In the normal course of their activities, our directors, officers,
employees, representatives and agents may find their personal
interests are in potential conflict with those of a client.
We have developed a Code of Conduct and Ethics, a Compliance Manual
and internal policies. Among other things, these documents state that
our employees must never put their own interests ahead of their
responsibilities toward clients or NBF and that they should not under
any circumstances exert undue pressure on clients to acquire a product
or service. They also reinforce the fact that any existing or
reasonably foreseeable material conflict of interest must be addressed
in a manner that is fair, equitable, transparent, and in the clients’
Here are some highlights from these documents:
Confidential information: Our employees are prohibited from
using confidential information gained in the course of their duties
for their personal benefit or for the benefit of a third party. This
includes information related to clients, transactions or client
accounts. Our employees may not exploit any situation for the purpose
of obtaining an advantage of any kind that would compromise
confidential client information.
Gifts, entertainment and compensation: Employees are prohibited
from accepting gifts, entertainment or compensation that could
influence the decisions they make in the course of performing their
duties and to compromise or give the impression of compromising their independence.
All decisions must remain objective and impartial, in the best
interests of clients. Unless they have our prior approval, our
employees may not receive any form of compensation other than what we
pay them. We ensure that our employee compensation practices do not
conflict with employees’ obligations toward our clients.
Other business activities: Employees are prohibited from
engaging in activities that could interfere or be in conflict with
their duties. We will not permit any employee to engage in business
activities outside the scope of their duties without our prior
approval and without ensuring that these activities do not compromise
our clients’ interests or harm our own reputation or that of the
industry. We would also consider an employee to be in a potential
conflict of interest if he/she were designated as a beneficiary of a
client’s estate or otherwise inherit from a client’s estate.
Client best interests: The interests of clients must always be
given priority over those of NBF and its employees. When we receive
two orders for the same security at the same or better price, we
always execute the client’s order before our or our employee’s order.
This also means that the Wealth Advisor has an obligation to choose
the best investment for a given client, even if it is an investment
that directly competes with our offerings. No Wealth Advisor is
authorized to make recommendations solely for the purpose of
generating revenue or promoting in-house investments if there is no
benefit to the client and the recommendations do not constitute the
best execution and the best investment for the client.
Referrals: On occasion, third parties may refer clients to us
for our products and services. We or our Wealth Advisors may also
refer clients to third parties. In all cases, referrals should
prioritize clients’ interests. When these referrals involve a
commission, the commission must comply with existing regulations, and
we notify the referred client about the commission and other relevant
information. This allows the client to make an informed decision about
the referral and to consider any potential conflict of interest. Any
agreement must be made in the best interests of clients and not for
the purpose of receiving a commission.
Corporate financing, advisory, and research activities: We
offer corporate financing, research, and investment advisory services
for a fee. We have established procedures and policies to avoid
conflicts of interest and to protect the confidentiality of privileged
information. In addition, our departments involved in advisory and
research activities are physically isolated from all our trading
activities thus preventing the unauthorized transmission of privileged information.
Underwriting and market-maker activities: In some cases, we may
act as an underwriter, meaning we administer the public issue and
distribution of securities. We may also be a market maker, which means
we hold an inventory of securities and use it to quickly complete buy
and sell orders. In some cases, the interests of the parties we work
for can differ from the interests of our clients. Regulations govern
the various roles we play. In a case of conflict, we are duty-bound to
abide by the applicable legislations and regulations. We will always
give the client’s best interest priority over our own interest so that
any recommendation constitutes the best execution and the best
investment for the client.
Policy respecting the allocation of securities: We have a
policy that deals with the allocation of securities among our clients
when there are not enough securities to meet the demand. This policy
is intended to ensure fair distribution of securities and thus avoid
that a client entitled to a quantity of securities does not receive
his fair share.
Brokerage commissions: We charge brokerage fees when a Wealth
Advisor exercises discretionary power by trading investments on behalf
of a third party. Examples include transactions carried out for an
investment fund or for an account under discretionary management. We
adhere to requirements intended to ensure that the brokerage fees are
proportionate to the services the client receives. Also, we ensure
that the client receives fair and reasonable benefits considering both
the use of services and the amount of client brokerage commissions paid.
Private placements and personal investments: Employees who wish
to participate in a private placement, as a buyer or promoter, must
first go through our authorization and verification procedure to avoid
or supervise conflicts of interest. Our employees’ personal
investments are also subject to our policies and supervision.
Employees should not make personal investments based on confidential
information held by NBF. We must always put clients’ interests first
over those of employees.
Discretionary management: We provide discretionary management
services to our clients. At times, certain securities in the managed
accounts may also be held by our employees, officers or managers, or
may be issued by our related or connected issuers. We may also offer,
as part of our discretionary management programs, public and private
investment funds (also known as “Private Pools” or “Private
Portfolios”) managed by National Bank Investments Inc. or by National
Bank Trust Inc., both affiliates of NBF (collectively the “Related
Funds”) and for which NBF or related entities:
› act as
investment fund manager, portfolio manager, or trustee, or
provide other services to the funds.
We may also recommend that you invest in Related Funds even if you
do not use our discretionary management services.
Some of these Related Funds may, in turn, invest a part of their
assets in other underlying funds that are Related Funds. NBF and its
divisions may receive fees or other compensation from these Related
Funds, such as management fees, administrative fees, custody fees,
securities lending fees and trading fees. The managers of the Related
Funds will ensure that investments by a Related Fund in another
Related Fund will not result in any duplication of management fees for
the same service and that the services are provided, at a minimum, on
market standard terms.
The decision to invest a Related Fund in underlying Related Funds is
made based on different criteria. Faced with comparable products, but
offered by competitors, the manager may prefer to invest in Related
Funds. We must always put clients’ interests first over those of NBF
and its employees.
Compensation and other benefits: We are compensated for the
business we perform for our clients. The level of compensation varies
depending on the product and the type of remuneration. At all times,
recommendations to clients are appropriate and are intended to give
precedence to clients’ interests, regardless of the compensation
associated with the recommended product or service. There is no undue
pressure on clients to acquire a product or service. In order to
oversee these practices and ensure the absence of conflicts of
interest, several controls are in place. Here are some examples of how
compensation could lead to a conflict of interest, and how we avoid
− Compensation and benefits from issuers: Issuers of
securities or other related parties may compensate us based on the
sale of their securities to our clients. An example is trailing
commissions we receive for selling mutual funds. Securities
regulations require issuers to include details in their offering
documents about such arrangements and the compensation involved.
Issuers can also pay or reimburse us for certain costs (registration
for educational events, sales communications, conferences, seminars,
etc.), allow us to attend conferences or seminars, and provide us with
promotional items of minimal value. Regulations surrounding these
sales practices are very strict and only benefits that meet the
conditions must be accepted.
− Currency and interest rates: On occasion, we may be
compensated indirectly. For example, in a foreign currency exchange,
we may receive compensation based on the difference between the price
our clients pay for the currency and the price we pay for the same
currency. We could also be compensated based on the difference between
the interest rate we receive on invested funds and the interest rate
actually paid to our clients.
− Marketplaces: We may receive compensation based on the
marketplace we use to carry out our clients’ transactions. Regulations
control the conditions under which we carry out our client transactions.
− Over-the-counter securities: We may receive compensation
for the purchase or sale of some over-the-counter securities. These
investments are traded outside of the formal exchanges. We mark up the
final price clients pay when they buy these securities, and mark down
the final price clients receive when they sell these securities.
− Compensation for Wealth Advisors: Wealth Advisors qualify
for different types of incentives, such as trips or bonuses, when the
revenue they generate crosses a certain threshold. We prohibit Wealth
Advisors from making recommendations solely for the purpose of
generating revenue without any benefit to the client. We have a
comprehensive supervision program in place to monitor Wealth Advisors
and ensure that any recommendation they make is suited to the client’s
investment objectives, time horizon, risk profile, investment
knowledge, and overall financial situation.
− Fee-based or commission accounts: There may be periods when
it would be cheaper for clients to pay a commission per trade instead
of a fee based on the assets they hold. Wealth Advisors must always
ensure that clients are using the billing method most suitable to
Proxy voting: Your Wealth Advisor may ask whether you intend to
vote on a specific matter or question pertaining to the securities you
hold. Your Wealth Advisor may even recommend you vote in a specific
manner. Our employees are prohibited from accepting payment from the
issuer or any other party that relates to any request for your vote or
a proxy in their favour. Our policy is that any recommendation the
Wealth Advisor makes must be in the best interests of the client.
Transaction between two clients: In some circumstances, we may
have one client who wants to buy a security through us and another
client who wants to sell the same security through us. Our policy is
to ensure that we make such transactions at fair market value. Neither
we nor our Wealth Advisors are authorized to favour one client over
another. Regulations and our policies require Wealth Advisors to make
only suitable investment recommendations to clients in their best interests.
Margin accounts and investment loans: A margin account or an
investment loan generates debit interest and additional fees or
commissions when we invest the amount borrowed. This benefits the
Wealth Advisor, as well as us or one of our related companies that
make the loan. Any investment recommendation made by the Wealth
Advisor must be suitable for the client and puts his interests first.
Our employees cannot recommend a product solely on the basis of the
amount it will bring us.