Client Relationship Disclosure Document
June 25, 2021
Wealhouse Capital Limited Partnership (herein referred to as “Wealhouse”, “we”, “us” or “our”) is registered as an investment fund manager in Ontario and Québec and as a portfolio manager and an exempt market dealer in Ontario, British Columbia, Alberta and Manitoba. Our head office is located at Suite 2404, 401 Bay Street, Toronto, Ontario, M5H 2Y4.
We are required under applicable securities laws to deliver to our clients all information that a reasonable investor would consider important about your relationship with us including, but not limited to, the services we offer, the fees and expenses we charge you and the risks that you should consider when making investments. Some of the information we are required to provide about our relationship with you may be contained in other documents we have provided to you or will provide to you from time to time, such as account opening forms, fund offering documents and periodic reports and account statements. These additional documents are hereby incorporated by reference into this document.
This document also describes material conflicts of interest that arise or may arise between us, individuals acting on our behalf and our clients, or between the differing interests of two or more of our clients to whom we owe a duty. The conflicts described are those that a reasonable investor would expect to be informed of or that we believe are necessary to disclose to our clients to ensure they are adequately informed of matters that may affect the services we provide to them.
We encourage you to read this document carefully before opening an account or signing a managed account agreement (the “Account Agreement”) with us. Your signature on an Account Agreement confirms you have received this document and understand its contents. If you have any questions relating to the contents of this document, please contact us by telephone at (416) 644-1190, by facsimile to (416) 644-1191 or by e-mail to email@example.com.
Description of products and services offered to clients
Wealhouse provides discretionary investment management services to the managed accounts of private clients and institutional groups. Wealhouse also acts as the investment manager to a number of investment funds and segregated funds including, but not limited to, the Panorama Fund, the Panorama Private Client Fund, the Voyager Fund, the Lions Bay Fund and the Amplus Credit Income Fund (collectively, the “Funds”). As an exempt market dealer, Wealhouse’s activities have historically been and are currently limited to marketing and distributing the Funds to managed account clients of Wealhouse and other investors who qualify as “accredited investors” under securities laws or otherwise qualify to purchase exempt market securities and to investment dealers or mutual fund dealers.
As your portfolio manager we manage your investment account on a discretionary basis. The relationship that we have with you is set out in an Account Agreement. Under the Account Agreement, we obtain information about you that permits us to get to know you, including your personal circumstances, financial circumstances, investment needs and objectives, investment time horizon and risk profile. Based on this information we buy and sell securities within your account that we believe are suitable for your investment needs without first asking your permission.
We may also act as an exempt market dealer in connection with distributions of securities of the Funds. While acting in our capacity as an exempt market dealer, we will only distribute securities to you where you qualify as an “accredited investor” under securities laws or otherwise qualify to purchase exempt market securities and where an investment in the securities is suitable for you based on information collected from you during the account opening process and our product assessment of the securities being offered. We will open an account for you in connection with your purchase of these securities, and assets will be held in your name with the issuer of the securities.
We are required under applicable securities laws to adhere to certain requirements when we provide you with these services. These requirements include the following:
Portfolio Management Clients
Standard and Duty of Care – As a fiduciary, we are required to act honestly, in good faith and in your best interests. In carrying out the duties set out in the Account Agreement, we must exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances.
Fair Allocation – We act for many clients and we must allocate investment opportunities among all of our
clients in a fair manner and not intentionally favour one client over another. See our Fairness Policy
described later in this document under the heading “Fair Allocation of Investment Opportunities”.
Best Execution – When we use our discretion to trade securities for your account we must seek to achieve the best possible result having regard to the price of the security, the speed of execution, the quality of execution and the total transaction cost.
Protect Your Privacy – We must keep all information that we obtain from you private and confidential and not reveal it to anyone else except as the law requires or as you otherwise permit.
Conflicts of Interest – We must adopt policies and procedures in order to ensure existing or potential
material conflicts of interest are addressed in the best interest of the client.
Know your client and suitability
Know Your Client Information
During the new account opening process and on at least an annual basis thereafter the following know your client (“KYC”) information is gathered in order to assist us with preparing the Account Agreement and choosing the correct investment mandate for you:
- personal circumstances;
- annual income;
- net assets;
- investment knowledge;
- investment time horizon;
- investment priorities;
- risk capacity and risk tolerance; and
- any other information that is relevant and necessary
Wealhouse has an obligation under applicable securities laws to assess whether a purchase, sale or other securities transaction is suitable for you at the time of account opening, prior to taking any investment action on behalf of the account, and in the event we become aware of any significant change in your personal or financial circumstances that could give rise to a change in your investment needs or objectives or in the way in which we manage the account. Wealhouse must put the client’s interest first when it takes an investment action for the client. As a result, it is important that we have up-to-date information about you in order for us to provide you with the best possible service and advice. Please inform us of any significant changes in the information on the KYC document as soon as possible. We will also confirm in writing any such changes.
To meet our suitability obligation, we must also “know” and understand each investment we place you in. Through our “know-your-product” (“KYP”) due diligence process, the firm analyzes every investment we place you in or recommend to you. Our KYP process is coordinated by the firm’s advising representatives and dealing representatives. Without limitation, as part of the firm’s KYP process, we generally consider such things as the reputation and track record of the investment product, the potential for profit and loss, the associated risk level and potential for conflicts of interest, the investment’s time horizon and complexity and the specific features of any investment, including costs and fees, liquidity, redemption rights and the frequency, completeness and accuracy of an issuer’s disclosure.
For exempt market dealer clients, the suitability determination conducted by Wealhouse and its representatives will not consider the larger market of non-proprietary products or whether those nonproprietary products would be better, worse, or equal in meeting the client’s investment needs and objectives.
In order to comply with applicable securities laws we also need to obtain up-to-date information on whether you are an insider of a reporting issuer or any other issuer whose securities are publicly traded.
Verification of Your Identity
Canada’s anti-money laundering laws require us to verify your identity before we can execute any transactions on your behalf, including accepting deposits of cash or securities into your account. The methods of identity verification are prescribed in the regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada).
Fees and expenses payable by you
Fees Charged by Wealhouse
For portfolio management clients, the operating charges and transaction charges that we charge you are set out in the Account Agreement and are directly deducted from your account.
Wealhouse earns fees for investment management services only. Our management fees are payable on a monthly basis in arrears and are calculated as a percentage of the net asset value of your account as at the last day of the preceding month. In addition, we may charge you an annual performance fee based upon a calculation methodology that is set out in the Account Agreement. Our performance fees are payable annually on the last day of each calendar year. All performance fees are calculated on the basis of return on investment after deduction of fees. We believe that these fee arrangements align our interests with yours in that we will earn more fees if we assist you in growing the value of the assets held in your account. If your account invests in a proprietary fund managed by us, your account will hold units of that fund. If we charge management fees at the fund level, we will not duplicate any fees at the managed account level.
For exempt market dealer clients, there will be no commissions payable to Wealhouse on the sale of units of the Funds. The Funds pay certain fees and expenses, such as management fees and incentive fees that are paid to Wealhouse and operating expenses (such as commissions, taxes, custody and accounting fees, legal and other expenses). Wealhouse earns management fees from the Funds which are based on a percentage of the assets under management of the relevant Fund. Depending on the class of security of the Fund, Wealhouse may also be entitled to an incentive fee from the relevant Fund in the event the Fund exceeds its high-water mark during the relevant time period. A description of the applicable fees and expenses associated with an investment in a Fund will be provided to you in the offering documentation that you will receive in connection with your investment in the product.
Expenses That May Be Charged to You
For portfolio management clients, we may require you to reimburse us for all expenses incurred by us in carrying out our duties in the Account Agreement to the extent such expenses were incurred for and on behalf of you and which do not represent administrative costs of Wealhouse necessary for us to carry out our functions.
Fees Charged by the Custodians and Other Investment Dealers
For portfolio management clients, the Custodians (defined below) generally do not charge a fee to act as the custodians of your account; instead they earn their revenues from the trading commissions charged on every purchase and sale of securities within your account. See the Custodians’ current pricing schedules which provide details of any custodian, execution and miscellaneous fees and expenses that may be charged to your account.
Wealhouse has full discretion to select investment dealers, including the Custodians, to execute trades for your account. Trading commissions charged by investment dealers for transacting Canadian and U.S. equity securities will generally range from $0.005 to $0.06 per share. For international trades, trading commissions will generally range from 10 – 25 basis points. If Wealhouse executes trades of securities through other investment dealers, the trading commissions charged will differ from the Custodians’ pricing schedules.
From time to time Wealhouse may determine that using an outside investment dealer is the best option, either to get access to a particular investment or to obtain a better price for you. In these cases, you may be charged a DAP fee (delivery against payment) or a RAP fee (receipt against payment) to settle the trade within your account. In addition, investment dealers may also charge a fee to wire payment to you or to research information for you.
Wealhouse does not receive compensation from any third parties. We do not receive, or expect to receive, benefits from any third-party in connection with a client’s purchase or ownership of a security through Wealhouse.
Impact of Fees and Expenses
Fees earned by Wealhouse and expenses charged to the Funds are not borne by a client directly but rather are borne by the specific Fund. That being said, the payment of these fees and expenses by a Fund will affect and lower what would otherwise be a client’s returns on their investment in a particular Fund. Additionally, the payment of fees and expenses related to your account also effects the return that could otherwise be earned on an investment due to compounding interest. Compound interest is a process by which interest is earned on the principal balance in an account, including the account of each of the Funds. If this interest earned is retained and reinvested into the principal balance of an account, it thereby generates incremental interest on the prior interest generated in the account. That is, compounding refers to generating earnings on previous earnings. The effect of paying fees or expenses in a client account (or Fund account) is to reduce the principal balance of the account. Therefore, the effect of paying fees and expenses is the cost of the fees and expenses themselves in addition to the fact that there is less principal in the account subject to the effects of compounding returns in the future.
Redemption, liquidation and resale restrictions
The units of the Funds are subject to redemption, liquidation and resale restrictions, the details of which are contained in the offering memorandum for the relevant Fund.
Without limiting the generality of the foregoing, the Funds are not qualified by a prospectus in your jurisdiction of residence and are subject to redemption, liquidation and resale restrictions, including that:
(i) redemptions may only be effected on specified “valuation days”;
(ii) redemptions within a defined time period from the date of purchase of the units, may be subject
to an early redemption fee;
(iii) Wealhouse may have the right to delay or suspend redemptions in certain circumstances; and
(iv) units of a non-prospectus qualified fund cannot generally be transferred or resold unless, in
exceptional circumstances, specifically permitted by Wealhouse in accordance with applicable
For portfolio management clients, we are required under applicable securities laws to report to you at least quarterly on your account holdings and activity unless you request more frequent reporting from us. We reconcile your account holdings and activity with information we receive from the Custodians where your securities and cash are held. The reports you receive include the date and type of transactions, name, price and number of securities transacted, and the total value of the transactions.
For clients for whom we act as an exempt market dealer on an ongoing basis and as required by securities laws, we will provide statements to you about your account every three months unless: (i) there has been a transaction in your account during a month, in which case you will be provided with a statement for that month, or (ii) you advise us that you would like the statements provided on a monthly basis, in which case they will be provided to you on such basis.
Among other information, the statements that we will provide to you will contain:
- information about each transaction conducted for you during the time period covered by the statement (including the date of the transaction, whether the transaction was a purchase, sale or transfer, the name of the security, the number of securities, the price per security and the total value of the transaction), and
- information about each security held, and the cash balance, in your account at the end of the time period covered by the statement (including the name and quantity of each security in the account, the market value of each security in the account, the total market value of each security position in the account, and the total market value of all cash and securities in the account).
On an annual basis, you will also receive: (i) a report on charges and other compensation, and (ii) an investment performance report.
The report on charges and other compensation shows the amount of fees and compensation Wealhouse has received from you during the relevant period. The investment performance report will provide rate of return information in respect of your accounts.
Use of Investment Performance Benchmarks
As part of our reporting on your managed account, we present benchmark information as a useful way for you to assess the performance of your portfolio relative to the performance of the overall market or to certain market sectors in which your portfolio invests. We may select benchmarks that are reasonably reflective of the composition of each client’s portfolio so that a relevant comparison of performance is presented. The benchmarks that we use are broad-based securities market indices that are widely recognized as performance benchmarks by Canadian and global mutual funds, hedge funds and the asset management industry. Benchmarks are presented for the same reporting periods as your account’s annualized total percentage returns.
In addition to securities market indices, we may provide certain clients with disclosure of month-end, quarter-end and/or year-end changes in certain economic or financial data that may also be relevant in assessing the performance of their investment portfolios including, among others, the 10–year Canadian and U.S. bond average yield, 30–year mortgage rate, exchange rates among the CAD, USD, YEN and EURO, and certain commodities such as gold, crude oil and natural gas.
It should be noted, however, that performance benchmarks do have some limitations for performance comparison purposes as generally benchmarks do not factor in the costs of investing such as operating charges, transaction charges and other expenses that may reduce the returns of a client’s portfolio. The composition of your investment portfolio reflects the investment strategy you have agreed upon, which may result in the composition of the investment performance of your account differing, possibly substantially, from the investment performance benchmark.
Additional information concerning a specific performance benchmark used to assess a client’s portfolio will be provided to a client upon request.
Confidentiality and privacy
We know you value your privacy and protecting our clients’ personal information is an integral part of our business values. We are committed to safeguarding this information in an appropriate and professional manner.
Microsoft Word – Wealhouse Capital LP – Client Relationship Disclosure Document June 2021
Microsoft Word – Wealhouse Capital LP – Client Relationship Disclosure Document June 2021
- All employees are accountable for protecting personal information held by us or transferred to a third party for processing.
- We do not sell our clients’ personal information.
- We limit the collection of personal information to only that information which is required for the purposes identified.
- We use or disclose personal information only for the purpose for which it was collected, unless the individual consents, or the use or disclosure is authorized by law.
- Personal information is kept as accurate, complete and up-to-date as necessary, taking into account its use and the interests of the individual.
- When requested, we will give individuals access to their information. We will correct or amend any personal information if it is inaccurate or incomplete.
Your personal information may be delivered to the Ontario Securities Commission and other applicable securities regulators or authorities and is thereby being collected indirectly by the applicable securities commissions under the authority granted to them under applicable securities laws for the purposes of the administration and enforcement of the securities laws of the provinces. The public official in Ontario who can answer questions about the Ontario Securities Commission’s indirect collection of personal information is the Inquiries Officer by mail to the Ontario Securities Commission at 19th Floor, 20 Queen Street West, Toronto, Ontario, M5H 3S8, by telephone at (416) 593-8314 or by e-mail to firstname.lastname@example.org. Contact information for all other regulators can be found in the Subscription Agreement.
Conflicts of interest
Under applicable Canadian securities laws, we are required to address and manage existing, as well as reasonably foreseeable, material conflicts in the best interest of our clients. A conflict of interest can include any circumstance where:
- the interests of different parties, such as the interests of Wealhouse and those of a client, are inconsistent or divergent;
- Wealhouse or one of its registered representatives may be influenced to put their interests ahead of a client’s interests; or
- monetary or non-monetary benefits available to Wealhouse or a registered representative, or potential detriments to which they may be subject, may compromise the trust that a reasonable client has in Wealhouse or the individual.
Whether a conflict is “material” or not depends on the circumstances. In determining whether a conflict is material, we will typically consider whether the conflict may be reasonably expected to affect the decisions of the client in the circumstances, and/or the recommendations or decisions of Wealhouse or its registered representatives in the circumstances.
As a portfolio manager and an exempt market dealer, Wealhouse may occasionally face conflicts between its interests and those of its clients, or between those of one client and those of another. Wealhouse has adopted certain policies and procedures to control the occurrence of such conflicts. In no case will Wealhouse put its own interests ahead of those of its clients. If we cannot address a material conflict of interest in the best interest of a client, we must avoid that conflict of interest.
The principal business activity of Wealhouse is to act as a portfolio manager for separately managed investment accounts of its clients (a “Wealhouse Managed Account”) and for the Funds that it manages. Wealhouse’s activities as an exempt market dealer are primarily the marketing of the Funds to clients of Wealhouse and other investors who qualify as “accredited investors” under securities laws or otherwise qualify to purchase exempt market securities and to investment dealers or mutual fund dealers. In providing trading or advisory services to our clients, it is important that our clients understand our interests in the service or transaction.
The following are some conflicts of interest that may affect the products or services we provide to you.
Related and Connected Issuers and Proprietary Products
We must make certain disclosures where we (a) act as your exempt market dealer; (b) advise you; or (c) exercise discretion on your behalf, with respect to securities issued by us, by a related issuer or, in the course of a distribution, by a connected issuer (collectively, “Related Securities”). There are potential conflicts of interest which could arise in connection with Wealhouse engaging in activities as an adviser and as an exempt market dealer in respect of Related Securities. Wealhouse will only engage in activities as an adviser and as an exempt market dealer in respect of securities of related and connected issuers in compliance with applicable securities laws.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Requirements requires Wealhouse to disclose to investors whether any securities it recommends to investors to buy, sell or hold are securities issued by Wealhouse, a related issuer or, during the distribution of the securities, a connected issuer of Wealhouse. An issuer is related to Wealhouse if, through the ownership of, or control over, voting securities or otherwise, the issuer is an influential securityholder of Wealhouse, Wealhouse is an influential securityholder of the issuer or if each of them is a related issuer of the same third party. An issuer is connected to Wealhouse if it has a relationship with Wealhouse that, in connection with a distribution of securities of that issuer, may lead a reasonable prospective purchaser to question if the issuer and Wealhouse are independent of each other.
As at the date hereof, the Funds are Related Securities.
In these situations, we must disclose our relationship with the issuer of the securities. The following is a list of the time and manner in which these disclosures must be made:
- Where we advise you with respect to the purchase, sale or holding of securities, the disclosure must be made prior to our giving the advice.
- Where we purchase or sell securities for your account, the required disclosure will be contained in the Custodian’s monthly statement and in the quarterly statement which Wealhouse prepares and sends to you.
- Where we use our discretion as an adviser to trade securities in a Wealhouse Managed Account we will not charge a trade commission without your consent, or otherwise in compliance with applicable law.
- Where we exercise discretion over a Wealhouse Managed Account, Wealhouse will refrain from causing you to purchase Related Securities unless, to the extent required by law, prior to exercising discretionary authority and at least once within each twelve-month period thereafter, Wealhouse provides you with a copy of this Client Relationship Disclosure Document and secures your specific and informed written consent to allow Wealhouse to exercise its discretion to acquire the Related Securities on your behalf.
The Funds are proprietary products and connected issuers (as such terms are defined under applicable Canadian securities laws) of Wealhouse because Wealhouse established the Funds and acts as their portfolio manager and investment fund manager. Additionally, as further described herein, Wealhouse earns fees from the Funds, the amount of such fees which are related to the amount of the assets under management of the Funds. Accordingly, any investment made into a Fund may have the effect of increasing the fees Wealhouse receives from such funds.
Wealhouse may use its discretionary authority over its managed account clients’ assets to invest some or all of these assets in the Funds. Wealhouse also may act as an exempt market dealer in connection with distributions of securities of the Funds, to purchasers that qualify as “accredited investors” under securities laws or that otherwise qualify for an exemption from the prospectus requirement. As an exempt market dealer, Wealhouse currently only offers proprietary products. Recommending a client subscribe for units of one or more of the Funds presents a material conflict of interest. In these instances, Wealhouse does not charge a sales commission or earn any trade-based compensation for placing units of the Funds to its clients. Wealhouse also ensures there is no duplication of fees in circumstances where a Wealhouse Managed Account invests in a Fund.
The Canadian Securities Administrators (“CSA”) have noted that in the above fact scenarios, a material conflict of interest exists between a registered firm’s (such as Wealhouse) incentive to distribute securities of its connected proprietary products (e.g., securities of the Funds) to its clients and the firm’s general obligations to its clients, including its KYC, know your product (“KYP”) and suitability obligations, as well as its fair dealing duty.
The CSA have also noted that this specific conflict of interest gives rise to inconsistent, competing or divergent interests, which may make it difficult for a registered firm to fulfil its duties to investors objectively, and which may lead a firm to:
- fail to disclose or provide inadequate disclosure to investors about connected issuers in cases where there is negative information (for example, where the issuer is experiencing financial difficulty), resulting in investors taking on more risk than they could bear or more risk than they wish to bear;
- be financially dependent on the connected issuer, creating an incentive to distribute an unsuitable product;
- inadequately disclose significant fees and charges paid to connected issuers, in some instances for little or no apparent services performed, resulting in investors not understanding the costs associated with their investment; and
- not monitor whether connected issuers are using the proceeds raised from their distributions for purposes other than those stated in their offering or marketing materials.
In addition to disclosing this conflict of interest to you and highlighting the risks that it presents, Wealhouse further addresses this conflict by permitting a client’s money to be invested in securities of the Funds only following our: (A) collection and analysis of client KYC information, and (B) suitability analysis and determination, including a determination that an investment in a Fund puts a client’s interest first. Wealhouse also conducts ongoing monitoring of each Fund’s performance to satisfy its KYP obligation and is transparent with clients regarding developments impacting the Funds.
Conflicts Arising from Internal Compensation Arrangements and Incentive Practices
Wealhouse does not specifically tie an individual’s compensation to the sales or revenue generation of the Firm overall or to the registered persons that an individual may supervise. Rather, our compensation structure is based on properly servicing Wealhouse and client needs within a staff member’s roles and responsibilities, as well as showing initiative, creating value and other soft target measurables. Compensation at Wealhouse is not commission driven. However, our overall success plays into the compensation available to our staff and also increases the return opportunities for the shareholders of the Firm. In addition, Wealhouse staff who refer an investor to a Fund may be entitled to receive a payment equal to a portion of the management and performance fees received by Wealhouse that are attributable to the investor’s subscription in the Fund.
In addition to disclosing this potential conflict of interest to you, Wealhouse manages this conflict by adhering to its well-developed compliance policies and procedures, including conducting proper KYC, KYP and suitability assessments with review and oversight by the Chief Compliance Officer as well as training staff on compliance obligations. In addition, individual compensation is predominantly based on factors unrelated to revenue generation (to date, incentive payments have not been a material part of individual compensation). To further address this conflict, portfolio managers will not receive any such incentive compensation for the referral of an investor to the Fund they manage and a dealing representative will not act in such capacity for investors that they have referred to the Fund. Given the heavily-regulated environment in which Wealhouse operates, the value of our business and compliance reputation and the trust clients put into Wealhouse to manage their assets in a regulatory compliant manner, Wealhouse believes its compliance and supervisory staff properly promote compliance and understand that it is not in the best interest of Wealhouse or its clients to forsake compliance for client or growth opportunities generally.
In respect of the Funds, Wealhouse may be seen to have a conflict of interest when determining whether certain expenses should be allocated to Wealhouse or to the relevant Fund (in which case, the expense being borne by the Fund will reduce its potential investment return to its unitholders).
The CSA have signaled through staff guidance, and in some cases compliance and enforcement actions, that they are in certain instances concerned about the expense allocation practices of registrants.
Wealhouse has a duty to make sure that expenses are allocated to itself or to the relevant Fund in a fair, accurate and appropriate manner and in accordance with the requirements of applicable Canadian securities laws. Similarly, Wealhouse’s expense allocation practices must be consistent with the terms of the agreements governing the relevant fund and the disclosure of such terms in the relevant fund’s offering documents.
To address this potential conflict of interest, Wealhouse has adopted an expense allocation policy and makes its expense allocation determinations in accordance with the policy.
Directorships and Outside Business Activities
Certain activities, interests or associations outside Wealhouse may create a conflict of interest between an officer, director or staff member’s personal interests and those of Wealhouse and its clients. Wealhouse 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 officer, director or staff member’s ability to act in the best interests of, or perform work for, the firm and its clients.
If a Wealhouse officer, director or staff member (or certain other individuals with a position at the firm or one of its affiliates) serves as a director of a publicly traded issuer, the firm limits its ability to trade in the securities of that issuer on behalf of a Wealhouse Client Account and/or Fund.
Shareholder as a Client/Fair Allocation
Allocating investment opportunities can present a conflict of interest, for example, when a security is unusually attractive at the time of purchase, and/or difficult to obtain, or it is unattractive, or difficult to dispose of, at the time of sale. As Wealhouse has multiple clients, the potential exists for Wealhouse to favour one client over another in the allocation of an attractive investment opportunity. In particular, the three largest managed accounts at Wealhouse are those of the shareholders of the Firm.
Under Canadian securities laws, Wealhouse has an obligation to deal fairly, honestly and in good faith with its clients, which includes a requirement to ensure fairness in allocating investment opportunities among its clients. In connection with complying with its obligations in this respect, Wealhouse is required to inform its clients of its policy with respect to the fair allocation of investment opportunities which is described below.
Best Execution and Soft Dollars
Wealhouse has an obligation to make reasonable efforts to achieve best execution when acting for a client. Accordingly, there can be a conflict of interest if a broker / dealer chosen by Wealhouse has higher execution costs than another broker / dealer. Potential conflicts may arise from Wealhouse’s use of soft dollars. Soft dollar arrangements occur when brokers have agreed to provide other services (relating to research and trade execution) at no cost to Wealhouse in exchange for brokerage business from Wealhouse. Although the brokers involved in soft dollar arrangements do not necessarily charge the lowest brokerage commissions, Wealhouse will nonetheless enter into such arrangements when it is of the view that such brokers provide best execution and/or the value of the research and other services exceeds any incremental commission costs.
In accordance with National Instrument 23-102 Use of Client Brokerage Commissions (“NI 23-102”), Wealhouse may from time to time enter into soft dollar arrangements where it considers that such arrangements will be beneficial to one or more clients and not prejudicial to any other client. In entering into any soft dollar arrangement, Wealhouse will seek to obtain the best order execution for the client and to minimize transaction costs. Any soft dollar arrangements entered into by Wealhouse will comply with the soft dollar standards of NI 23-102. Additional information concerning the use of soft dollar arrangements by Wealhouse will be provided to a Wealhouse Client upon request.
This conflict is controlled through policies and procedures regarding best execution and use of soft-dollars including prior approval and ongoing monitoring of soft-dollar arrangements by the Chief Compliance Officer and review of trade execution data on an ongoing basis to ensure reasonability.
In the event Wealhouse personnel personally trade or otherwise invest in the same securities as Wealhouse’s clients, or otherwise conduct any dealing activities for their own behalf, there may be a potential or actual conflict of interest that the personnel may benefit from opportunities at the expense of our clients. Wealhouse has personal trading policies and procedures in place that sets forth standards to which Wealhouse personnel are held and that is intended to appropriately manage this potential conflict of interest. In addition to our policies and procedures in these regards, Wealhouse and its personnel must comply with applicable Canadian securities laws which, without limitation, prohibit activities such as insider trading, tipping and front running.
The cash and securities held in your account are not in our custody but are held in one or more trading accounts at TD Securities Inc. (the “Canadian Custodian”) and/or Morgan Stanley & Co. Inc. (the “Foreign Custodian”) (collectively, the “Custodians”), who act as the custodians of the account. In accordance with applicable securities laws, we have determined that each of the Custodians is a qualified custodian that is functionally independent from us. Each Custodian may also use one or more sub- custodians to hold the cash and securities in your account. Each Custodian has confirmed that any sub- custodian will also be a qualified custodian in accordance with applicable securities laws.
The Canadian Custodian may hold the securities in your account at its head office, any of its branches or at any other location where it is customary for the Canadian Custodian to keep like securities, and the Canadian Custodian may hold same through a custodian, agent or nominee if necessary or usual for it to do so in respect of like securities. The Canadian Custodian has the right to use, from time to time, securities in the conduct of its own business, including the right to sell, pledge, assign, invest, use, commingle or register any securities in it its name or in the name of its custodian or nominee. The relationship with respect to cash held by the Canadian Custodian in your account is one of creditor and debtor respectively. The Canadian Custodian has all right, title and interest in the cash. For further detail please feel free to contact us.
Client assets may be held outside Canada in an account at the Foreign Custodian. When Wealhouse directs the client to the Foreign Custodian, Wealhouse has considered the nature of the regulation, reputation and sufficiency of equity of the Foreign Custodian and has concluded that using the Foreign Custodian to hold and trade foreign securities on behalf of the client is more beneficial than using the Canadian Custodian as the Foreign Custodian has more extensive global custodian network. The Foreign Custodian may hold the securities in your account at its head office, any of its branches or at any other location where it is customary for the Foreign Custodian to keep like securities. In respect of your assets in an account with the Foreign Custodian, it has the right to loan, pledge, hypothecate, re-hypothecate, sell or otherwise use any and all such assets, separately or in combination with the property of others for any amounts due to the Foreign Custodian or for a greater sum, and without the Foreign Custodian’s retaining in its possession or control a like amount of similar property. For further detail please feel free to contact us.
Each Custodian is subject to various laws and regulations in various jurisdictions that are designed to protect their customers in the event of their insolvency. For example, the assets of each client account held at the Canadian Custodian is insured by the Canadian Investor Protection Fund (CIPF) in an amount up to CAD $1 million. The assets of each client account held at the Foreign Custodian is insured by the Securities Investor Protection Corporation (SIPC) in an amount up to USD $500,000.
However the practical effect of these laws and their application to your assets are subject to substantial limitations and uncertainties. Because of the range of possible factual scenarios involving the insolvency of a Custodian or any sub-custodians, or any of their respective material affiliates, it is impossible to generalise about the effect of their insolvency on your account and your assets. You should assume that the bankruptcy or insolvency of a Custodian, sub-custodian or any of their respective material affiliates may result in the loss of all or a substantial portion of your assets held by or through such Custodian or sub- custodian and/or cause a delay in the payment of withdrawal proceeds. Further, either Custodian’s right to lend, pledge or otherwise deal with the assets held by them may result in such assets becoming frozen or inaccessible for an extended period of time if the Custodian experiences financial difficulty and may result in a potential loss of such assets. As the Foreign Custodian is incorporated and located outside of Canada, this also may result in you or us having additional difficulty enforcing any legal rights and/or repatriating assets upon the bankruptcy or insolvency of the Foreign Custodian.
Additional risk factors, include, without limitation, the risk of potential loss in the event of a breakdown in a Custodian’s information technology systems or if a Custodian is involved in a material cybersecurity incident, including the unauthorized access of its information technology systems by a malicious third party or if the Custodian or any of its representatives are involved in acts fraudulent or willful misconduct or are grossly negligent. We have considered each Custodian’s reputation, financial stability and ability to deliver custodial services and have concluded that each Custodian conducts its services and has developed safeguards in accordance with prudent business practice.
Under the Account Agreement you have given us trading authority to instruct each Custodian with regard to the purchase, sale and delivery of securities and cash for your account(s) held at each Custodian but we do not have access to your assets held at the Custodian and are not authorized to transfer securities or cash into or out of your accounts held at the Custodian.
Wealhouse does not hold client assets in its capacity as exempt market dealer. The securities purchased through Wealhouse will be maintained in book-entry form and recorded on the books of the Fund in your name. The assets of each Fund are subject to the custody arrangements applicable to the Funds as disclosed in each Fund’s offering memorandum.
Fair allocation of investment opportunities
We must ensure the fair treatment of our clients through the highest standards of integrity and ethical business conduct. The principle of fair treatment must be recognized by all partners, officers and employees of Wealhouse in order to provide a true benefit to our clients. Our clients have the right to be assured that their interests will always take precedence over the personal trading activities of Wealhouse portfolio managers and other Wealhouse access persons.
In order to ensure fairness in the allocation of investment opportunities among the Wealhouse Managed Accounts and the Funds (each a “Wealhouse Client”), Wealhouse will allocate investment opportunities with consideration to the suitability of such investments to each Wealhouse Client’s investment objectives and strategies, portfolio composition, restrictions and cash availability (even though the investment objectives and strategies are substantially the same for some of the Wealhouse Clients and cash flows of each Wealhouse Client can be substantially different given daily/monthly subscriptions and redemptions/withdrawals). As well, cash flows (subscription inflows and redemptions/withdrawals) and investment strategies can influence the allocation process in order to maintain property weightings in each Wealhouse Client account. If an investment opportunity is suitable for more than one Wealhouse Client, Wealhouse will allocate such investment opportunities equitably in order to ensure that each Wealhouse Client has equal access to the same quality and quantity of investment opportunities.
To ensure fairness in the allocation of investment opportunities as between each Wealhouse Client, Wealhouse will ensure:
- where orders are entered simultaneously for execution at the same price, fills are allocated on a pro rata basis;
- when transactions are executed at different prices for a group of Wealhouse Clients, fills are allocated on an average price basis;
- in the case of a block trade or a new or secondary securities issue, if all Wealhouse Client orders can be accommodated (demand is smaller than supply), allocation is made on a pro rata basis based on the order size of each Wealhouse Client. Where the allotment received is insufficient to meet the full requirements of all Wealhouse Clients on whose behalf orders have been placed (demand exceeds supply), allocation is made on a pro rata basis based on the size of the Wealhouse Client account or the existing position size in a Wealhouse Client account. However, if such prorating should result in an inappropriately small position for a Wealhouse Client, the allotment would be reallocated to another Wealhouse Client. Depending on the number of block trades or new or secondary issues, over a period of time, every effort will be made to ensure that these prorating and reallocation policies result in fair and equal treatment to all Wealhouse Clients; and
- when orders for more than one Wealhouse Client are bunched or blocked and the transactions are executed at varying prices, an average price will be determined and allocated to each Wealhouse Client on a pro rata basis. As well, all commissions will be totalled and allocated to all Wealhouse Clients on a pro rata basis. If different prices and commissions are executed, then an average price as well as total average commission will be calculated and allocated on a pro rata basis. For a normal secondary purchase order executed through a dealer or broker, the average price and commission will be calculated and allocated evenly among our Wealhouse Clients. There will be no differentiation on price towards our Wealhouse Clients.
All partners, officers and employees of Wealhouse must give priority to investments made on behalf of Wealhouse Clients over those that benefit their own or another Wealhouse employee’s interest. In addition, Wealhouse will always seek to obtain the best order execution for each Wealhouse Client and to minimize transaction costs.
General Risks of Investing
You should be comfortable about where your money is invested. This requires you to think about and understand your own risk tolerance and the risk level of your investments. It is important that you understand that your investment is not guaranteed. Therefore, the greatest risk to you as an investor is that you could lose all or part of your investment. Unlike bank accounts or guaranteed investment certificates (GICs), stocks, bonds, money market securities and funds are not covered by the Canada Deposit Insurance Corporation or any other government deposit insurer.
Accounts hold different kinds of investments depending on their investment mandate. The value of investments in any account will fluctuate on a daily basis, reflecting changes in interest rates, economic conditions and markets as well as company news. Therefore, the value of any portfolio’s securities may go up or down. This means that the value of your investment when you sell it may be more or less than when you bought it.
The following is a list of general risks which may affect your account. We have listed those risks at the top, which are most likely to impact our clients. Securities regulators require that we list all types of investment risk, even those which are not relevant to how we manage your account. The risks that are specific to your account’s investment mandate may be outlined in the Account Agreement. Please do not hesitate to contact us should you wish to review the specific risks which relate to you.
Risk-Return Trade Off
Risk and return are closely related. This means that to obtain a higher return, you may have to accept a higher level of risk. A higher risk portfolio is generally less stable and fluctuates more. The more a portfolio’s return fluctuates, the more risk is associated with the portfolio. It is therefore important to understand what we mean by “fluctuation” within a given period of time, a security may fluctuate, that is, it may suffer losses and realize gains. High-risk investments generally offer higher long-term returns than safer ones. Since they fluctuate more, high risk investments may post more negative short-term returns, compared to lower-risk investments.
Risks Relating to Concentration
If an account invests a large proportion of its assets in securities issued by one issuer, in a single asset class or in a single sector, it will have risk relating to concentration. When an account is not diversified, it could experience greater volatility and will be strongly affected by changes in the market value of these securities.
Risks Relating to Credit
An account can lose money if the issuer or a bond or other fixed income security cannot pay interest or repay principal when it comes due. This risk is higher if the fixed income security has a low credit rating or no rating at all. Fixed income securities with a low credit rating usually offer a higher yield than securities with a high credit rating but they also have the potential for substantial loss. These are known as “high yield securities”.
Risks Relating to Companies Listed on Stock Markets
The value of an account will increase or decrease with the market value of the securities in it. If an account holds stocks, the value of its securities will fluctuate with the market value of the stocks it holds. The market value of a stock will fluctuate according to the performance of the company that issued the stock, economic conditions, interest rates, stock market tendencies and other factors. Historically, equity securities are more volatile than fixed income securities. Securities of small market capitalization companies can be more volatile than securities of large market capitalization companies.
Risks Relating to Interest Rate Fluctuations
Investments are affected by interest rate fluctuations. A drop in interest rates may reduce the return of money market securities. An increase in interest rates may reduce the return of accounts holding debt or fixed income securities.
Risks Relating to Currency
Whenever an account buys assets in a currency other than the base currency (for Canadians this is generally Canadian dollars), there are risks relating to exchange rates. As the currency changes in value against the other currencies, the value of the portfolio securities purchased in those other currencies will fluctuate.
Some client accounts denominate the value of their securities in Canadian dollars, but invest in different currencies. The value of their securities will fluctuate as foreign currencies change value in relation to the Canadian dollar. Some client accounts denominate the value of their securities in both U.S. and Canadian dollars. The value of their securities denominated in Canadian dollars will fluctuate in relation to the U.S. dollar.
Risks of Using Borrowed Money (Leveraging) to Finance the Purchase of a Security
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 remains the same even if the value of the securities purchased declines.
Securities may be purchased using available cash, or a combination of cash and borrowed money. If cash is used to pay for the security in full, the percentage gain or loss will equal the percentage increase or decrease in value of the security. The purchase of a security using borrowed money magnifies the gain or loss on the cash invested. This effect is called leveraging. For example, if $100,000 of securities are purchased and paid for with $25,000 from available cash and $75,000 from borrowings, and the value of the securities declines by 10% to $90,000, your equity interest (the difference between the value of the securities and the amount borrowed) has declined by 40% (i.e. from $25,000 to $15,000).
It is apparent that leveraging magnifies gains or losses. It is important that an investor proposing a leveraged purchase of securities be aware that a leveraged purchase involves greater risk than a purchase using cash resources only. To what extent a leveraged purchase involves undue risk is a determination to be made on an individual case basis by each purchaser and will vary depending on the circumstances of the purchaser and the security purchased.
It is also important that the investor be aware of the terms of a loan secured by securities. The lender may require that the amount outstanding on the loan not fall below an agreed percentage of the market value of the securities. Should this occur, the borrower must pay down the loan or sell some of the securities so as to return the loan to the agreed percentage relationship. In our example above, the lender may require that the loan not exceed 75% of the market value of the securities. On a decline of value of the securities to $90,000 the borrower must reduce the loan to $67,500 (75% of $90,000). If the borrower does not have cash available, the borrower must sell securities to provide money to reduce the loan.
Money is, of course, also required to pay interest on the loan. Under these circumstances, investors who leverage their investment are advised to have adequate financial resources available both to pay interest and also to reduce the loan if the borrowing arrangements require such a payment.
Risks Relating to Small Companies
Small companies can be riskier investments than larger companies. For one thing, they are often newer and may not have a track record, extensive financial resources or a well-established market. This risk is especially true for private companies or companies that have recently become publicly traded. They generally do not have as many shares trading in the market, so it could be difficult to buy or sell small companies’ stock when it needs to. All of this means their share prices can change significantly in a short period of time.
Risk Relating to Liquidity
Liquidity refers to the speed and ease with which an asset may be sold and converted into cash. Most of the securities held by an account may be sold easily at a fair price and thus represent investments which are relatively liquid. However, an account may invest in securities which are not liquid, i.e., which may not be sold quickly or easily. Some securities may not be liquid because of legal restrictions, the nature of the investment or certain characteristics of the security. The lack of purchasers interested in a given security or market could also explain why a security may be less liquid. The difficulty of selling illiquid securities may result in a loss or a reduced return for an account.
Risks Relating to Foreign Investments
Accounts that invest in foreign countries may face increased risk because the standards of accounting, auditing and financial reporting in these countries are not as stringent as in Canada and the U.S. These countries may receive less complete information on the securities they buy.
A change of government or a change in the economy can affect foreign markets. Governments may impose exchange controls or devalue currencies. This would restrict the ability of a portfolio manager to withdraw investments. Some foreign stock markets are less liquid and more volatile than North American markets. If a market has lower trading volumes, it can restrict the portfolio manager’s ability to buy or sell securities. This increases the risk for an account that only invests in foreign securities.
Risks Relating to Fund-on-Fund Investing
When an account invests some or all of its assets in securities of a pooled fund or a mutual fund (each, an “underlying fund”), the underlying fund may have to dispose of its investments at unfavourable prices to meet the redemption requests of the portfolio. This could have a harmful effect on the performance of the underlying fund that faces a large redemption. Furthermore, the performance of the portfolio is directly linked to the performance of the underlying fund and is therefore subject to the risks of the underlying fund in proportion to the amount of its investment in the underlying fund.
Risks Relating to Specialization
Some clients prefer a mandate which invests in a particular industry or geographic area. When an account specializes in this way, it can be more volatile. Specialization lets the portfolio manager focus on specific areas of the economy, which will affect the performance of the portfolio depending upon changes in the sector and the companies in the sector. Events or developments affecting that sector or part of the world may have a greater effect on the portfolio than if it had been more diversified.
Risks Relating to Securities Lending Transactions
Clients and funds may, for a fixed period of time, lend securities of their portfolio in exchange for collateral. To limit the risks, the client will negotiate with its custodian the following: the value of assets given as collateral, minimum level percentage coverage of the loaned securities and the type of collateral provided to the client.
The risk associated with securities lending transactions is mainly the borrower’s inability to pay the necessary consideration to maintain the collateral at the determined percentage. The client’s account could sustain a loss if the borrower is unable to return the loaned securities by the end of the agreed upon period and the market value of the securities loaned increases before the account buys back the securities. In this case, the collateral will no longer be sufficient to purchase the same securities on the market. Consequently, the client or the fund will have to use the money in the account to buy back the securities and will sustain a loss. This risk can be minimized by selecting borrowing parties with solid credentials, which have undergone a stringent credit evaluation.
Risks Relating to the Use of Derivatives
Derivatives are investment instruments such as options, forward contracts, futures and swaps. Usually, derivatives grant the right or require the holder to buy or sell a specific asset during a certain period of time. There are several types of derivatives, each based on an underlying asset sold in a market or on a market index. A stock option is a derivative in which the underlying asset is the security of a major corporation. There are also derivatives based on currencies, commodities and market indexes.
In the asset management industry, portfolio managers seek to improve the rate of return of portfolios by using derivatives and accepting a lower, more predictable rate of return through hedging transactions, rather than a higher but less predictable potential rate of return. This is called hedging. Derivatives may not be used for speculation. Derivatives may also be used to reduce the risk of currency fluctuations, stock market volatility and interest rate fluctuations. However, there is no guarantee that using derivatives will prevent losses if the value of the underlying investments falls. In some cases, derivatives may be used instead of direct investments. This reduces transactions costs and can improve liquidity and increase the flexibility of an account.
Derivatives may also be used for non-hedging purposes. Derivatives can help increase the speed and flexibility with which trades may be executed, but there is no guarantee that using derivatives will result in positive returns. Accounts that use derivatives also face a credit risk.
The following are examples of risk relating to the use of derivatives:
- The use of derivatives to reduce risk associated with foreign markets, currencies or specific stocks, called hedging, is not always effective. There may be an imperfect correlation between changes in the market value of the investment being hedged and the hedging derivative.
- There is no assurance that portfolio managers will be able to sell the derivatives to protect a portfolio. An over-the counter market may not exist or may not be liquid. Derivatives traded in foreign markets may be less liquid and therefore have more risk than derivatives traded in North American markets.
- There may be a credit risk associated with those who trade in derivatives. The account or the fund may not be able to complete settlement because the other party cannot honour the terms of the contract.
- There may be credit risk from dealers who trade in derivatives, such as a dealer going bankrupt.
- A securities exchange could impose daily limits on the trading of certain derivative instruments, making it difficult to complete a derivative contract.
- If an account or a fund is unable to close out its position on a derivatives contract, this can affect its ability to hedge against losses.
- The price of derivatives based on a stock index could be distorted if trading in some or all of the stocks that make up the index is interrupted.
- If trading in certain derivative instruments is restricted by a stock exchange, the account or the fund could experience substantial losses.
Risks Relating to Investing in Mutual Funds, Hedge Funds and Specialty Products
The prospectus, offering memoranda or other offering documents for mutual funds, hedge funds and/or speciality products managed by Wealhouse or third party managers detail the risk factors associated with such investments. The risks factors that are described in those offering documents are hereby incorporated by reference into this document.
Complaints and dispute resolution
If you have a complaint that relates to any advising or trading activity of Wealhouse or one of our representatives, we would like to hear from you. We will acknowledge your complaint in writing, investigate the matter and provide you with a written response.
Complaints should be reported in writing to the attention of the Chief Compliance Officer, by mail to Wealhouse Capital Limited Partnership, Suite 2404, 401 Bay Street, Toronto, Ontario, M5H 2Y4 or by facsimile to (416) 644-1191.
An independent dispute resolution or mediation service is also available to you, at Wealhouse’s expense, to resolve any dispute that might arise between you and Wealhouse about any advising or trading activity of Wealhouse or one of our representatives. Below is a description of our complaints handling process and the procedures to be followed if you wish to have your complaint resolved by an independent dispute resolution or mediation service.
If you have a complaint about our services or a product, contact us at the address/number noted above.
- what went wrong
- when it happened
- what you expect, for example, money back, an apology, account correction
Help us resolve your complaint sooner
- Make your complaint as soon as possible.
- Reply promptly if we ask you for more information.
- Keep copies of all relevant documents, such as letters, e-mails and notes of conversations with us.
We will acknowledge your complaint
We will acknowledge your complaint in writing, as soon as possible, typically within 5 business days of receiving your complaint. We may ask you to provide clarification or more information to help us resolve your complaint.
We will provide our decision
We normally provide our decision in writing, within 90 days of receiving a complaint. It will include:
- a summary of the complaint
- the results of our investigation
- our decision to make an offer to resolve the complaint or deny it, and
- an explanation of our decision
If our decision is delayed
If we cannot provide you with our decision within 90 days, we will:
- inform you of the delay
- explain why our decision is delayed, and give you a new date for our decision
You may be eligible for the independent dispute resolution service offered by the Ombudsman for Banking Services and Investments (OBSI).
If you are not satisfied with our decision
You may be eligible for OBSI’s dispute resolution service.
A word about legal advice
You always have the right to go to a lawyer or seek other ways of resolving your dispute at any time. A lawyer can advise you of your options. There are time limits for taking legal action. Delays could limit your options and legal rights later on.
Taking your complaint to OBSI
You may be eligible for OBSI’s free and independent dispute resolution service if:
- we do not provide our decision within 90 days after you made your complaint, or
- you are not satisfied with our decision
OBSI can recommend compensation of up to $350,000.
OBSI’s service is available to clients of our firm. This does not restrict your ability to take a complaint to a dispute resolution service of your choosing at your own expense, or to bring an action in court. Keep in mind there are time limits for taking legal action.
Who can use OBSI
You have the right to use OBSI’s service if:
- your complaint relates to a trading or advising activity of our firm or by one of our representatives
- you brought your complaint to us within 6 years from the time that you first knew, or ought to have known, about the event that caused the complaint, and
- you file your complaint with OBSI according to its time limits below
Time limits apply
- If we do not provide you with our decision within 90 days, you can take your complaint to OBSI any time after the 90-day period has ended.
- If you are not satisfied with our decision, you have up to 180 days after we provide you with our decision to take your complaint to OBSI.
Filing a complaint with OBSI
Telephone: 1-888-451-4519 or 416-287-2877 in Toronto
Information OBSI needs to help you
OBSI can help you best if you promptly provide all relevant information, including:
- your name and contact information
- our firm’s name and contact information
- the names and contact information of any of our representatives who have been involved in your complaint
- details of your complaint
- all relevant documents, including any correspondence and notes of discussions with us
OBSI will investigate
OBSI works confidentially and in an informal manner. It is not like going to court, and you do not need a lawyer.
During its investigation, OBSI may interview you and representatives of our firm. We are required to cooperate in OBSI’s investigations.
OBSI will provide its recommendations
Once OBSI has completed its investigation, it will provide its recommendations to you and us. OBSI’s recommendations are not binding on you or us.
OBSI can recommend compensation of up to $350,000. If your claim is higher, you will have to agree to that limit on any compensation you seek through OBSI. If you want to recover more than $350,000, you may want to consider another option, such as legal action, to resolve your complaint.
For more information about OBSI, visit www.obsi.ca
Form CRS –
Customer Relationship Summary
JUNE 16 2020
|Wealhouse Capital Limited Partnership is registered with the Securities and Exchange Commission (SEC) as an investment adviser. Brokerage and investment advisory services and fees differ, and it is important for you to understand these differences. Free and simple tools are available to research firms and financial professionals at Investor.gov/CRS, which also provides educational materials about broker-dealers, investment advisers, and investing.|
What investment services and advice can you provide me?We offer investment advisory services to retail investors, including discretionary asset management for high net worth individuals, based on each client’s unique investment needs. Our basic strategy is to exploit market inefficiencies, through buying and selling long and short positions in both equity and debt securities as well as derivatives.
MonitoringOur investment professionals continuously monitor and review client accounts. More formal reviews may be triggered by material changes in variables such as an account’s individual needs, or the market, political, or economic environment.
Investment AuthorityWe generally manage client accounts on a discretionary basis, subject to any client-imposed restrictions, which means we have the authority to determine the securities to be bought and sold as well as the amount, without obtaining client consent to specific transactions.
Limited Investment OfferingWe do not limit our advice to proprietary products, or a limited menu of products or types of investments.
Account Minimums and Other RequirementsThe minimum initial account size for a managed account is USD 1,000,000. This requirement may be waived or modified at our discretion.
Additional informationabout our services is available on Part 2 of our Form ADV, which is available here.
Ask your financial professional:
What fees will I pay?We charge an investment management fee that is typically 2.00% per annum, and is payable monthly in arrears. The fee is calculated as a percentage of the net asset value of each account as of the last day of the preceding month.
We also may charge an annual performance fee or enter into side letter agreements based upon a calculation methodology that is set out in each account’s investment management agreement.
All fees are negotiable only at our discretion.
Our fees are exclusive of brokerage commissions, transaction fees, service provider fees, and other related third-party costs and expenses which will be incurred by each Client.
Additional informationabout our firm’s fees are included in Item 5 of Part 2 of Form ADV, available here.
You will pay fees and costs whether you make or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time. Please make sure you understand what fees and costs you are paying.
Ask your financial professional:
Help me understand how these fees and costs might affect my investments. If I give you $10,000 to invest,how much will go to fees and costs, and how much will be invested for me?
What are your legal obligations to me when acting as my investment adviser? How else does your firm make money and what conflicts of interest do you have?When we act as your investment adviser, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the investment advice we provide to you. Here are some examples to help you understand what this means.
Ask your financial professional:
How might your conflicts of interest affect me, and how will you address them?
Additional informationabout conflicts of interest between us and our clients can be found on Part 2 of our Form ADV, which is available here.
How do your financial professionals make money?Our financial professionals receive a salary and may receive a discretionary bonus. Compensation is set with the intention of attracting and retaining highly qualified professionals. Compensation is based on a variety of factors, including the number, value and complexity of accounts under management, the performance of those accounts, and client satisfaction and retention.
Do you or your financial professionals have legal or disciplinary history?Yes ☐ No ☒
Visit Investor.gov/CRSfor a free and simple search tool to research us and our financial professionals.
Ask your financial professional:
As a financial professional, do you have any disciplinary history? For what type of conduct?
Additional information about our servicescan be found here. If you have any questions about the contents of this brochure or would like to request a copy of this relationship summary, please contact us at (416) 644-1190.
Ask your financial professional:
Who is my primary contact person? Is he or she a representative of an investment-adviser or a broker-dealer?Who can I talk to if I have concerns about how this person is treating me?