ARROW CAPITAL MANAGEMENT INC. STATEMENTS OF POLICIES
National Instrument 31-103 sets out registration requirements and exemptions for firms and individuals. Under client relationships, sections 13.6 and 14.2 set out disclosure when recommending related or connected securities and relationship disclosure information.
The securities laws of certain jurisdictions of Canada require securities dealers and advisors, when they trade in, or advise with respect to, their own securities or securities of certain other issuers to which they, or certain other parties related to them, are related or connected, to do so only in accordance with particular disclosure and other rules. In certain provinces and territories, these rules require dealers and advisors, prior to trading with or advising their clients, to inform them of the relevant relationships and connections with the issuers of the securities. Clients should refer to the applicable provisions of those securities laws for the particulars of these rules and their rights or consult with a legal advisor.
The following sets out the policies of Arrow Capital Management Inc. (“Arrow”) concerning related and connected issuers and its activities as an adviser and dealer. If you wish further information concerning the matters described below, please contact us.
Related and Connected Issuers
The securities laws of the province of Ontario requires securities dealers and advisers, when they trade in or advise with respect to their own securities or securities of certain other issuers to which they, or certain other parties related to them,are related or connected, to do so only in accordance with particular disclosure and other rules. These rules require dealers and advisers, prior to trading with or advising their customers or clients, to inform them of the relevant relationship in connection with the issuer of the securities. Clients and customers should refer to the applicable provisions of the securities laws for the particulars of these rules and their rights or consult with a legal adviser.
Arrow is registered in Ontario as a portfolio manager, exempt market dealer, commodity trading manager and an investment fund manager. Arrow may, from time to time, be deemed to be related or connected to one or more issuers for purposes of the disclosure and other rules of the securities laws referred to above. Arrow is engaged in providing advisory services. These services are typically provided through its proprietary pooled funds sponsored by Arrow, although Arrow may also from time to time act as an adviser to other pooled funds. As a result, each pooled fund listed in Schedule “A” or new funds sponsored in the future by Arrow (collectively, “Arrow Funds”), is or will be a related issuer and connected issuer of Arrow. Arrow will act as an adviser in respect of securities of any such related issuer and connected issuer, all of which are Arrow Funds.
Arrow may also act as dealer in connection with trades in securities of these funds. In any such case, such services and activities will be carried on by Arrow in the usual course of its business as an adviser and limited market dealer in accordance with its usual practices and procedures and in accordance with all applicable disclosure and other regulatory requirements.
Activities as a Dealer and Adviser
The Ontario Securities Commission also requires a securities dealer and adviser to inform its clients if it provides services as both a dealer and an adviser, and of the policies and procedures adopted by the dealer and adviser to minimize the potential for conflicts of interest that may result from its activities of both a dealer and an adviser.
Arrow is a portfolio manager which provides advisory services to pooled funds. Arrow is also an exempt market dealer. Arrow will only act as an exempt market dealer for the sale of pooled funds managed by it. Accordingly, its client services as an adviser and dealer are integrated and not separable from each other. In selling such funds, Arrow is obliged to consider the general investment needs and objectives of the client and the suitability of such funds for any particular client.
Conflicts of Interest Statement
Client transactions that involve Arrow’s sales representatives providing investment advice with respect to Arrow products may give rise to certain conflicts of interest or have the potential to give rise to certain conflicts of interest.For this reason, Arrow takes the position that, where these conflicts or potential conflicts arise, client interests are paramount to the interests of the related issuers and affiliates of Arrow and all dealings with such issuers and relating to Arrow products are conducted on terms no less favourable than would be available to third parties.
Certain inherent conflicts of interest arise from the fact that related issuers and affiliates of Arrow may:
- act as counter parties in transactions with other Arrow Parties and may be paid significant fees which have not been negotiated at arm’s length;
- act as directors or officers of other entities that provide services relating to Arrow Products; and
- affect decisions that govern the relationships of Arrow Parties pertaining to Arrow Products.
Arrow Parties are required to satisfy the required standard of care in exercising their duties with respect to Arrow products. Future investment activities, including the establishment of other investment funds, may give rise to additional conflicts of interest. Investors should read the risks section of the applicable offering documents for any Arrow product and, in particular, the potential conflicts of interests discussed therein.
Polices and Procedures
The potential for conflicts of interest isminimized through the Arrow Code of Ethics and Conduct (the “Code”) whichapplies to all employees and directors of Arrow and requires that the interestsof clients be placed above personal interests through the application of thehighest standards of integrity and ethical business conduct. Adherence to the Code is enforced through theannual certification and acknowledgment of employees, officers and directors ofArrow certifying compliance with the Code. The Valuation and ComplianceCommittee meets quarterly to discuss valuation, governance and complianceissues related to the Funds.
Note on Anti‐Money Laundering
Under the provisions of the Proceeds ofCrime (Money Laundering) and Terrorist Financing Act, Arrow is obligated toimplement specific measures to detect and deter money laundering and thefinancing of terrorist activity. As such, investors will have to provide certainadditional information, as noted in Arrow’s investment application and correspondingforms. If Arrow is aware or suspects that an investor is engaged in moneylaundering, Arrow may be obligated to report its suspicions to the FinancialTransactions and Reports Analysis Centre of Canada. Any such reporting willnot be deemed a breach of privacy and confidentiality restrictionsimposed by applicable law or otherwise.
Note on Privacy Protection
Arrow’s Privacy Protection Policy is designed to highlight key safeguards that it has implemented to protect against the occurrence of illegal laundering of assets or funds and the financing of terrorist activities. The Policy is created to make certain that appropriate client information is acquired and legitimate business activities are distinguished from illegal or suspicious activities thereby ensuring that only legitimate transactions by legitimate clients are permitted. The Policy is supported by Arrow’s internal compliance regime that includes the appointment of a designated compliance officer, development of applicable policies and procedures, periodic review of the effectiveness of these policies and procedures and ongoing compliance training and monitoring. Arrow will only collect personal information as needed in order to establish, administer and maintain accounts, execute transactions, provide statements, complete necessary documentation, determine eligibility, inform you of products and services,confirm your identity and/or to comply with regulations, policies, and legislations.
Arrow may also use your information for internal audit, record keeping or statistical purposes. As such,information may be shared with Arrow Canada’s service providers including our back office, FundSERV, auditors, trustees, legal counsel and registrar and transfer agent; Arrow affiliates; investors’ financial institutions, representatives or agents; self-regulatory bodies or government authorities as required for compliance and reporting purposes such as the Canada Revenue Agency and the provincial securities commissions; and other parties as required by a court of law or for legal proceedings.
For more information please contact us at:
Arrow Capital Management Inc.
36 Toronto Street, Suite 750
Toronto, Ontario M5C 2C5
Phone: (416) 323‐0477
Fax: (416) 323‐3199
SCHEDULE A FUNDS
Act II Long/Short Fund
Arrow Diversified Fund
Arrow East Coast Fund
Arrow Global Long/Short Hedge Fund
Arrow High Yield Fund
Arrow Macro Fund
Arrow MMCAP Risk Arbitrage Fund
Arrow Multi-Strategy Hedge Fund
Arrow Raven Rock Fund
Arrow Risk Arbitrage Fund
Arrow Russian Fund
Arrow Special Opportunities Fund
Arrow V Relative Fund
COR US Equity Income Fund
Curvature Market Neutral Fund
Distressed Securities Fund
East Coast Investment Grade Fund
East Coast Investment Grade Income Fund
Enso Global Fund
Garrison Hill Fund
Goodwood Value Fund
Raven Rock Income Fund
Raven Rock Strategic Income Fund
SG US Market Neutral Fund