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MANAGING CONFLICTS OF INTEREST

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FCM and its personnel owe each investor a duty of care and loyalty.  In order to carry out these duties, FCM must identify existing and potential relationships that are or could potentially be deemed a conflict of interest, assess the impact of the conflict to the clients/investors, devise policies and procedures to avoid, if possible, or manage such conflicts in a fair and equitable manner and disclose such conflicts to clients. FCM reviews its business and operations at least annually to determine where material conflicts of interest may exist that may create risk exposure for FCM and its clients/investors.  FCM will assess new business initiatives to determine whether the implementation of the initiative may create any material conflicts of interests or require modifications to any existing procedures intended to mitigate conflicts of interest.

 

The purpose of this disclosure is to provide clients/investors with a description of the conflicts of interest FCM may encounter.

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Corporate Finance Activities : FCM advises and assists corporate clients who are issuers in securities on raising capital from investors.  In doing so, FCM may have a business relationship with an issuer and a business relationship with clients who are investing in securities of that same issuer.  In these instances, FCM will ensure it discloses this potential conflict to each affected client.

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Fees and Commissions: FCM will receive compensation for dealing activities it conducts. This fee will be discussed with each client in advance of any transactions and fully disclosed in the applicable trade confirmation and transactional statement.

Connected or Related Issuers: where Fecteau Côté Manocchio is a connected or related issuer, proper disclosures will be made to the client.

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Gifts and Business Entertainment - where the Company’s personnel accept gifts or business entertainment of more than minimal value from securities issuers, investors or service providers, there is a potential that the individual may be incentivized to act in a manner which is not in the best interest of FCM and its clients. FCM has established standards for accepting gifts and business entertainment from persons or entities with which the Company has an existing or potential business relationship to attempt to minimize the potential for such conflict.

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Employees' Participation to New Issues:  FCM and its employees may participate with clients in any new issue of securities, may have been a participant in previous rounds of financing or may hold warrants on an Issuer that were earned on previous financings.  Information on the interest of FCM, its Dealing Representatives or employees in any relevant Issuer is available upon request by contacting the firm's Chief Compliance Officer.

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Employee Investment Accounts:  FCM does not maintain clients’ accounts, therefore employees are allowed to have their accounts at other registered firms. FCM has adopted a personal trading policy involving a Restricted Securities List that applies to all employees. These policies are designed to reasonably prevent employees from trading in advance of Client orders or on the basis of material non-public information.

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Incentive compensation 

Shareholders of FCM are registered as dealing representatives and can benefits from dividend payments, broker warrants and securities from issuers on successful distributions. FCM’s representatives could also receive or may also be rewarded with an incentive compensation in the form of salary or commission after recommending products distributed.  Representatives may be inclined to recommend a product with higher remuneration even if it is not the best product to meet the clients’ investments needs and objectives. Although this incentive compensation may potentially create a conflict of interest, FCM and its dealing representatives are obligated to ensure that the recommendations and transactions they make are suitable for their clients. The board of directors will ensure that representatives are not inclined to recommend a product that is not in clients’ best interests, that the incentive is not based solely on sales volumes, and that actions are taken against a representative in the event of inappropriate conduct.

 

Conduct of FCM representatives

FCM representatives must abide by strict professional standards. They must show discernment, impartiality and reasonable prudence, and conduct themselves with loyalty, integrity, honesty and fairness in all their interactions with clients, including disclosing any material conflicts of interest. All representatives must have a licence to practise their profession, which is issued by the regulatory authorities after a background check and verification of their credentials. They are subject to ongoing oversight of their professional activities and a mandatory continuing education program.

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In the normal course of their duties, FCM representatives may find themselves in situations where their personal interests can conflict with those of a client. The code of ethics and the compliance manual set forth standards that guide the conduct of FCM representatives. For instance, these standards prohibit them from:

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  • Using confidential information acquired in the course of their duties or exploiting a situation for the purpose of obtaining an advantage of any kind;

  • Accepting or giving gifts, entertainment or compensation that could influence decisions to be made in the course of their duties;

  • Engaging in outside activities that could interfere or conflict with their duties;

  • Entering into any transaction that they know conflict with the best interests of FCM clients;

  • Engaging in any activity, holding an interest in any business or participating in any partnership that could interfere or appear to interfere with the independence of their judgment as to the best interest of FCM clients.

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Non-proprietary products

As part of its activities, FCM only offers investment securities for mandates obtained by issuers and does not offer proprietary products. As a result, the suitability determination conducted by FCM and its representatives will not necessarily take in consideration the larger market for products. We will not make a thorough analysis and comparison of individual similar non-proprietary offerings that may be better, worse or equivalent in meeting the client’s investments needs and objectives. Note that FCM’s product offering can meet the needs of only a certain investor profile and representatives may refuse to complete transactions on a product that does not match the investor profile.

 

FCM-related companies 

The following entities may be considered related or connected to FCM:

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  • Placements SAMF Inc.  who is a shareholder of FCM and is controlled by Serge Fecteau our Chairman and Chief Operating Officer.

  • Phillips Square Quanto Solutions Ltd who is a shareholder of FCM and is controlled by Alexandre Cöté our President and Chief Executive Officer.

  • Investment SEMA Inc. Who is a shareholder of FCM and is controlled by Marco Manocchio our Managing Partner and and Chief Investment Officer.

  • Mosander Inc. provides consultancy services to FCM and is Controlled by Cedric Carignan-Leblanc our Chief Compliance Officer. 

 

FCM engages to disclose to investors the information if additional entities become related or connected to FCM.

 

Outside professional activities

Representatives may conduct paid or unpaid professional activities outside FCM. In such case, they are required to disclose them to FCM before exercising it. FCM will examine the nature of the activity and the representative’s relationship with the outside organization, the compensation they may receive and any potential conflicts of interest that may arise. 

Then FCM will issue a decision. If the outside professional activity is allowed, appropriate measures will be taken based on each individual circumstances to protect personal data and confidential information. 

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Client referral agreement 

FCM has numerous referral arrangements wherein it refers clients or receives referred clients and pays or receives commissions, fees or other benefits linked to the referral where referral parties have written agreements with FCM. Referral arrangements may be entered into with other registrants and non-registrants. Referral arrangements may, in certain circumstances, give rise to conflicts of interest as a result of the commissions, fees or other benefits provided for the referral or due to the relationship between the parties to the arrangement or for any other reasons. FCM has put in place, policies and procedures that are designed to ensure that commissions, fees and other benefits received or paid or provided, as applicable, in connection with such referral arrangements are appropriate and do not provide inappropriate incentives, and that any recommendation made by us stays in the client’s best interest.

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The referral arrangement is set out in a written agreement which will be entered into in advance of any referrals being made or services being offered. You are not obligated to purchase any securities or service provided by FCM in connection with such referral or otherwise. A summary of how the referral commission, fee is calculated and paid and to whom it is paid, potential conflicts of interest and other relevant information regarding each referral arrangement will be provided to affected investors when applicable.

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