Conflict of Interest Disclosures
Description of Conflicts of Interest
Conflicts of interest may exist in any interaction clients have with our company; conflicts can be actual, perceived, or potential.
Who We Are
Clarus Securities is an institutional investment dealer founded on providing sales, trading, and investment banking services primarily in the small to mid-cap market.
Clarus restricts its product offering to private placements, prospectus offerings and the execution of equity trades on a commission basis. Clarus does trade options, bonds or transact in mutual funds or hedge funds that provide different compensation structures. Due to the limited product offering, Clarus does not provide portfolio services, but depending on account type, will custody customer assets at no cost. Annual fees for registered accounts, transfers and the cost of handling private securities are disclosed in the booklet titled Relationship Disclosure for Retail Clients.
Most Clarus’ clients are described as institutional and high net worth retail clients.
There are generally two types of conflicts that can arise:
- Conflicts of interest between you and us; and
- Conflicts of interest between you and our other clients.
As an investment firm, we are a financial intermediary. There are times when we may be the party on the other side of the transaction, referred to as a principal trade. There are times, when we will facilitate a transaction between you as our client and a third party on the other side of the transaction through an agency trade. In our investment banking service, we advise issuers of securities on how to best structure these transactions and, at the same time, recommend that clients buy these securities.
The research analyst and/or associates who prepare our research reports are compensated based upon the overall profitability of Clarus Securities, which includes the overall profitability of investment banking and related services. In the normal course of our business, Clarus Securities may provide financial advisory and/or investment banking services for the issuers mentioned in our reports. Clarus Securities may buy from or sell to clients the securities of issuers mentioned in our reports on a principal basis. Clarus Securities, and/or its employees may from time to time acquire, hold, or sell securities discussed therein, or in related securities. Each research report sets out the required disclosures, so the client can make an informed decision. Please refer to the last page of each research report for this disclosure.
Canada has comprehensive securities rules and regulations which are directed at protecting client and investor interests such as dealing with conflicts of interest. For further information on how Canadian securities regulations deal with conflicts of interest to protect investors, we recommend you refer to the Provincial Securities Commissions websites, as well as the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Securities Administrators (CSA) websites. Alternatively, you can call Clarus’ main number and request to speak with compliance.
Oversight of Conflicts of Interest
In general, Clarus manages relevant conflicts as follows:
Clarus manages relevant conflicts mainly by restricting the internal exchange of information and having Chinese walls in place between investment banking and sales and trading.
Clarus will avoid conflicts that are prohibited by law as well as conflicts that cannot effectively be addressed or are too difficult to address without substantial effort and resources.
Clarus will provide you with information about conflicts, so that you are able to assess independently their significance when evaluating our recommendations and any actions we take.
Possible Conflicts and How They Are Managed
- Clarus will earn compensation mainly by providing research, sales and trading and investment banking services for which clients pay us.
- We will inform you of fees, commissions, and other compensation in advance.
- We are required by industry regulations and firm policy only to make suitable investment recommendations.
- Clarus may receive compensation from securities issuers and sell their securities to you.
- We will disclose to you the situations and type of fees we may receive.
- Regulations require issuers to provide specific disclosure in the offering document (e.g., prospectus) of compensation arrangements.
- Clarus may sell you securities which we own (called principal trades) and profit by doing so.
- We will tell you whether we have acted as principal on the trade
- Clarus may need to allocate to clients’ certain securities where availability may be limited, such as securities issued by companies where demand exceeds supply.
- Allocations are performed by the Head of Sales considering, among other factors, the size and nature of the orders in relation to the size of the transaction.
- Clarus provides investment research on securities of issuers that may have other business relationships with us.
- We provide full disclosure of any conflicts of interest in all research reports.
- Our research is subject to extensive regulatory disclosure requirements dealing with the ownership of such company securities by us and by analysts performing the research, as well as other various disclosures.
- Clarus engages in proprietary trading (trading for its own account).
- Client trades are given priority to firm and employee trades in accordance with industry client priority regulations.
- Clarus does not sell proprietary products.
- Clarus’ employees are employed under contract and may not engage in personal transactions with Clarus’ clients.
- Clarus’ employees are permitted to maintain outside business activities, but if there is a conflict of interest, this will be disclosed to you prior to any transaction.
- Other conflicts may arise from time to time, which will be disclosed prior to entering the transaction.
If you have any questions or concerns, please do not hesitate to contact us by calling the main line and discussing the matters with your advisor or compliance.
(Last Updated: May 18, 2021)