Conflicts of Interest Policy


Contents

 

1 Introduction

1.1 Purpose & Objective

1.2 Application

1.3 Breach of this Policy

2 Definitions

3 Conflict of Interest Policy

3.1 Cashel’s AFSL Obligation

3.2 What is a conflict?

3.3 Insider trading

3.4 Confidentiality

3.4.1 Restriction in handling confidential information

3.5 Identification of conflicts of interest

3.6 Reporting of conflicts of interest

3.7 Recording of potential conflicts of interest

3.8 Assessment and Evaluation process

3.9 Rating of conflict

3.10 Disclosure in the provision of financial services

3.10.1 General Disclosure requirements

3.10.2 Disclosure

3.10.3 Transactions

3.10.4 When and how does a disclosure have to be made and by whom?

3.10.5 What has to be disclosed?

3.10.6 The consequences of breaching the disclosure requirements

3.11 Gifts

3.11.1 Corporate entertainment

3.11.2 Political contributions

3.12 Outside affiliations and employment

Appendix A Conflicts of Interest

Appendix B Conflict of Interest Register

Appendix C Reporting of Conflict Interest

Appendix D Conflict of Interest –Risk Matrix

 
 

1. Introduction

This Policy has been issued by Cashel Financial Services Pty Ltd (Cashel) ABN 23 106 177 093, holder of AFSL number 306803, which is part of the Cashel Group of companies. The Cashel Group comprises amongst other entities, Cashel House Group Pty Ltd ABN 67 131 322 024, Cashel Corporate Finance Pty Ltd ABN 87 131 324 608 and Cashel Private Wealth Pty Ltd ABN 41 138 358 933. This policy outlines Cashel’s policies and procedures for managing conflicts of interest that may arise:

 

• in dealings with Cashel or Cashel Representatives and clients or clients of Cashel; or

• in relation to conduct by Cashel Representatives during their employment with Cashel.

 

This policy extends to insider trading and confidentiality issues where a special type of conflict of interest may arise. Cashel expects that Cashel Representatives will act with honesty and integrity. Cashel’s reputation is dependent on Cashel Representatives meeting this requirement. In addition, certain legislative and common law requirements in most jurisdictions (including in relation to the provision of Financial Services, insider trading and confidentiality) apply to Cashel and Cashel Representatives regarding conflicts of interest.

 
1.1 Purpose and Objective
 

The purpose of this Policy is to describe Cashel’s policy in relation to the management of potential conflicts of interest through control, avoidance and disclosure of any conflict of interest (as appropriate). This is done through:

 

Identity

Identification of all potential, apparent and actual conflicts of interest that arise:

• in dealings between Cashel or Cashel’s Representatives and clients or clients of Cashel; or

• in relation to conduct by Cashel Representatives during their employment with Cashel.

 
 

Assess and evaluate:

Having policies and procedures in place to assess and evaluate any actual, apparent or potential conflicts of interest. This will permit the decision to be made as to whether a particular conflict of interest situation is manageable or whether it must be avoided.

 
 

Assess and evaluate:

Having policies and procedures in place to assess and evaluate any actual, apparent or potential conflicts of interest. This will permit the decision to be made as to whether a particular conflict of interest situation is manageable or whether it must be avoided.

 
   

Internal controls

Having processes and procedures in place to adequately monitor, manage and deal with conflicts of interest; and

 

Disclosure

Making adequate disclosure of conflicts of interest to clients where necessary to ensure that they are sufficiently informed. Disclosure of a conflict may not be appropriate in all circumstances. Some circumstances must be avoided or controlled (by allocation to another Representative).

 

Each Cashel Representative must carefully consider the conflicts that may arise in their daily business activities, or be perceived to arise and be an active participant in Cashel’s management of such conflicts of interest.

 
1.2 Application

Cashel’s policies and procedures with regard to the management of potential conflicts has been developed to ensure Cashel’s Representative are able to manage and potential conflicts as they arise in the normal course of business. The policy applies to all Cashel Representatives and Associates, and it is a requirement that Representatives understand and comply with the requirements set out in this Policy, Cashel’s Representative and Associates Trading Policy and all other policies which form part of Cashel’s compliance program.

 
   
1.3 Breach of this Policy

Compliance with this Policy is a fundamental term of employment, and any failure to comply may result in disciplinary action up to termination. Should you have any queries regarding the contents of this Policy please do not hesitate to discuss these issues with the Compliance Manager or one of the Responsible Managers.

 

2. Definitions

In this Policy the following definitions apply unless the context requires otherwise:

 

AFSL means Australian Financial Services Licence issued by ASIC.

 

ASIC means Australian Securities & Investments Commission.

 

Associates is defined as including all of your immediate family, and Related Entities and accounts to which you have trading authority.

 

Authorised Person means a person who has been appointed by the Cashel’s Compliance Committee to authorise Cashel Representative transactions.

 

Cashel means Cashel Financial Services Pty Ltd and its Related Entities;

Cashel Representative or Representative is defined as including all directors, officers, employees, authorised representatives (within the meaning of Chapter 7 of the Corporations Act); and Associates of Cashel.

Compliance Manager means the Cashel Representative responsible for the day to day management of Cashel Compliance program, policies and procedures..

 

Corporations Act means the Corporations Act 2001 (Cwth).

 

Financial Product Advice means a recommendation, a statement of opinion or an interpretation of information, or a report of any of those things, that:

 

• is intended to influence a person or people in making a decision about a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or

• could reasonably be regarded as being intended to have such an influence;

but does not include anything in an exempt document.

 

Financial Products means for the purpose of this Policy instruments including, but not limited to:

 

• shares or securities of any entity available for trading on a listed exchange;

• CFDs and other OTC derivative products;

• options, futures and other instruments available for trading on listed exchanges;

• foreign exchange, and other financial instruments.

 

Financial Services means:

 

• providing Financial Product Advice;

• dealing in a Financial Product (which includes arranging to deal in a Financial Product);

• making a market in a Financial Product; or

• providing custodial or depository service

 

Immediate Family means your spouse or de-facto spouse (including same-sex partners) and your non-adult children (18 years or less), if any. It does not extend to your parents or siblings unless you have authority on the trade on their account.

 

Policy means this “Conflicts of Interest” policy

 

Prescribed disclosure documents means (as applicable):

 

• Financial Services Guide (FSG);

• Statement of Advice (SoA);

• Product Disclosure Statement (PDS); or

• Any other document prescribed by legislation which is required to be provided to clients of Cashel

 

Prescribed Person means

 

• Cashel Representative spouses (including de-facto’s) and under-age children (referred to as Immediate Family),

• companies and trusts controlled by Immediate Family and subsidiaries of those companies;

• a person or entity who holds 20% or more of shares of Cashel (referred to as Controller);

• any Related Entities of a Controller;

• the Immediate Family of a Controller, and

• Cashel and its subsidiaries.

 

Related Entity is as defined in the Corporations Act.

 

Responsible Manager means the Cashel Representative(s) who are responsible for ensuring the implementation of effective, ongoing compliance arrangements which address Cashel’s general obligations as an AFSL holder.

 

Trading means subscribing for, buying or selling or entering into an agreement to so subscribe, buy or sell and in the case of an option, buying, selling or exercising the option.

 

3. Conflict of Interest

 
3.1 Cashel’s AFSL Obligation

As an AFSL holder Cashel has an obligation under the law to have in place adequate arrangements for the management of conflicts of interest that arise wholly, or partially, in relation to activities undertaken by Cashel or Cashel Representatives in the provision of Financial Services as part of the business of Cashel or a Cashel Representative.

 

Where this is not done or where conflicts of interest are not managed appropriately, Cashel’s AFSL may be suspended or cancelled and Cashel and/or Cashel Representatives may be liable in extreme cases to pay compensation, fines and/or suffer imprisonment.

 

Cashel requires Cashel Representatives to manage all conflicts of interest that arise wholly or partially in relation to the provision of Financial Services in accordance with this Policy.

 
 
3.2 What is a conflict?

A conflict of interest is any circumstance, whether actual, apparent or potential, where some or all of:

 

• a client’s interests are inconsistent with or divergent from some or all of Cashel’s or its Representative’s interests;

• a Representative’s interest are inconsistent with or divergent from some or all of Cashel’s interests; or

• a Representative’s interests are illegal or prohibited by law or regulation.

 

A conflict of interest may arise between:

 

• a client and the interests of Cashel;

• two or more business units of Cashel;

• two or more clients of Cashel; or

• a client and the personal interests of an Cashel Representative.

 

Cashel and the personal interests of a Cashel Representative. Examples of conflicts of interest are set out in Appendix A. Cashel’s risk matrix is set out in Appendix D.

 
 
3.3 Insider trading

Financial Products traded by Cashel Representatives may give rise to a special type of conflict of interest that is “insider trading”. There are legislative restrictions that apply to this type of conflict of interest and a summary of the relevant sections of the Corporations Act is set out below,

If a person has “inside information” relating to a Financial Product it is illegal for that person to:

• trade in those Financial Products;

• advise, procure or encourage another person to trade in those Financial Product; or

• pass on information to any other person (directly or indirectly) if the person knows or ought reasonably to know that the person may use the information in those Financial Products.

Any breach of the insider trading prohibition by a Cashel Representative can have very serious consequences to you personally, potentially Cashel and (if applicable) our clients, and you may be subject to:

• criminal liability: penalties include fines or imprisonment;

• civil liability: you can be sued by another party or Cashel for any loss suffered as a result of illegal trading activity; and

• forfeiture of any profits made by insider trading.

It is the responsibility of each Cashel Representative to ensure that they do not do any of the things prohibited by the insider trading law. A breach of the law or this Policy is regarded as serious by Cashel and will lead to disciplinary action including termination of employment.

For further information on insider trading prohibitions Cashel Representatives should read the Cashel Representative and Associated Trading and Information Barriers policies.

 
3.4 Confidentiality

During the course of their employment, Cashel Representatives may have access to information relating to clients of Cashel including information:

 

• considered to be sensitive by clients; or

• relating to various aspects of Cashel’s commercial activities that may be confidential.

 

Confidential information includes any non-public information relating to:

 

• a client, including personal information relating to the client, the client’s business or personal affairs (e.g. financial information, transactions that the client has undertaken or plans to undertake); or

 

• Cashel’s commercial activities.

 

Cashel considers that maintaining customer trust and confidentiality is of paramount importance in a successful commercial advisory relationship. Preserving the security and integrity of customer information is vital to maintaining client trust and confidence. Cashel Representatives should refer to Cashel’s Privacy Policy for further information relating to personal information of a client.

 
3.4.1 Restriction in handling confidential information

Under the law there is a duty of confidentiality owed by Cashel to its clients. There are four exceptions to the duty:

• where disclosure is compelled by law;

• where there is a duty to the public to disclose;

• where Cashel’s interests require disclosure; and

• where disclosure is made with the express or implied consent of the customer.

As a general rule, Cashel Representatives must not disclose confidential information to a third party. If you are requested to disclose confidential information relating to a client of Cashel you must immediately contact the Compliance Manager and not disclose confidential information without approval from the Compliance Manager.

Cashel Representatives must use their best endeavours to prevent the publication or disclosure of any confidential information. It should not be used for personal gain or benefit or for improper advantage of any Representative of Cashel.

 
3.5 Identification of conflicts of interest

It is the responsibility of each Cashel Representative to be alert to, aware of and identify any conflicts of interest (whether actual, apparent or potential) which might arise:

• when dealing with clients,

• during employment with Cashel, or

• when observing others.

Cashel maintains a conflicts of interest register, an example of this is set out in Appendix B. The conflicts of interest register will set out some typical conflicts of interest that might be encountered by Cashel Representatives in their various business units and the manner in which they should manage those conflicts of interest.

 
3.6 Reporting of conflicts of interest

Cashel Representatives are required to report any actual, apparent or potential conflicts of interest to their Responsible Manager and the Compliance Manager. For practical purposes reporting to either one by a Representative will be sufficient in the first instance. The form as set out in Appendix C should be completed by the Representative who identified the conflict of interest.

 
3.7 Recording of potential conflicts of interest

Each Responsible Manager should record in electronic format details of certain potential conflicts that may arise as a result of Cashel’s involvement in mandates or deals or entering into research agreements, mandates, where Cashel is approached by a client to assist in an acquisition or sale, market sounding, valuation, placements or book builds. Whenever Cashel agrees to act, submits a request for proposal or enters a confidentiality agreement with a client, a reportable potential conflict may arise requiring the creation of a conflict entry.

 
3.8 Assessment and Evaluation process

When a conflict of interest is identified it must be assessed and evaluated to determine the appropriate response. This policy is a consequence based policy. This means that conflicts are assessed and evaluated on the basis of the consequences that could flow from a conflict. Under this Policy, conflicts are rated into the three categories set out below. In order to determine which rating applies to a conflict, it is necessary to identify:

• the consequences that could follow from that conflict of interest; and

• the probability of each consequence occurring.

 
3.9 Rating of conflict of interest

Conflicts of interest are to be rated into one of three categories: The Compliance Manager will provide management guidance to assess conflicts.

 

(1) Serious Conflict (SC) which is to be avoided:

There is an actual, apparent or potential conflict of interest that in the reasonable opinion of the relevant Responsible Manager could (and is likely to) result in:

 

• an extreme consequence i.e. significant breach of the Corporations Act or legislation in any other jurisdiction, breach notification to ASIC or ASX or any other regulator, AFSL suspension, reputational damage to Cashel, termination of employment of the representative involved ;

 

• have a significant disadvantageous consequence for another person having regard to the objectives of this Policy; or

• result in a breach of this Policy.

 

(2) Manageable Conflict

There is actual, apparent or potential conflict of interest that in the reasonable opinion of the relevant Responsible Manager;  

• could but is unlikely to result in an extreme consequence;

• could result in a Serious Conflict;

• is not a Serious Conflict and should be a Manageable Conflict having regard to the objectives of the Policy and the potential consequences of the conflict of interest; or

• would result in a minor or technical breach of the Policy.

 

(3) Low Conflict (LC):

No conflict of interest or an insignificant conflict of interest exists as assessed by the Responsible Manager and the Compliance Manager.

 
3.10 Disclosure in the provision of Financial Services

Cashel must make appropriate disclosures to affected clients as part of its arrangements to manage conflicts of interest. Cashel Representatives must ensure that clients are adequately informed about any conflicts of interest that may affect the provision of Financial Services to them. The Compliance Manager will provide a script for use to guide how clients are informed.

 
3.10.1 General Disclosure requirements

All Financial Product Advice (including reports and ratings publications) provided by Cashel should contain or be accompanied by all information that a reasonable person might or should take into account in assessing that Financial Product Advice. The information should include details of any factors that could influence the client’s decision. The client should be placed in a position where they can objectively assess the value to them of the Financial Product Advice they receive.

Employees should consider the materiality of the impact of any conflict and ensure that any disclosure about conflicts of interest is:

• timely, prominent, specific and meaningful to the client;

• occurs before or when the financial advice is provided, but in any case at a time that allows the client a reasonable time to assess its effect; and

• refers to the specific service to which the conflict relates.

There are some situations where disclosing a particular conflict will be inappropriate. There may be situations in which conflicts of interest arise that are confidential, and even amount to inside information. In such situations representatives should discuss the matter with their Responsible Manager and/or the Compliance Manager.

 
3.10.2 Disclosure

The following factors should be considered in assessing the disclosure that should be provided to a client:

 

• the level of financial sophistication of the client;

• the extent to which third persons are likely to rely, directly or indirectly, on the service (e.g. where the advice is given to an intermediary client (i.e. financial service provider) in circumstances where it is likely to be passed on to retail clients)

• how much the client already actually knows about the specific conflict; and

• complexity of the service Cashel will provide.

 
3.10.3 Transactions

Where a conflict of interest has been identified in relation to a particular transaction consideration must be given to what disclosure is required to be made to parties to that transaction. In determining this, regard should be given to information that the other parties to, and clients affected by, the transaction would consider material. In some instances where the conflict has a serious consequence or potential impact on Cashel and its clients the only satisfactory way of managing the conflict is to avoid it. It is not always appropriate to simply disclose conflicts to a client.

 
3.10.4 When and how does a disclosure have to be made and by whom?

If a matter should be disclosed, it must be disclosed at the same time and in the same manner as the advice or recommendation (i.e. verbal or written). The disclosure must be approved by the Compliance Manager, made by the person giving the advice or making the recommendation (i.e. verbal or written). This includes published material such as research reports or newsletters. In the context of research reports and newsletters, the retail disclosure standard should be adopted because the research report or newsletter is likely to be received by retail clients.

 
3.10.5 What has to be disclosed?

As a general principle, Cashel Representatives should always disclose any material conflicts of interests of which they are aware (i.e. interests which may influence our motivation behind the advice or the client’s likely reaction to (or judgement of) the research, advice or recommendation).

 

Cashel Representatives must disclose the particulars of any material interest(s) of which he or she is aware relating to:

 

• any commission or fee, or any other benefit or advantage, whether monetary or not, direct or indirect, that the person giving the advice or an Associate has, will or may receive in connection with the advice; and

 

• any other monetary or other interest, whether direct or indirect, of the person giving the advice or an Associate, that may be capable of influencing the representative.

 

The nature of the interest or its materiality may differ depending on whether the recommendation is to ‘buy’, ‘sell’, ‘hold’ or ‘accumulate’ or the ratings applied by Cashel.

 

Disclosable interests are those which flow from third-parties or personal holdings about which the client would not be aware. The brokerage payable by the client does not have to be disclosed. Commission-split or trailing commission arrangements or direct incentives to promote a particular issuer or its Financial Products (whether listed or unlisted) must be disclosed. Research and printed recommendations badged by Cashel must disclose material house positions, material positions held by Related Entities and/or other Associates such as directors, executive officers or the company secretary and any placement or lodgment or other fee or interest Cashel may receive relevant to the Financial Products recommended.

 

Directors must disclose material personal and Associates’ holdings and those of Cashel and its Associates. Representatives must disclose material personal and Associates’ holdings and those of Cashel and its Associates when the advice is given in writing or (if known) when advice is given verbally.

 

Generally, a Cashel Representatives’ personal holdings are unlikely to be sufficiently material in relation to liquid ASX listed, Morgan Stanley Capital International or top 100/200 stocks. However, holdings become more ‘material’ the less the stock’s liquidity or market capitalisation.

 

The Corporations Act requires disclosure of substantial holdings. Employees of Cashel must disclose directorships, consultancy or advisory relationships relating to the issuer or Financial Product (subject to compliance with information barriers requirements). Where Cashel (or a Related Entity) has acted as manager, co-manager of a recent offering (within one year), that fact must be considered as a conflict.

 
3.10.6 The consequences of breaching the disclosure requirements

Non-disclosure of a conflict is a breach of the law. If disclosure should have been made and wasn’t made, the person giving the advice is directly liable for any damages or losses suffered as a consequence of the client acting on the original advice. Because it may also be construed by ASIC as Prohibited Conduct or conduct which shows Cashel has not acted in an efficient, honest or fair manner, ASIC may make a banning order against the employees(s) involved and/or separate actions against Cashel where the person involved was not adequately supervised, sufficiently trained or competent. ASIC may be concerned about the effectiveness of the supervising Responsible Manager. It could be grounds for ASIC to take disciplinary action against Cashel and the Cashel’s Responsible Manager and to make a banning order.

 
3.11 Gifts

A non-monetary benefit is not a conflicted remuneration if it is less than $300 for each AFSL holder or Representative that receives the benefit and identical or similar benefits are not given on a frequent or regular basis.

 

ASIC is more likely to consider a benefit given on a frequent or regular basis if it is given at least three times over a one year period to the same AFSL holder or to the same Representative.

 

From time to time Cashel Representatives may be offered gifts, benefits or corporate entertainment (see 3.11.1). These gifts or benefits may influence or could give rise to a sense of obligation, which may conflict with their duties to Cashel or our other clients.

 

At no time should any Cashel Representative give or receive any gift/benefit or accept an invitation that would in any way cause Cashel embarrassment (e.g. attending adult entertainment venues with a client or potential client), or do anything that could alter the Cashel Representative’s performance of his or her duties or influence decisions.

 

Under no circumstances should Cashel Representatives accept any invitations to events other than lunch or breakfast research / company briefings, from an organisation that is tendering for Cashel business. If employees are unsure of their position in this regard they should consult their Responsible Manager and/or the Compliance Manager before attending the briefing.

  Cashel recognises that there are certain circumstances where the giving or receiving of nominal gifts by employees may be acceptable where the value or the nature of the gift would not be regarded by an observer as improper.

 

Retaining any gift greater than the nominal value must be specifically approved by the Responsible Manager (‘Nominal value’ is defined as one hundred Australian dollars (AUD$100) or less.) Gifts valued above the nominal value, not approved for retention must be surrendered to the Compliance Manager or CEO.

 

Cashel Representatives should note that the giving or receiving of cash or cash-convertible gifts is prohibited.

 

Representatives who receive gifts of nominal value must notify their Responsible Manager. The gift must be assessed by the Responsible Manager to determine if the gift must be surrendered.

 

Cashel prohibits making gifts (other than meals and those of nominal value e.g. Cashel merchandising) to employees of other firms, to clients or to others without approval from the Responsible Manager.

 
3.11.1 Corporate entertainment

From time to time Cashel Representatives may be invited to attend corporate lunches or dinners or receive invitations to attend various corporate events (e.g. sporting events and theatre shows). Representatives are free to accept meal invitations from existing suppliers and fund managers and Financial Product promoters only if they feel that the invitation is given in a transparent manner without the expectation of obligation. For the purpose of clarity, accepting a meal invitation to discuss business issues is acceptable. Representatives should not accept meal invitations that are social in nature e.g. meals or functions that include partners.

 

Unless approved by a Responsible Manager or CEO, Representatives are not permitted to accept invitations to corporate events from Intermediaries or Financial Product issuers or promoters. Cashel approval will depend on demonstrable evidence that attendance at these events can lead to material benefit for our clients or Cashel.

 
3.11.2 Political contributions

All political contributions and activities of Cashel Representatives are to conform to the requirements of the Australian

 

Electoral Commission, the applicable laws in the various States as well as the following procedures set out below.

 

Cashel Representatives may lawfully engage in political activities subject to the following requirements.

 

No contributions or commitments to make contributions may be made by or on behalf of Cashel. This prohibition includes:

 

• contributions to incumbents, candidates and in relation to matters which are the subject of a ballot or referendum;

• payments of honoraria;

• donation of Cashel’s services or any other things of value to an incumbent or candidate for the purpose of influencing any election, to reduce the debt in connection with an election, or to reduce the transition or inaugural expenses incurred by a successful candidate; or

• donations of Cashel’s services or any other provision of things of value in relation to an issue the subject of a ballot or referendum.

 

Cashel Representatives are not to engage in political activities during normal working hours or make use of Cashel’s resources, facilities or corporate name.

 

No Cashel Representative may solicit political contributions for any candidate, campaign, ballot/referendum matter or political action committee from any other employees or from anyone other person or entity without prior approval of the CEO. If permitted, soliciting must not be conducted in a manner which indicates or suggests that:

 

• it is a job requirement;

• it would be personally beneficial to contribute; or

• that retribution may or will be taken if no contribution is made.

All Cashel Representatives are prohibited from making political contributions for the purpose of inducing or influencing the obtaining or retaining of business.

 
3.12 Outside affiliations and employment

Where Cashel Representative wishes to supplement their income by external employment or be involved in charitable, civic, sporting or educational organisation or affiliation, Cashel requires the employee to first seek approval from the CEO in conjunction with the Compliance Manager before engaging in any external employment or club affiliation.

In general Cashel will not object to a Cashel Representative working externally or being a member of a club or affiliation where the employment or affiliation does not:

 

• adversely impact on the employee’s capacity to perform their functions and responsibilities while employed at Cashel;

• bring the Cashel brand into disrepute or put Cashel at a competitive disadvantage; and

• expose the employee to undue harm or influence.

 
 
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