all or substantially all of its transactions with Canadian Schedule I banks.
Moreover, neither the Fund nor the Manager has an internal credit function which evaluates the creditworthiness of its counterparties. The ability of the Fund to enter into an agreement with any one or number of counterparties, the lack of any meaningful and independent evaluation of such counterparties’ financial capabilities and the absence of a regulated market to facilitate settlement may increase the potential for losses by the Fund.
Currency and Exchange Rate Risk
It is the intention of the Fund to include currency instruments in its investment strategy. Gains or losses in different currency positions could be hedged or unhedged. Thus, changes in currency exchange rates may affect the value of the Fund.
Cyber Security Risk
With the increased use of technology in the course of business, the Funds are susceptible to operational, information security and related risks. Generally, cyber security incidents can result from deliberate attacks or unintentional events that threaten the integrity, confidentiality or availability of the Fund’s information resources. A cyber security incident includes, but is not limited to, gaining unauthorized access to the Funds’ electronic systems (e.g., through hacking or malicious software) to corrupt data, disrupt business operations or steal confidential or sensitive information, or may involve denial of service attacks which may cause system failures and disrupt business operations. Failures or breaches of the electronic systems of the Fund, Manager, other service providers (e.g., transfer agent, custodian, sub-custodians and prime brokers) or the issuers of securities in which the Fund invests have the ability to cause disruptions and negatively impact the Fund’s business operations. These disruptions could potentially result in financial losses, interference with the Fund’s ability to calculate their net asset values, impediments to trading, inability of the Fund to process transactions including redeeming units, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or compensation or additional compliance costs associated with corrective measures. Similar adverse consequences could result from cyber security incidents affecting the issuers of securities in which the Fund invests and counterparties with which the Fund engages in transactions. In addition, substantial costs may be incurred to prevent any cyber security incidents in the future. While the Funds have established business continuity plans and risk management systems seeking to address system breaches or failures, there are inherent limitations in such plans and systems and there is no guarantee that such efforts will succeed. Furthermore, the Funds cannot control the cyber security plans and systems of the Funds’ service providers or issuers of securities in which the Fund invests.
Custody Risk and Broker or Dealer Insolvency
The Fund may not control the custodianship of all of its securities. The Fund’s assets will be held in one or more accounts maintained for the Fund by its prime brokers or at other brokers. Such brokers are subject to various laws and regulations in various jurisdictions that are designed to protect their customers in the event of their insolvency. However, the practical effect of these laws and their application to the Fund’s assets are subject to substantial limitations and uncertainties. Because of the large number of entities and jurisdictions involved and the range of possible factual scenarios involving the insolvency of a prime broker or any sub-custodians, agents or affiliates, it is impossible to generalize about the effect of their insolvency on the Fund and its assets. Investors should assume that the insolvency of any of the prime brokers or such other service providers would result in the loss of all or a substantial portion of the Fund’s assets held by or through such prime broker and/or the delay in the payment of withdrawal proceeds.
Foreign Securities
Investments in obligations of foreign entities and instruments denominated in foreign currencies involve risks not normally associated with domestic investment such as currency fluctuations, investment controls and political events.
General Derivatives Risk
The Fund may use derivative financial instruments, including, without limitation, credit default swaps, options, futures, forwards, interest rate swaps, and cross-currency swaps and may use derivative techniques for hedging and for trading purposes, including for the purpose of obtaining the economic benefit of an investment in an entity without making a direct investment. The risks posed by such instruments and techniques, which can be extremely complex, include, in addition to the risks outlined above: (i) legal risks (the characterization of a transaction or a party’s legal capacity to enter into it could render the financial contract unenforceable, and the insolvency or bankruptcy of a counterparty could pre-empt otherwise enforceable contract rights); (ii) operations risk (inadequate controls, deficient procedures, human error, system failure or fraud); (iii) documentation risk (exposure to losses resulting from inadequate documentation); (iv) liquidity risk (exposure to losses created by inability to prematurely terminate the derivative or a cease trade order being issued in respect of the underlying security); (v) investment risk arising from the disappearance of any conversion premium due to premature redemptions, changes in conversion terms or changes in issuer’s dividend policy; and (vi) lack of liquidity during market panics.
Although a derivative hedge reduces risk, it does not eliminate risk entirely. Use of derivatives for hedging purposes involves certain additional risks, including (i) dependence on the ability to predict movements in the price of the securities hedged; (ii) imperfect correlation between movements in the securities on which the derivative is based and movements in the assets of the underlying portfolio; and (iii) possible impediments to effective portfolio management or the ability to meet short-term obligations because of the percentage of a portfolio’s assets segregated to cover its obligations. In addition, by hedging a particular position, any potential gain from an increase in value of such position may be limited.
General Economic and Market Conditions
The success of the Fund’s undertaking may be affected by general economic and market conditions, such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws, and national and international political circumstances. These factors may affect the level and volatility of securities prices and the liquidity of the Fund’s investments. Unexpected volatility or illiquidity could impair the Fund’s profitability or result in losses.
Interest Rate Risk
It is the intention of the Manager to hedge the majority of term interest rate risk through the use of short government positions and/or interest rate swaps. Hedging relationships can break down for large moves in underlying rates, and may require regular re-balancing. To the extent the Manager elects not to, or is unable to completely hedge our interest rate risk, the Fund may be adversely impacted by movements in interest rate risk.
Investment and Trading Risks in General
All trades made by the Manager risk the loss of capital. The Manager may utilize trading techniques or instruments, which can, in certain circumstances, maximize the adverse impact to which the Fund may be subject. No guarantee or representation is made that the Fund’s investment program will be successful, and investment results may vary substantially over time. Many unforeseeable events, including actions by various government agencies, and domestic and international economic and political developments may cause sharp market fluctuations which could adversely affect the Fund’s portfolio and performance.
Leverage
The Fund may use financial leverage by borrowing funds against the assets of the Fund. Leverage increases both the possibilities for profit and the risk of loss for the Fund. From time to time, the credit markets are subject to periods in which there is a severe contraction of both liquidity and available leverage. The combination of these two factors can result in leveraged strategies being required to sell positions typically at highly disadvantageous prices in order to meet margin requirements, contributing to a general decline in a wide range of different securities. Illiquidity can be particularly damaging to leveraged strategies because of the essentially discretionary ability of dealers to raise margin requirements, requiring leveraged strategy to attempt to sell positions to comply with such requirements at a time when there are effectively no buyers in the market at all or at any but highly distressed prices. These market conditions have in the past resulted in major losses to a substantial number of private investment funds. Should such conditions recur, Unitholders will be solely reliant upon the ability and experience of the Manager to limit losses to the Fund.
Liquidity of Underlying Investments
It is possible that the Fund may not be able to sell some of its investments without facing substantially adverse prices.
Options
It is the intention of the Fund to use options selectively as a return enhancement and portfolio hedging tool. In certain circumstances, the Fund may elect to sell options, as a part of its overall investment strategy. Selling call and put options is a highly specialized activity and entails greater than ordinary investment risk. The risk of loss when purchasing an option is limited to the amount of the purchase price of the option, however investment in an option may be subject to greater fluctuation than an investment in the underlying security. In the case of the sale of an uncovered option there can be potential for an unlimited loss. To some extent this risk may be hedged by the purchase or sale of the underlying security.
Portfolio Turnover
Portfolio securities may be sold without regard to the time they have been held when, in the opinion of the Manager, investment considerations warrant such action. While not expected, a higher rate of portfolio turnover would involve correspondingly greater expenses than a lower portfolio turnover rate.
Sector Risk
To the extent that the Fund has concentrated positions in any one sector of the economy, it will be subject to risk factors that are specific to that sector, thereby increasing overall risk to the Fund’s portfolio. For example, the assets, earnings and share values of companies involved in the natural resource industry are subject to risks associated with the world price of energy, forces of nature, economic cycles, commodity prices, exchange rates, political events, changes in fiscal regimes, unexpected results of exploration, drilling and reservoir performance and results surprises (earnings, drilling, strategies etc.).
Short Sales
Selling a security short (“shorting”) involves borrowing a security from an existing holder and selling the security in the market with a promise to return it at a later date. Should the security increase in value during the shorting period, losses will incur to the Fund. There is in theory no upper limit to how high the price of a security may go. Another risk involved in shorting is the loss of a borrow, a situation where the lender of the security requests its return. In cases like this, the Fund must either find securities to replace those borrowed or step into the market and repurchase the securities. Depending on the liquidity of the security shorted, if there are insufficient securities available at current market prices, the Fund may have to bid up the price of the security in order to cover the short position, resulting in losses to the Fund. Moreover, the borrowing of securities entails the payment of a borrowing fee. There is no assurance that a borrowing fee will not increase during the borrowing period, adding to the expense of the short sale strategy.
SCHEDULE B – CONFLICTS OF INTEREST
Overview of Client Focused Reforms and Conflicts of Interest Disclosures
The Canadian securities regulators are enhancing their rules to better support your interests as a client. These enhanced rules are based on the fundamental concept that your interests as a client must always come first. At Altema Asset Management Inc. (Altema) our goal is to be acting in our Clients’ best interests at all times and these new rules require us to provide enhanced disclosure so that you have greater visibility of our efforts to always act in your best interests.
About Altema Asset Management Inc.
Altema is a registered Portfolio Manager, Investment Fund Manager and Exempt Market Dealer in Manitoba, Newfoundland & Labrador and Ontario and is registered as a Portfolio Manager and Exempt Market Dealer in British Columbia.
Conflicts of Interest
A conflict of interest arises when an external influence has the potential to impact the decisions made by either us, as your portfolio manager, in managing your account or you, as the client, in making decisions about your account with us.
How We Manage of Conflicts of Interest
In general, we deal with and manage relevant conflicts as follows:
- Avoidance: 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.
- Disclosure: By providing you with information about conflicts, you are able to assess their significance when evaluating our services.
At Altema, we have adopted policies and procedures to assist in identifying conflicts of interest. Conflicts deemed too significant to be addressed through controls or disclosures, or that cannot be effectively managed in the best interests of the client, will be avoided. If the conflict cannot be avoided, we will control the conflict with policies and processes, and where it will assist in managing the conflict, we will provide disclosure to you in order to explain how we manage the conflict in your best interests. This disclosure will assist you in helping to understand the nature of your relationship with Altema.
Specific Material Conflicts of Interest
Our existing or reasonably foreseeable material conflicts of interest are described below. We are also disclosing those potential conflicts that we avoid, in order to better explain how we put the best interests of our clients first.
Potential Conflict of Interest |
Impact on the Conflict |
Addresses By |
How we Address |
Conflicts Arising from Proprietary Products
It is an inherent conflict of interest to recommend or purchase securities of issuers that are related, connected to or managed by the firm, to clients of the firm.
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If this conflict of interest is not managed properly, this conflict may result in clients being placed in proprietary products that are less suitable or have inferior performance or other characteristics when compared to other potential alternatives, due to the financial benefit to Altema and/or its related entities.
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Control and Disclosure |
Altema controls the conflict by ensuring that the purchase of the Fund or the utilization of the Fund within managed accounts is suitable for the client and which places the client's interest first. The nature of the risks inherent in the Fund and the fact that Altema only distributes or utilizes its own Fund is disclosed in its RDI, the respective offering memorandum and subscription agreements for the Fund. Managed account clients consent to the purchase of the Fund within managed accounts and managed account clients will not be subject to duplication of fees with respect to their assets invested in the Fund that are charged a management fee. Altema reviews the Funds on at least an annual basis to determine that the Fund is comparable to other investment funds with similar mandates available outside of Altema.
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Conflicts arising from Related Offerings It is an inherent conflict of interest to recommend the use of additional services offered by Altema or an affiliated entity. |
If this conflict of interest is not managed properly, there is a risk that the client may be referred to or may be recommended services from a related entity that are not suitable or in the client’s best interest. |
Avoidance |
Altema manages this conflict through avoidance as neither Altema, nor any affiliated entities, offer additional services to clients of the firm. |
Conflicts arising from internal compensation arrangements and incentive practices While motivating registered individuals and firms to generate revenue or grow assets is normal practice, some compensation practices can result in behaviour that is not in the best interest of clients as a result of incentives to add clients, or assets or revenue generated from clients.
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If this conflict of interest is not managed properly, employees may be financially incentivized to place their interests ahead of the clients and may make decisions for personal financial reasons rather than based on client suitability. |
Control and Disclosure |
Altema manages this conflict by disclosing any incentives, which involves an advising representative having a portion of that individual’s compensation tied to the revenue of Altema. Altema personnel may be compensated for performance of its underlying funds, which aligns their incentives with client interests. Such compensation mechanisms are disclosed to clients.Altema portfolio managers are very seasoned industry veterans who take their fiduciary obligations seriously and manage the Fund within the investment objectives for which the Fund was designed and do not take undue risks in order to achieve performance fees. The Fund’s operations are subject to continual monitoring and oversight with respect to adherence to its mandate and client suitability.
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Conflicts of interest at the supervisory level If Altema’s compliance or supervisory staff’s compensation is tied to sales or revenue generation of the firm overall, there is an inherent conflict of interest to put their interests ahead of clients’ interests.
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If this conflict of interest is not managed properly, employees may be financially incentivized to place their interests ahead of the clients and may not provide proper oversight or supervision. |
Avoidance |
Altema avoids this by not having supervisory staff with compensation tied to sales or revenue generation and does not assign sales or revenue targets to staff who have compliance or supervisory roles. Bonuses may be paid to reflect overall performance of the firm which will not be solely dependent on investment performance or client assets. |
Conflicts arising from third-party compensation Altema may receive trailing commissions from third party mutual fund companies.
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If this conflict of interest is not managed properly, clients may be paying duplicate fees due to the structure of certain products and/or Altema may be incentivized to select products that include third party compensation. |
Avoidance |
Altema manages this conflict of interest through avoidance as it does not accept any third party compensation. In the event that Altema were to receive third party compensation, it would control the conflict by not charging clients duplicate fees on the applicable assets. |
Conflicts in fee-based accounts Altema offers only fee-based accounts for its portfolio management clients. |
If this conflict of interest is not managed properly, clients may be unsure of their fee arrangement with Altema and there may be confusion as to which services are included in the fees they pay, in addition to potential embedded fees charged on securities held in the account. |
Avoidance, Control and Disclosure |
Altema discloses all fees and charges at the time of account opening. Altema also provides an annual report on fees and operating charges paid each calendar year. Additionally, Altema does not charge duplicate management fees where it charges embedded fees or otherwise receives compensation in respect of those assets. |
Differing fee arrangements Where a client is charged more than other clients for the same or substantially similar products or services, potential conflicts of interest may arise. |
If this conflict of interest is not managed properly, clients may not be aware of the opportunity to negotiate management fees and certain clients may receive the same services for a lower fee, without the knowledge of clients that there are different fee schedules or certain criteria leading to different fee schedules. Additionally, if this conflict is not appropriately managed, Altema may give preferential treatment to higher fee-paying clients.
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Control and Disclosure |
Altema manages this conflict as it has established processes as it relates to fee arrangements to ensure clients are treated fairly, honestly, and in good faith. Fees may vary due to certain client accounts being subject to grandfathered fees, pre-existing client relationships and fee schedules, account size, account aggregation for fee assessment, or other circumstances such as the level and complexity of the services to be provided to the client. |
Addressing conflicts between clients (fair allocation of investment opportunities) There can be competing interests among clients, and a registrant may have difficulty trying to address these conflicts in the best interest of all their clients simultaneously. |
If this conflict of interest is not managed properly, certain clients may receive preferential treatment and better access to certain investments or investment opportunities with limited availability. |
Control and Disclosure |
Altema manages this conflict by implementing a fair allocation of investment opportunities policy which is disclosed to clients.
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Purchasing assets from clients outside of the normal course of business The purchase of an asset from a client outside of the normal course of business may create a material conflict of interest. |
If this conflict of interest is not managed, there may be potential situations in which an employee of Altema breaches its fiduciary duty by participating in a transaction with a client outside of the ordinary course of business, or the client may reflect negatively on the transaction. |
Avoidance |
Altema prohibits engaging in transactions with clients outside of the ordinary course of business. |
Conflicts related to referral arrangements Altema may enter into referral arrangements whereby it receives referred clients and pays ongoing referral fees to referral parties who have written referral agreements with Altema. |
If this conflict of interest is not managed properly, referred clients may be unaware of the compensation received in respect of their account or may be charged additional fees to account for the referral fee paid by Altema. |
Avoidance, Control and Disclosure |
Altema avoids this conflict as it does not currently engage in any referral arrangements. Altema has a comprehensive policy in place that governs any referral arrangement the firm may enter into, from time to time. All referrals are inbound and referral fees are paid from Altema's management fee. No incremental cost is incurred by the client and referral arrangements are disclosed to and consented to by potential clients prior to Altema's acceptance of the prospective client as a client of the firm. |
Full control or authority over the financial affairs of a client Having full control or authority over the financial affairs of a client in an inherent conflict of interest. |
If this conflict of interest is not managed properly, an employee of Altema may be in a position to appoint themselves or ensure they continue to manage the client’s assets without any independent oversight. |
Avoidance |
Altema avoids this conflict by declining any appointments. |
Individuals who serve on the board of public companies Material conflicts of interest arise if an individual acts as a director of a non-affiliated firm or acts as a director of a reporting issuer. Materiality is determined on a case-by-case basis. |
If this conflict of interest is not managed properly, employees of Altema may be put in a position where they are conflicted in their duties to act in the best interest of clients/the firm by virtue of their duty to the other registrant firm or publicly listed company. Additionally, they may become aware of material non-public information and be unable to advise on certain securities and/or may be viewed as acting on a conflict of interest in buying certain securities on behalf of clients.
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Control and Disclosure |
Altema manages this conflict as all outside activities or relationships, such as directorships or trusteeships of any kind, or paid or unpaid roles with charitable organizations, must be approved, in advance, by Altema’s CCO and UDP. Altema maintains policies and procedures to ensure that registrants do not act upon any material non-public information and appropriate safeguards are put in place to prevent improper trading in those impacted securities.
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Individuals who have outside activities Material conflicts of interest arise if an individual engages in activities outside of their employment with the firm, including other business ventures or volunteer positions.
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A conflict of interest may arise as a result of a Altema registrant’s outside activities (OA). A conflict may arise from activities due to time commitment, their position or any compensation received. The OA may hinder their ability to perform their duties, may give rise to confusion as to which entity the individual is representing or the employee may be in a position of influence.
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Avoidance, Control and Disclosure |
Altema controls this as registrants must disclose all outside activities on an ongoing basis. All outside activities are reviewed with the CCO to confirm if a conflict of interest exists and where applicable implement controls to deal with the conflict of interest.
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Employee familial or other relationships who are in senior positions at issuers |
If this conflict of interest is not managed properly, registrants may be biased towards, or may have access to non-public information that impacts portfolio decision-making. |
Avoidance, Control and Disclosure |
Altema controls this conflict by requiring that personnel disclose any familial relationships that involve positions of influence with issuers. In the event that such a situation exists, Altema will implement controls and oversight to ensure the conflict of interest is mitigated.
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Trade Execution – best execution When placing orders for and on behalf of clients’ accounts, Altema has an obligation to obtain best execution of trades for client accounts. |
If this conflict of interest is not managed properly, clients may end up paying excessive or higher than normal trade costs. |
Control |
Altema manages this conflict as it has written policies for best execution. Altema seeks the best overall price and execution available and its goal is to execute transactions in a reasonable and efficient manner.
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Use of client brokerage commissions – soft dollar arrangements When placing orders for and on behalf of clients’ accounts, firms may receive “soft dollars” as a result of selecting a particular broker for their transactions. |
If this conflict of interest is not managed properly, Altema may be incentivized to utilize certain brokers for trades due to the benefits that the firm receives, and such brokers may charge higher fees or provide lower quality broker services than other available brokers.
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Avoidance |
Altema avoids any soft dollar conflicts as it does not enter into any soft dollar arrangements.
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Cross Trades Where securities are purchased by a Fund or an account of a responsible person at a time when the other Fund or account of a responsible person is a seller of such securities, it is an inherent conflict of interest because of the potential benefit to the respective Fund or account of a responsible person. |
If this conflict of interest is not managed properly, Altema or its representatives may execute trades for the benefit or themselves or other clients to the detriment of another client or clients. |
Control |
Altema controls this conflict by having a policy that prohibits inter-account trades unless they are approved by the CCO in advance and the trades are affected in accordance with its written policies and procedures. Altema does not currently engage in such trade operations. |
Trading and Pricing Errors Altema may have a potential conflict of interest when determining when, and how, to deal with a client account error. The risk is that Altema may not to take steps to correct or otherwise address the error due to the cost or other implications to Altema. |
If this conflict of interest is not managed properly, clients may end up disadvantaged due to trading and pricing errors caused by the firm. |
Control |
Altema controls this conflict by having a policy that, in the event of a material trading or pricing error caused by an employee of Altema, and where a client or the Fund has been negatively impacted, the client or the Fund is made whole. |
Valuation of Portfolios and Fund(s) As Altema’s revenue is based on a percentage of the market value of each client’s account, Altema may have a conflict of interest in those instances where Altema is responsible for valuing portfolio securities. The valuation of a client’s account will impact the fees earned by Altema and the performance reported to clients as well as marketed. |
If this conflict of interest is not managed properly, portfolio values may be inflated or marked improperly to create additional revenue as fees are charged as a percentage of assets under management. |
Control |
Altema has policies and procedures in place which involve valuation checks and balances including external pricing, valuation and reconciliation processes. Altema further controls this conflict as it uses a third-party service provider to calculate the net asset values of the Fund. Altema has policies for the valuation of the Fund and the correction of errors in the calculation of net asset value of the Fund, in accordance with industry guidelines. |
Large Unitholders |
Allowing a large unitholder to invest in a fund may constitute a conflict of interest because Altema will earn revenues, or gain other benefits, from the assets invested by the large unitholder, while there is the possibility that the trading activities of the unitholder could adversely affect the remaining unitholders of the Fund. Additionally, the redemption of a large unitholder could pose a liquidity risk to the Fund and result in adverse circumstances for the remaining unitholders. |
Control and Disclosure |
Altema monitors investors/advisors with respect to concentration levels held in the Fund and has controls in place to take mitigating steps such as extended redemption notice periods in the event of a significant redemption request being received. Altema also controls this conflict as it has a policy to allow for a fund to make a special distribution within the Fund when there is an exit of a large unitholder in order to mitigate the consequences to the remaining unitholders and to ensure that unitholders are minimally impacted by any potential large unitholder redemption.
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Allocation of Fund Expenses |
There is a conflict of interest between the interests of the Manager and its clients and the Fund in relation to the allocation of expenses amongst the Fund and its unitholders. This conflict creates a risk that the Manager may allocate expenses to the Fund that are not appropriate, or may allocate expenses disproportionately to the Fund that are not fair and equitable to all clients and may negatively impact the Fund and the Fund's performance.
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Control |
Altema controls this conflict through policies and procedures that require that expenses charged to the Fund are reasonable and appropriate and the method of allocating such expenses is fair and equitable. The Fund pays its own operating expenses and fees of third-party service providers. No expenses are charges to client accounts other than management fees, fixed admin fees and custodian fees.
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Employees/access persons could benefit from trading with knowledge of portfolio transactions for clients. (e.g. front running a trade) Individuals may find themselves in situations where their personal interests are in conflict with those of a client. When individuals at Altema invest in the same securities as clients of Altema, there is a perceived or potential conflict of interest that such individuals at Altema may benefit from opportunities at the expense of Altema’s clients. |
If this conflict of interest is not managed properly, employees of Altema may be trading ahead of clients and/or acting on information improperly for their own gain, which may be to the detriment of clients. |
Control and Disclosure |
Altema controls this conflict as it has a Code of Ethics and Personal Trading Policy regarding personal trading which provides that employees who are access persons require pre-approval of all personal trades.
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Using inside information for personal gain Conflicts of interest arise when individuals have access to inside information and complete trades ahead of client orders for their personal benefit. |
If this conflict of interest is not managed properly, employees of Altema may be trading ahead of clients and acting on information improperly for their own gain, which may be to the detriment of clients. |
Control |
Altema controls the use of inside information conflict as its Code of Ethics prohibits the use of material non-public information for personal gain. Altema manages the personal trading conflict as its Code of Ethics requires pre-approval of all personal trades. |
Tied Selling It is an inherent conflict of interest where purchase of one service is conditional on buying another as well, which is prohibited by securities laws. |
If this conflict of interest is not managed properly, clients may feel obligated to maintain their relationship with Altema or one of its related entities in order to continue receiving their desired services. |
Avoidance |
Tied selling is prohibited by Altema. |
Gifts and Entertainment There may be instances wherein Altema’s individuals may give or accept gifts or business entertainment of more than minimal value in connection with Altema’s business and as such a perceived or potential conflict of interest could arise. |
If employees were to receive excessive gifts or entertainment they may be influenced to purchase or recommend products to clients that are not appropriate, suitable or in the clients’ best interests. |
Avoidance and Control |
Altema has policies in place to place limits and guidelines on gift acceptance. Altema caps the value of gifts that may be accepted at $250.00 per year, any gift exceeding this amount must be disclosed to, and approved by, the CCO. |
Marketing with misleading or inaccurate performance Altema has an interest in showing good performance to attract more clients which may conflict with Altema’s fiduciary responsibility to its clients and prospective clients to provide accurate performance reporting. |
If this conflict of interest is not managed properly, clients may be influenced to invest with or use Altema’s services based on improperly presented or misleading information. |
Control and Disclosure |
Altema controls this conflict as it has developed comprehensive policies and procedures for the review and approval of all marketing material. |
Proxy Voting There is a potential conflict of interest as there is the opportunity for Altema to vote securities or to agree to certain corporate actions in its own interest over the interests of clients. |
If this conflict of interest is not managed properly, clients' securities may not be voted in the best interests of the clients or may not be voted at all, to the detriment of clients. |
Avoidance and Control
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Altema currently does not engage in proxy voting. Altema has policies and procedures in place with respect to proxy voting to ensure that if proxies are voted, it is done in the best interests of clients. |
Complaints There is a potential conflict of interest if a complaint is received and not responded to as it may adversely affect an individual or the firm. |
If this conflict of interest is not managed properly, client complaints may not be appropriately addressed and improper activity may not be properly remedied. |
Control and Disclosure |
Altema controls this conflict of interest through policies and procedures and makes disclosure to clients regarding such policies, as well as third party resources clients may pursue when making complaints.
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