What is Wealthsimple's policy on conflict of interests and fair allocation?

What is Wealthsimple's policy on conflict of interests and fair allocation?

A basic overview of our policy is as follows:

Conflicts of Interest: Wealthsimple also manages the portfolios of other clients but we will make decisions based on what is right for you.

The Relationship Between Wealthsimple and the Custodian: ShareOwner is the custodian that Wealthsimple uses to hold assets, execute trades, etc. You are a client of both Wealthsimple and Canadian ShareOwner Investments Inc.

Allocation of Investment Opportunities: We will treat your accounts fairly and not display favouritism or discrimination.

Referral Arrangements: If Wealthsimple takes part in any referral programs relating to you, we will let you know.

Related and Connected Issuers: For clarity, Wealthsimple may, on behalf of its clients, buy or sell Purpose Funds or Mackenzie Funds. However, any relations do not influence Wealthsimple’s Investment Committee, which assesses and decides which securities Wealthsimple will buy or sell for its clients

You can see a more detailed description of our policy below:

1. Conflicts of Interest

Wealthsimple performs portfolio management services for various accounts other than your accounts. The services are not exclusive, and, subject to the following, Wealthsimple or any affiliate is not prevented from providing similar services to other clients (whether or not their investment objectives and policies are similar to yours) or from engaging in other activities. Wealthsimple may give advice and take action concerning its other clients, which may be the same as, similar to or different from the advice given, or the timing and nature of action taken, concerning the accounts. Wealthsimple shall not be obligated to purchase or sell for you any security or other property which Wealthsimple purchases or sells for any other account if, in the sole discretion of Wealthsimple, such transaction appears unsuitable, impractical or for any reason undesirable for the Accounts.

2. The Relationship Between Wealthsimple and the Custodian

ShareOwner is registered as an Investment Dealer in each province and territory of Canada and is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. ShareOwner and Wealthsimple are separate, but affiliated entities. Although they are separate entities, information about you and your account may be shared between Wealthsimple and ShareOwner in order to service your account.

3. Allocation of Investment Opportunities 

Subscriptions or orders for multiple Accounts may be grouped and submitted together. In such circumstances, each Account generally receives its pro rata share and the same blended price of each fill wherever practicable. In the event that securities are purchased for the accounts of more than one client and an insufficient number of securities are available to satisfy the purchase order, the securities available will be allocated to the extent reasonably possible pro rata based on the size of the Accounts. There may be times, however, where strict application of this policy would not lead to a fair, practical and reasonable allocation. In such circumstances, allocation by a method other than this policy will be permitted, provided that such allocation produces a fairer and more reasonable result. 

4. Referral Arrangements

Wealthsimple may enter into referral arrangements as described under applicable securities law. The terms of any referral arrangements made in respect of the Account will be disclosed to the Client before any referral takes place. 

5. Related and Connected Issuers

As a part of its business activities, Wealthsimple may buy or sell the securities of its “related” or “connected” issuers (defined below) on behalf of its clients, exercise its discretionary power to buy or sell such securities pursuant to discretionary management agreements, or make recommendations in respect of such securities, including funds managed by Purpose Investments Inc. or Mackenzie Financial Corporation. For clarity, Wealthsimple may, on behalf of its clients, buy or sell Purpose Funds or Mackenzie Funds. Purpose Funds may be considered “connected” issuers as a result of the marital relationship between the principal of Purpose Investments Inc. and a direct or indirect shareholder of Wealthsimple. Neither of such individuals is involved with, nor has the ability to influence, Wealthsimple’s Investment Committee, which assesses and decides which securities Wealthsimple will buy or sell for its clients. Mackenzie Funds may be considered “connected” issuers as a result of a third person owning or controlling, indirectly, more than 20% of the voting securities of Mackenzie Financial Corporation and Wealthsimple. Wealthsimple will only buy or sell the securities of Purpose Funds or Mackenzie Funds on behalf of its clients in accordance with applicable securities laws and based on its good faith determination of the best interest of its clients. For more information on how Wealthsimple controls the potential conflict of interest, please contact us.

As defined in subsection 1.2(2) of National Instrument 33-105 Underwriting Conflicts, a person or company is a “related issuer” of another person or company if:

  • the person or company is an “influential security holder” of the other person or company,
  • the other person or company is an influential security holder of the person or company, or
  • each of them is a related issuer of the same third person or company.

The term “influential security holder” generally refers to a situation where a person or company or professional group (which includes a registered firm and its officers, directors, employees and affiliates):

  • owns or controls, directly or indirectly, more than 20% of the voting securities of an issuer,
  • owns or controls, directly or indirectly, more than 20% of the dividends or distributions to the holders of the equity securities of the issuer, or more than 20% of the amount to be distributed to the holders of equity securities of the issuer on the liquidation or winding up of the issuer,
  • controls or is a partner of the issuer if the issuer is a general partnership,
  • controls or is a general partner of the issuer if the issuer is a limited partnership,
  • owns or controls, directly or indirectly, more than 10% of the voting securities of an issuer, and together with its related issuers, is entitled to nominate at least 20% of the directors of the issuer, or its officers, directors or employees constitute at least 20% of the directors of the issuer.

The term “connected issuer” means, for a registered firm or registered individual:

  • an issuer distributing securities, if the issuer or a related issuer of the issuer has a relationship with any of the following persons or companies that may lead a reasonable prospective purchaser of the securities to question if the specified firm registrant and the issuer are independent of each other for the distribution:
  • the specified firm registrant,
  • a related issuer of the specified firm registrant
  • director, officer or partner of the specified firm registrant,
  • a director, officer or partner of a related issuer of the specified firm registrant, or
  • a selling security holder distributing securities, if the selling security holder or a related issuer of the selling security holder has a relationship with any of the following persons or companies that may lead a reasonable prospective purchaser of the securities to question if the specified firm registrant and the selling security holder are independent of each other for the distribution:
  • the specified firm registrant,
  • a related issuer of the specified firm registrant
  • a director, officer or partner of the specified firm registrant
  • a director, officer or partner of a related issuer of the specified firm registrant.
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