CONFLICTS OF INTEREST DISCLOSURE
In this page we describe potential conflicts of interest that may arise in the ordinary course of CastleMoore’s business. We seek to avoid or minimize conflicts where reasonably possible. Under all circumstances the interest of clients come first. However, some conflicts or the perception of them cannot be avoided, and we have chosen to manage these conflicts rather than avoid them. CastleMoore has policies and procedures in place to identify and respond to conflicts of interest that may arise in our business that we believe are sufficient to protect the interests of our clients. If you have any questions about our conflict of interest mitigation and our asset management please contact CastleMoore.
The following are some conflicts of interest that may affect the products or services we provide our clients.
Currently, CastleMoore manages no proprietary products or has any relationship as a result of an advisory agreement through which CastleMoore provides portfolio management services to exchange-traded funds or mutual funds managed by a third-party. CastleMoore may invest its client’s assets in future Funds. CastleMoore in future may receive a fee from an exchange managed fund or from a third party for acting as portfolio manager of the third-party funds.
A full description of the features of any future fund, including the features of each class of securities of the funds, the costs of buying and selling units of the fund, the costs and expenses involved in holding units in the fund, and the risks that the fund may pose, will be described in the prospectus of the future fund.
CastleMoore will not charge a sales commission or earn any compensation for placing units of the fund with its clients. However, CastleMoore is entitled to earn management and performance fees payable by the fund. Where CastleMoore invests funds in a client’s managed account the management fee that would otherwise be payable by a client directly to CastleMoore under the terms of the Investment Management Agreement is waived (e.g., not charged to you) in respect of the amount of the client’s investment in the fund.
Canadian securities legislation requires registrants, when they trade in or advise with respect to their own securities or securities of certain other issuers to which they, or certain other parties related to them, are “related” or “connected”, to do so only in accordance with particular disclosure and other rules.
An issuer of securities is “related” to CastleMoore if, through ownership or direction or control over voting securities, CastleMoore exercises a controlling influence over that issuer or that issuer exercises a controlling influence over CastleMoore or the same third party exercises a controlling influence over both CastleMoore and the issuer. An issuer is “connected” to CastleMoore if due to indebtedness or other relationships, a reasonable prospective purchaser might question if that issuer and CastleMoore are independent of each other.
CastleMoore does not trade in securities of related issuers, or while in the course of distribution, connected issuers, except as will be set out in the future or with the client’s prior consent.
Any future CastleMoore Funds are “connected issuers” of CastleMoore and are in continuous distribution. In its capacity as the portfolio and investment fund manager of the CastleMoore Funds and as a client portfolio manager, CastleMoore:
- acts as a portfolio manager in respect of the management of the investment portfolios of each of the CastleMoore Funds
- may recommend that units of the CastleMoore Funds be purchased or sold for client accounts in the event it determines that such an investment is suitable for a client and in accordance with a client’s Investment Policy Statement with the firm;
- exercises discretionary authority to buy or sell units of the CastleMoore Funds for client accounts.
A full description of the features of the CastleMoore Funds, including the features of each class of securities of the CastleMoore Funds, the costs of buying and selling units of the CastleMoore Funds, the costs and expenses involved in holding units in the CastleMoore Funds, and the risks that the CastleMoore Funds may pose, will be described in a prospectus of the respective CastleMoore Funds.
CastleMoore does not offer remuneration to staff based on any sales programs with incentives. Staff compensation rises, alone, from the overall success of CastleMoore and their individual performances. Staff may receive bonuses based on the profitability of the firm or additional compensation above their salary for client service or sales. All compensation is free of conflicts of interest.
All employees are trained and encouraged to identify and report to management any conflict of interest within CastleMoore operations that they observe. If they are in doubt about any activity they are involved in, including outside business activities, unrelated to their CastleMoore employment, they must stop such activity and seek clarification from management before resuming the activity. Personal trading by staff is frowned upon. All staff are strongly encouraged to strictly follow a model portfolio as all our clients do. If staff conduct personal trading, whether in an account held outside a CastleMoore custodian or not, all trades must be pre-approved by the Chief Compliance Officer (CCO) first. Copies of all statements for staff accounts held with different custodians are delivered monthly to the CCO.
Outside Business Activities of Staff
All outside business activities of staff are approved by the CCO for any conflicts of interest prior to their undertaking. If such activities create a conflict that cannot be managed or avoided such activities are not approved. Staff are not permitted to enter into any business arrangement with clients without prior consent from the CCO. Under no circumstances are staff permitted to purchase from or sell assets to clients. No staff may lend money to or receive a loan from clients. Staff may not act with full discretion as a Power of Attorney, trustee or executor. Staff may not act for another registered firm.
CastleMoore enters into referral arrangements with outside, third parties. Clients of third parties are referred to the Company for financial planning and/or financial asset management services. A fee is paid to third parties for the referral of their client to CastleMoore. If clients are part of a referral arrangement, they will receive a SCHEDULE D: Referral Arrangement Notice. If a client is not part of a referral arrangement, it is mentioned for the benefit of all our clients. It is important to know that referral arrangements do not pose a conflict of interest for clients that are not part of a referred situation. All clients of CastleMoore, regardless of how they became clients, are treated equally and fairly.
Costs Associated with Client Account Management and Their Impact
All costs associated with client account management have the impact of lowering the overall client return, though they are a necessary component of a client’s portfolio management. Costs are shown in detail in Schedule A: Fee Schedule. This information maybe provided upon request. Other costs are outlined below.
Compensation on Cash Balances
Cash balances are included in monthly fees. Cash will normally be invested quickly unless it is a tactical decision by portfolio managers to reduce risk or prepare for opportunities. New accounts while being set up will not be charged any fees until the portfolio is fully invested with current assets. CastleMoore is charged by its custodians’ fees on day one, including all cash balances, and absorbs these costs without passing them along to clients.
Embedded Fees in ETF’s or Mutual Funds
CastleMoore may use third party products that have embedded fees. CastleMoore does not receive any compensation when purchasing ETF’s for clients though the embedded fees do have an impact on client performance. We strive to seek out the lowest cost ETF’s for the function they are serving. ETF’s with higher embedded costs may serve to provide better risk or opportunity functions, such as liquidity or capitalization, and are thus used in the client’s best interest. We do not use any DSC mutual funds though we may transfer in existing positions to dispose of them as soon as possible. We do not charge our normal monthly fee on DSC or “A” Class units. Low MER mutual funds, such as “F” Class units are used. CastleMoore receives compensation when purchasing “F” Class units. This information and the total real costs to clients is outlined in writing in Schedule A and also explained verbally to clients.
Security Selection in General
All portfolio decisions, including security selection, is free of any conflict of interest. Securities are transacted based on what is in the best interest of clients, including any embedded costs or compensation, liquidity, capitalization, exchanges traded on, and general security features. CastleMoore does not cross trades between client accounts.
Best execution refers to making sure that when trading on clients’ behalf that we are getting the best, the fairest, price possible for security transactions. In addition to having market data that is separate from market data provide by custodians, CastleMoore also receive market data from three custodians vs a single custodian. The Company also transacts almost exclusively in highly liquid securities thereby not exposing clients to mispricing or inefficient pricing that comes with illiquid securities.
If you have any questions about our Conflict of Interest Policy please contact us at:
4275 Village Centre Court, Suite 201, Mississauga, ON L4Z 1V3, www.castlemoore.com
T: 905-847-1400 or 1-877-289-5673, Fax: 416-352-0190, firstname.lastname@example.org