Securities regulations applicable in Canada require registered firms to comply with certain rules in relation to client disclosure, especially with respect to disclosure regarding conflicts of interest and risks of investing. By signing the Acknowledgement of Client Disclosure Form, attached to this document, you are acknowledging that you have received, read and understood the contents of this document.
WhiteHaven Securities Inc. (WHS) is an Exempt Market Dealer operating in the Province of Alberta, British Columbia, Ontario and Quebec and a Mutual Fund Dealer in the Province of Quebec.
WhiteHaven Asset Management Inc. (WHAM) is a Portfolio Manager in the Province of Alberta, British Columbia, Manitoba, Ontario and Quebec, a Derivatives Portfolio Manager in the Province of Quebec and an Investment Fund Manager in the Province of Ontario and Quebec.
Both WHS and WHAM are owned by WhiteHaven Holding Inc. (WHH). Athanasios Baltzis, the Ultimate designated Person of WHS and WHAM, controls and is the majority owner of WHH.
In this document, we will refer to WHS and to WHAM as “WhiteHaven”.
WhiteHaven is a member of the Investment Funds Institute of Canada (IFIC) with the Autorité des marchés financiers (AMF) in Quebec as its primary regulator. WhiteHaven endorses and adheres to the IFIC Code of Ethics and the IFIC Privacy Code. We meet or exceed the provincial securities regulator’s requirements for bonding insurance, protecting those investments administered by our firm. In addition each representative maintains an individual Errors and Omissions liability insurance coverage.
WhiteHaven wishes to inform its clients of how it identifies and responds to conflicts of interest in order to control their impact. We consider there to be a conflict of interest where the interests of different parties, such as interests of a client and those of WhiteHaven or any individual acting on its behalf could be inconsistent or divergent. We strive to identify all existing material conflicts of interest, and material conflicts of interest that we, in our reasonable opinion, would expect to arise. We are taking protective measures to anticipate reasonably foreseeable conflicts and assess the materiality of those conflicts.We then assess the level of risk associated with each conflict and address any conflict in the client’s best interest that is, putting the interests of clients first, ahead of WhiteHaven’s own interests and any other competing considerations. We avoid any situation that cannot be addressed in the best interest of the client, would entail a serious conflict of interest or represent too high a risk for clients or the integrity of the markets. In any other situation entailing a conflict of interest, we ensure that appropriate measures are implemented to control the conflict of interest effectively.
The following are some of the general conflicts of interest that may affect the service we provide to you.
We attach as Schedule B to the document, the most recent list of all conflicts of interests which provides more details as to the specific conflicts of interests that may affect you. Schedule B will be updated from time to time and an updated version will be posted on our website at www.whitehaven.ca/COID.
Disclosure in respect of securities of Associated, Related and Connected Issuers
WhiteHaven may deal in the securities of entities or people that are associated, related or connected to it.
When WHAM wishes to cause a portfolio managed by it to purchase a security of an issuer in which a Responsible Person (as such expression is defined in Schedule A hereto) or an associate of a Responsible Person is a partner, officer or director of this issuer (an “Associated Issuer”), National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations requires that (i) such fact be disclosed to the clients and (ii) before the purchase, a written consent of the client to the purchase be obtained.
WhiteHaven established the following policies aimed at avoiding any conflicts of interest that may arise as a result of WhiteHaven’s relationship with Related Issuers and Connected Issuers (as such expressions are defined in Schedule A hereto) and ensuring that all investment decisions and their execution are made in the best interest of WhiteHaven’s clients:
All investment decisions or trades relating to purchases and sales of client portfolio securities will be made in the ordinary course of business. WhiteHaven will maintain operational and decision- making autonomy in the management of clients’ funds and the selection of portfolio investments on the basis of the business judgment of responsible representative uninfluenced by considerations other than the best interest of the clients.
WhiteHaven may, from time to time, use its discretion to purchase or sell securities of any Related Issuer and/or Connected Issuer. However, WhiteHaven will only do so if:
Services Provided to the Exempt Market Issuers and Related Operating Entities
In connection with entities for which WHS acts as exempt market dealer, in addition to the compensation it receives as a selling agent in connection with the issuance of units of such entities, WHS, its subsidiaries and its affiliates may also provide services to such entities, their affiliates and/or related operating company, such as, though not limited to, the following services, for which they receive compensation:
It should be noted that such services are offered at market standard rates or at arm’s-length terms.
Specific disclosures regarding this matter are provide in the Schedule B to this document.
Some members of WhiteHaven’s management team, directors or shareholders, including the ultimate designated person and chief compliance officer may act as representatives of WhiteHaven, while having compliance functions. WhiteHaven has taken measures to ensure that the supervision of these representatives remains as effective as possible notwithstanding their other functions for WhiteHaven. A list of the management functions which are held by people who also act as representative is included in Schedule B to this document.
Should Compliance identify, or be made aware of, any issue involving a representative who is also a member of management, such person shall report his findings straight to the board of directors of WHS or WHAM, as the case may be.
Fair Allocation Amongst Clients
WHS is engaged to act as an exempt market dealer and/or mutual fund dealer by various clients. At times, WhiteHaven may make the same investment for one or more of its clients or amongst its clients. Similarly, WHAM acts as portfolio manager for various accounts. As access to some of these investment may be limited or offered at different prices, conflicts between the treatment of different clients may occur.
In order to ensure fairness in the allocation of investment opportunities it offers to its clients, WhiteHaven will allocate investment opportunities with consideration to the prime determinants of market exposure, cash availability and industry sector exposure and with regard to the suitability of such investments to each client. Investment decisions and trades shall be made on the basis of the judgment of a responsible representative uninfluenced by considerations other than in the best interest of its clients.
WHS typically receives its fees from the manufacturer of the investment product it distributes. Such fees, which can take the form of up front commissions, deferred commissions and/or trail fees are described in the offering documents relating to each such investment product.
WHS receives a reimbursement of expenses from issuers to cover the costs of due diligence relating to WHS’s onboarding process. Issuers cover these due diligence expenses whether they are onboarded by WHS or rejected.
Should the mutual funds be held in a RRSP, RRIF or other tax deferral plans, the trustee of the plan may annually deduct a trustee fee from the funds. The trustee may also charge a deregistration fee and transfer out fee.
Personal Interests and Outside Business Activities
In the ordinary course of performing their duties, our directors, officers, employees, representatives and agents may find their personal interests are in potential conflict with those of a client. For example, our management team may, from time to time, personally wish to invest in certain investment products of issuers in which WhiteHaven is invested, may act as director or officer of such issuers or have business relationships with the issuers in which WhiteHaven invests or with advisors or service providers of such issuers.
We have developed a policy governing employees which state that our personnel must never put their own interests ahead of their responsibilities toward clients or WhiteHaven. It also reinforces the fact that any material conflict of interest must be addressed in a manner that is fair, equitable, transparent and consistent with the clients’ best interests.
When personnel engage in certain activities, interests or associations outside WhiteHaven, a conflict of interest may arise between the person’s personal interests and those of WhiteHaven and its clients. WhiteHaven has developed a policy that governs personnel’s outside business activities and to which all personnel must adhere. In few circumstances, an employee of WhiteHaven may serve on the board of directors or other governing body of a publicly traded company. Further, WhiteHaven has implemented a notification and pre-approval process to restrict any outside business activity that would interfere or give the appearance of interfering with an employee’s ability to act in the best interests of, or perform work for, WhiteHaven and its clients.
Employees are reminded quarterly regarding the importance of the reporting of outside business activities and are encouraged to communicate with Compliance if they have any questions regarding what constitutes a reportable outside business activity.
A list of the most important conflicts arising out of Personal Interests and Outside Business Activities is attached hereto as Schedule B.
All WhiteHaven employees are required to put the interests of clients ahead of their own personal interests and must comply with the personal trading policy in effect. WhiteHaven believes that in order to avoid any potential for conflict of interest, its employees and other covered persons must not invest in any securities other than mutual funds, pooled funds, market indices and their derivatives (e.g. iShares, listed futures) of any equity asset class managed by WhiteHaven. Furthermore, if mutual funds or pooled funds managed by WhiteHaven are purchased, a one-month holding period applies. From time to time, some Representatives and employees of WhiteHaven may invest in exempt market products distributed by WhiteHaven, but WhiteHaven employees and Representatives are required to report all personal transactions to Compliance for pre-approval.
The use of privileged information (also referred to as material non-public information) and the disclosure of such information to any person not entitled to receive it are prohibited. Moreover, no personnel of WhiteHaven may trade, either personally or on behalf of others (such as investment funds and private accounts managed by WhiteHaven), while in the possession of material, non-public information.
Gifts and Entertainment
Giving, receiving or soliciting gifts in a business setting may create an appearance of impropriety or may raise a potential conflict of interest for WhiteHaven. The overriding principle is that all WhiteHaven employees should not accept inappropriate gifts, favours, entertainment, special accommodations, or other things of material value that could influence their decision-making or make them feel beholden to an individual or firm.
WhiteHaven has adopted and implemented firm policies in order to prohibit any person acting on its behalf from paying or accepting any fee or commission, or providing or receiving any non- monetary benefit that is likely to conflict to a material extent with any duty that WhiteHaven owes to its clients or any duty which the recipient firm owes to its clients.
WhiteHaven has referral arrangements with certain parties, pursuant to which that party may market, promote and introduce certain clients to WhiteHaven. Under these referral arrangements, the other party generally receives a referral fee from WhiteHaven for its referral services. Under Canadian regulations, WhiteHaven is required to disclose the nature of such referral arrangements, including the fees WhiteHaven pays such parties. Such disclosure is included in the document attached hereto as Schedule B.
Compliance is notified of the referral arrangements involving a shared commission. Prior to accepting to act in furtherance thereof, Compliance reviews the file to ensure that all conflict of interests are controlled. Compliance also ensures that Representatives are performing their duties adequately and that all regulatory requirements are met and that all internal policies are respected.
A Proxy Voting Policy was put in place for Clients of WHAM, who may always request to receive proxy- related materials if they wish to and may also request to obtain information on the manner in which their shares were voted in their favor.
WhiteHaven has the responsibility to effect orders correctly, promptly and in the best interests of its clients. Should any error occur in the handling of any client transactions due to WhiteHaven’s actions, inaction, or actions of others, WhiteHaven’s policy is to seek to identify and correct any errors as promptly as possible without disadvantaging the client or benefiting WhiteHaven in any way
Other conflicts of interest
Other potential or actual conflicts of interest may arise. We will continue to take the necessary steps to identify and respond to such situations fairly and reasonably, and update our policies as required. Where not avoided, any material conflicts of interest will be disclosed to you as they arise.
Associated Issuers, Related Issuers and Connected Issuers Relationships; Personal Interests and Outside Business Activities
Solstar Capital Fund
In connection with the trade in units of the Solstar Capital Fund (for the purposes of this section, the “Fund”), WHS has identified the following conflicts of interest:
BWS TV Productions Inc. (Fashion Hero – Bond Offering)
In connection with the trade in bonds of BWS TV Productions Inc./Les Productions TV BWS Inc., WHS has identi- fied the following conflicts of interest:
BWS Capital Fund (Fashion Hero – Equity Offering)
In connection with the trade in units of the BWS Capital Fund (for the purposes of this section, the “Fund”), WHS has identified the following conflicts of interest:
MVMT Capital Fund
In connection with the trade in units of the MVMT Capital Fund (for the purposes of this section, the “Fund”), WHS has identified the following conflicts of interest:
Trinity Hotels Fund I
In connection with the trade in units of the Trinity Hotels Fund (for the purposes of this section, the “Fund”), WHS has identified the following conflicts of interest:
NewOak Finance Fund I
In connection with the trade in units of the NewOak Finance Fund I (for the purposes of this section, the “Fund”), WHS has identified the following conflicts of interest:
NewOak Finance Equity Fund I
In connection with the trade in units of the NewOak Finance Equity Fund I (for the purposes of this section, the “Fund”), WHS has identified the following conflicts of interest:
WattbyWatt Equity Fund I
In connection with the trade in units of the WattbyWatt Equity Fund I (for the purposes of this section, the “Fund”), WHS has identified the following conflicts of interest:
The FoodCourt Equity Fund I
In connection with the trade in units of the FoodCourt Equity Fund I (for the purposes of this section, the “Fund”), WHS has identified the following conflicts of interest:
Solstar Pharma Inc. (unsecured convertible promissory note)
In connection with the proposed unsecured convertible promissory note financing of Solstar Pharma Inc. (for the purposes of this section, “Solstar”), WhiteHaven Securities Inc. (“WHS”) has identified the following conflicts of interest:
The IMMEX Equity Fund I
In connection with the trade in units of the IMMEX Equity Fund I (for the purposes of this section, the “Fund”), WHS has identified the following conflicts of interest:
The WhiteHaven Funds
WHAM has established pooled funds for which it acts as investment fund manager and/or portfolio manager (the “WhiteHaven Funds”). From time to time, in accordance with a client’s investment policy, WHAM, acting as the adviser of such client, may decide to have a client’s assets invested in the WhiteHaven Funds. In such cases, WHAM will ensure that no management fees or incentive fees would be payable by the client, that, to a reasonable person, would duplicate a fee payable by the client for the same service.
As is often the case with other smaller firms, individuals perform many roles within WhiteHaven which may include supervisory roles in addition to acting as Representatives:
WhiteHaven may perform trades while returning part of the commission to an unregistered representative (for ex- ample, a Client who referred to WhiteHaven the new client for whom a trade was done). Depending on the nature of the referred client, on the size of the account or on other business factors, WhiteHaven may remit a portion of the commission it should be benefiting from to the refferring unregistered representative. WhiteHaven will be perform- ing all the work that qualifies as a registrable activity under applicable securities laws and as compensation for this work, WhiteHaven generally keeps a minimum of 20% of the commission that it receives and shares 80% of the commission with the referring party. For example, WhiteHaven shall complete the KYC with the new Client and ensure that any investment made on its behalf is suitable.
Compliance is notified of the referral arrangements involving a shared commission. Prior to accepting to act in fur- therance thereof, Compliance reviews the file to ensure that all conflict of interests are controlled. Compliance also ensures that Representatives are performing their duties adequately and that all regulatory requirements are met and that all internal policies are respected.
From time to time, some Representatives and Employees of WhiteHaven may invest in exempt market products dis- tributed by WhiteHaven.