Securities regulations in Canada require all dealers and advisers to comply with certain rules in relation to conflicts of interest, particularly with respect to the disclosure of information in that regard.
Purpose of this Document
It is important for you to be informed about how we identify and respond to conflicts of interest in order to minimize their impact. We consider a conflict of interest to be any circumstance where the interests of different parties, such as the interests of a client and those of Eight Capital, are inconsistent or divergent.
Eight Capital takes reasonable steps to identify all existing material conflicts of interest, and those we would reasonably expect to arise. We then assess the level of risk associated with each conflict. We avoid any situation that would entail a serious conflict of interest or represent too high a risk for clients or market integrity. In any other situation entailing a conflict of interest, we ensure that appropriate measures are implemented to control the conflict of interest effectively, such as separation of business units and restriction of certain information. We will disclose to you information about conflicts, so that you may independently assess its importance when evaluating our recommendations and/or any activity by Eight Capital.
The purpose of this Statement of Policies Respecting Conflicts of Interest is to inform you of the nature and extent of conflicts of interest that may affect the services Eight Capital provides to you.
Eight Capital is registered as an investment dealer offering, research, investment banking and trade-execution services, to corporate accounts, pension funds, independent investment dealers, portfolio managers, investment, fund managers and other institutional customers.
Conflict of Interest Situations
The situations in which Eight Capital could be in a conflict of interest, and the way in which Eight Capital intends to respond to such conflicts, are described herein below.
A person or company issuing securities is considered a “related issuer” to Eight Capital if, through the ownership of, or direction or control over voting securities or otherwise, i) this person or company is an influential securityholder of Eight Capital, ii) Eight Capital is an influential securityholder of that person or company or iii) each of them is a related issuer of the same third person or company.
A connected issuer is an issuer distributing securities where there is a relationship between Eight Capital and the issuer, and any Partner, Director or Officer or related issuer of Eight Capital, which may lead a reasonable prospective purchaser of the securities of the connected issuer to question Eight Capital’s independence from the issuer with respect to the distribution of the securities of this issuer.
Relationships with Parties Related or Connected to Eight Capital
As of January 2021, Eight Capital is connected to the following issuer of securities.
Australis Capital Inc.
Eight Capital has a policy of complying in all respects with the applicable securities legislation and to make all the required disclosures. Eight Capital’s affiliation with Eight Merchant Capital and its subsidiaries make it necessary to put in place certain policies aimed at dealing with any potential conflicts of interest and ensuring that the best interest of Eight Capital’s clients is preserved.
Eight Capital is controlled by Eight Merchant Capital. Furthermore, Eight Merchant Capital is also the principal shareholder of the following dealers:
VIII Capital Corp. (registered in the United States only)
Eight Capital is therefore related to the above-mentioned dealers. Although there may be overlaps among the directors and officers of these entities, all of these entities are operated as separate legal entities.
These entities may, from time to time, cooperate in offering products and services for the benefit of our clients. It should be understood that in such cases, there is no exchange of client information among these companies without a client’s express prior written consent or unless the information is reasonably necessary in order to provide a specific product or service.
Eight Capital may obtain from or provide to the above-mentioned dealers management, administrative, referral and/or other services in connection with its ongoing business activities or the ongoing business activities of these other companies or transactions completed by it or these other companies. These relationships are subject to certain legislative and industry regulatory requirements which impose restrictions on dealing between related registrants intended to minimize the potential for conflict of interest resulting from these relationships. Eight Capital has also adopted internal policies and procedures which supplement these requirements, including its policies on confidentiality of information.
VIII Capital Corp.
VIII Capital Corp. is registered as a broker dealer in the United States with the Securities and Exchange Commission (“SEC”) in certain states, and is also a member of the Financial Industry Regulatory Authority (“FINRA”) and serves institutional customers in the United States.
Eight Capital is subject to a number of regulatory obligations, including the requirement to diligently pursue the best price and best execution of each client order on the marketplace. These obligations override any direct or indirect interest Eight Capital has in the above-mentioned companies.
Conflicts of Interest of Eight Capital Employees
In the ordinary course of performing their duties, our officers, employees, representatives and agents may find themselves in situations where their personal interests are in conflict with those of a client.
Eight Capital has equipped itself with a Code of Professional Conduct, a Policies and Procedures Manual and internal policies dealing with the situations related to its activities. Among other things, they reiterate that Eight Capital employees must never favour their own interests to the detriment of their responsibilities toward Eight Capital’s clientele. Those documents set forth the basic principles by which its employees’ conduct is guided, particularly including the following:
Confidential information: It is prohibited to use confidential information acquired in the course of or in connection with one’s duties, or exploit a situation for the purpose of obtaining an advantage of any kind;
Gifts, entertainment and compensation: It is prohibited to accept gifts, entertainment or compensation that could influence decisions to be taken in the course of performing one’s duties. In carrying out their duties, and to avoid any conflicts of interest situations, Eight Capital employees may not receive any other form of compensation than that paid by Eight Capital without the prior written approval of Eight Capital. In addition, Eight Capital ensures that its practices for compensating its representatives are not inconsistent with their obligations to its clients;
Other business activities: It is prohibited for Eight Capital employees to engage in activities that could interfere with or enter into conflict with their duties. Eight Capital has a policy respecting its employees’ other business activities. The policy is intended to detect and, where applicable, supervise and disclose or prohibit any conflicts of interest. Eight Capital does not authorize any other business activities that could harm the reputation of Eight Capital or one of its related entities. Furthermore, employees wishing to act as directors of officers of a public or private company must declare their intentions and be duly authorized by Eight Capital. Eight Capital will not permit any of its employees to engage in activities outside the scope of their duties, including, but not limited to, serving as a director of a company or other entity, without first ensuring that such activities do not compromise the interests of Eight Capital’s clients.
Client priority rule: The interests of clients must always be given priority over those of Eight Capital and its employees. For this reason and to avoid conflicts of interest, between two orders for the same security at the same price (or a better price), the order coming from a client is always executed prior to the one from Eight Capital or one of its employees.
Trading and financial or professional relationships with clients: Eight Capital employees may not have activities of a financial or professional nature with a client without Eight Capital’s prior authorization. The authorization process includes the assessment and supervision of any material conflicts of interest and is intended to ensure the client’s interests are completely protected.
Payment of order execution and research services through brokerage fees (“soft dollars”): Specific requirements apply to Eight Capital relative to any securities transactions wherein Eight Capital charges brokerage fees and which are carried out for an investment fund, a managed account under discretionary management or any other account or portfolio with regard to which an advisor exercises discretionary power respecting investments on behalf of third-party beneficiaries.
Such requirements are intended to ensure that an assessment is made as to whether or not the goods or services being paid for meet the definition of acceptable goods and services.
Private placements and personal investments: Eight Capital employees wishing to participate in a private placement, as a buyer or promoter, are subject to an Eight Capital authorization and verification procedure to avoid or supervise any possible conflict of interest situations resulting from such transactions. Eight Capital employees’ personal investments are also subject to Eight Capital policies and supervision.
Referrals: On occasion, clients may be referred by third parties to Eight Capital for the purpose of obtaining the products and services offered by Eight Capital. When such referrals involve a referral commission, they must comply with the existing regulations and be subject to the required disclosures to clients so referred. Such disclosures allow the clients concerned to make an informed decision with respect to the referral and to assess any potential conflicts of interest.
Other conflicts of interest
From time to time, other potential or actual conflicts of interest may arise. Eight Capital undertakes to continue taking the necessary steps to identify and respond to such situations fairly and reasonably, in keeping with the standard of care to which it is subject in its relationships with its clients. This Statement of Policies Respecting Conflicts of Interest of Eight Capital will be updated should there be any evolution with respect to material conflicts of interest.