Jin-Ocean EMD Management Ltd. (the “Firm“) is registered as an “exempt market dealer” under applicable securities laws, and is in the business of promoting and selling securities on a prospectus-exempt basis. The Firm will primarily promote and sell the securities of Jin-Ocean Mortgage Investment Corp. (“Jin-Ocean MIC“), an affiliated company of the Firm, but will also promote and sell securities of independent third-party issuers on a case-by-case basis.
The purpose of this Conflicts of Interest Disclosure is to provide investors with a clear understanding of conflict of interest; the upcoming Client Focused Reforms (CFRs) mandated conflicts of interest with the June 30, 2021 deadline to be implemented, the changes may directly or indirectly impact you.
- What is a conflict of interest?
Conflict of interest means a real or apparent incompatibility between a firm member’s interests and the interests of the client or potential client.
When dealing with Jin-Ocean MIC’s products, our Dealing Representative will ensure that the following information is disclosed to the client prior to any trade:
1. disclosure regarding the relationship between the Firm and Jin-Ocean MIC, along with the disclosure of all common directors, officers, and management;
2. disclosure of any compensation that the Firm may receive from Jin-Ocean MIC for the purposes of meeting the Firm’s operational needs;
3. an explanation to the client that the Dealing Representative do not receive special compensation or incentives for offering Jin-Ocean MIC products;
4. disclosure that the client’s information will be stored in the same office or area as Jin-Ocean MIC’s offices, but that all Firm records will be maintained separately from Jin-Ocean MIC’s records; and
5. disclosure that Firm staff may invest in Jin-Ocean MIC with approval from the UDP or CCO.
Our Firm generally will manage the inherent conflict of interest that arises when promoting/selling Jin-Ocean MIC products. In so doing, our KYP due diligence team must do the following:
- be comprised of at least two independent consultants, along with the UDP
- make objective assessments of each Jin-Ocean MIC product;
3. review the Firm’s policies and procedures on an annual basis to ensure that conflicts of interest, KYC, KYP, client suitability, and the duty to deal fairly are all properly addressed; and
4. monitor and respond to conflicts of interest arising from the Firm’s relationship with Jin-Ocean MIC.
Our firm will identify the other conflicts of interest between a client and the Firm and report to the CCO. For example:
- Third Party Conflicts
2. Tied Selling
3. Fair Allocation
- CFRs mandated conflicts of interest disclosure
Under the requirement of CFRs, our firm will need to review and amend our compliance systems, including making changes to their policies, procedures and controls to address material conflicts of interest in the best interest of our clients, and to establish a framework where our firm and the dealing representatives put the client’s interest first when making suitability determinations, and our firm will also need to train our registered representatives, all according to the scale of their operations. The reforms, which aim to ensure that our firm put the clients’ interests before our own, include changes to conflict of interest requirements, disclosure obligations and know your client (KYC) / know your product (KYP) rules.
- Recognize conflicts
Our firm’s conflicts of interest analysis include the key elements: materiality, reasonability and professional judgment taking into consideration the firm-client relationship and the firm’s business model in order to mitigate those conflicts sufficiently, so that the conflicts have been addressed in the client’s best interest.
- Immediate and full disclosure in writing
To address certain material conflicts, the CFRs require our firm to fully disclose any conflict of interest to the client at the earliest practical opportunity. Our firm must give all the details we know to the client in writing. Our firm must explain the conflict of interest and the affect on the clients.
- The client decides how to proceed
Clients decide how to proceed in the face of any conflict. Our firm members should advise the client to obtain independent advice concerning the conflict. This independent advice may best come from a lawyer.
- Our firm’s duties to avoid the conflicts
Our firm members must first receive informed written consent from the client prior to providing services. In addition, the firm members would provide full disclosure in conjunction with other controls, including pre-trade controls, post-trade reviews etc.
Our firm members would be provided with certain training regarding the conflict of interest. They must be aware of potential and real conflicts of interest and the appropriate steps to take to deal with the conflict.
- KYC / KYP rules
Dealing representatives would strictly follow the firm’s Investors Suitability Determination Criteria and obtain the KYC information at client account opening. Our firm will review client’s account annually to determine clients’ suitability. Our firm is obliged to keep the KYC information current and send the updated KYC information to clients.
Our firm will follow the KYP process to periodically review Jin-Ocean MIC products and determine the specific controls that are needed to ensure that its KYP obligations are met.