Relationship Disclosure Information

Prime Quadrant Corp., carrying on business as Prime Quadrant (“Prime Quadrant”) is registered as a portfolio manager, exempt market dealer and investment fund manager in the provinces of Ontario, Quebec, Manitoba, Alberta, and British Columbia. Our head office is located at 2 St. Clair Avenue East, Suite 800, Toronto, Ontario, M4T 2T5.

The disclosure provided in this document is meant to deliver to our clients all information that a reasonable investor would consider important regarding your relationship with Prime Quadrant. We encourage you to read this document carefully to understand its contents. If you have any questions, please contact us by telephone (647-749-4118 Ext. 160) or by e-mail (compliance@primequadrant.com). Some of the information we are required to provide about our relationship with you may be contained in other documents we have provided to you or will provide to you from time to time. These additional documents are hereby incorporated by reference into this document.

If there is a significant change to the information contained in this document, it will be made available on www.primequadrant.com and notice of any change will be provided to you in a timely manner.

Services Offered

Prime Quadrant provides investment research and consulting services to high net worth families.  Most of the consulting work that we do for clients is undertaken on a “non-discretionary” basis, meaning that our clients make their own investment decisions based on the research and consulting services that we provide to them. Although we believe it is important that investors maintain ultimate responsibility for their portfolios, sometimes we will enter an agreement to provide ‘discretionary” investment management services, where our clients grant us a mandate to make investment decisions for them based on a pre-agreed plan. The primary goal of this service is to provide our clients with lower cost access to particular investment opportunities (i.e., F-Class funds) or outcomes (i.e., liquidating securities at a lower cost).  In practice, however, we expect to discuss any of the trading we direct within these mandates with our clients before execution.

Prime Quadrant also manages and selects securities for certain proprietary private pooled funds and may place certain of its discretionary and non-discretionary clients into these private proprietary pooled funds (see ‘conflicts of interest’ for further details).

Finally, where Prime Quadrant has sufficient capacity in an investment opportunity, we will offer the additional capacity to our transactional dealing clients.

Custodian

Prime Quadrant does not hold or have access to clients’ assets. Where Prime Quadrant acts with discretionary authority over its clients’ accounts, Prime Quadrant will use National Bank Independent Network (“NBIN”) and its affiliates to custody the assets in your account.

Prime Quadrant and National Bank Independent Network (“NBIN”), a division of National Bank Financial, have entered into a Portfolio Manager Services Agreement pursuant to which NBIN has agreed to provide certain services to Prime Quadrant and its clients, including executing trades for client accounts.

Prime Quadrant is responsible for providing NBIN with all instructions related to securities transactions to be executed for your accounts, ensuring such transactions are suitable for you and for complying with all applicable “know your client”, “know your product” and anti-money laundering obligations. Any fees charged by NBIN shall be paid out of your NBIN accounts.

Prime Quadrant’s arrangement with NBIN is intended to enhance the protection of client assets as NBIN is a qualified custodian that is functionally independent from Prime Quadrant. Although Prime Quadrant will monitor the services performed by NBIN and believes that they are an appropriate custodian, in the event of the bankruptcy or insolvency of NBIN, there is no certainty that you will not incur losses due to your assets being unavailable for a period of time, the ultimate receipt of less than full recovery of your assets, or both.

NBIN may also be used as custodian for the Prime Quadrant Pooled Funds. Please refer to the offering document for any of the pooled funds for further information on the custodian.

Proxy Voting

Where Prime Quadrant has authority over a client’s NBIN account or within its pooled funds, Prime Quadrant has discretion to vote proxies on behalf of these accounts. In exercising such discretion, and to minimize any potential for conflicts of interest, Prime Quadrant will ensure that securities are only voted in the best interest of its clients. Further, Prime Quadrant does not invest in securities of issuers in order to exercise control over or to participate in the management of issuers.

Know Your Client, Identity, and Suitability

Under Canadian securities law, Prime Quadrant has an obligation to ensure that the securities we recommend and transact on your behalf are a suitable investment for you (unless you are a permitted investor and not in a discretionary managed account, and have signed a suitability waiver). We will conduct our suitability approach by always placing the client’s interest first. To determine suitability, we collect certain KYC or “know-your-client” information. This required KYC information is used to establish your investment knowledge, objectives, constraints, and time horizon; your financial circumstances, including annual income and net worth; and your risk tolerance.

In addition to securities law, both Canada’s anti-money and anti-terrorist financing regulations (“AML/ATF”) and foreign tax reporting obligations (“FATCA”) require us to verify your identity and tax jurisdiction before we can transact on your behalf. This includes whether you are an insider of any publicly listed issuer or whether you control or are the beneficial owner of any company; whether you are a politically exposed person or the head of an international organization. To establish the identity of a client that is a legal entity, Prime Quadrant must determine the nature of the client’s business; in the case of a corporation, the identity of all individuals who are beneficial owners, or who exercise direct or indirect control or direction over more than 25% of the voting rights or the voting securities of the corporation; in the case of a partnership or trust, the identity of all individuals who exercise control of the affairs of the partnership or trust.

Prime Quadrant must also take reasonable steps to keep your KYC information current. You can help us in this endeavor by promptly informing us of any change to your KYC information that could result in a change to the types of investment appropriate to you, such as a change in your income or net worth, investment objectives, risk tolerance, or time horizon.

Confidentiality and Privacy

We know you value your privacy and protecting our clients’ personal information is an integral part of our business values. Prime Quadrant has adopted a privacy policy in accordance with the Personal Information Protection and Electronic Documents Act (Canada) (“PIPEADA”) with respect to personal information of its clients.  A copy of Prime Quadrant’s Privacy Policy is available upon request.

Please be advised that your personal information may be delivered to the Ontario Securities Commission (“OSC”) and is thereby being collected indirectly by the OSC under the authority granted to it under applicable securities laws for the purposes of the administration and enforcement of the securities laws of the Province of Ontario. If you have questions about the OSC’s use of this information, please contact the commission directly by telephone at 1-877-785-1555 or by e-mail to inquiries@osc.gov.on.ca.

Investment Risks

You should be comfortable with how your money is invested. It is important to be aware of the potential risks inherent in investing in the capital markets, including that there are no guarantees and no assurance that an investment’s objective or target returns will be achieved or that investors will receive a return of their capital. In addition, exempt market securities are not covered by the Canada Deposit Insurance Corporation.

Please remember that risk and return are inversely related – that is, to obtain a higher return you generally have to accept a higher level of risk. Information regarding past performance does not imply any guarantee of future performance or that losses will be avoided. Factors that may affect the value and liquidity of your investments include general economic factors; market and business conditions; fluctuations in securities prices, interest rates, and foreign currency exchange rates; changes in government regulations; and catastrophic events. Please read the offering documents provided to you by Prime Quadrant for all strategy specific risks prior to investing.  

In addition, if you invest a large proportion of your assets in the securities of one issuer, in a single asset class, or in a single strategy, you will have concentration risk. When your investments are not diversified, your returns may be strongly affected by changes in the market value of these securities.

Pursuant to National Instrument 45-106 Prospectus and Registration Exemptions (“NI 45-106”) individual accredited investors (other than individuals who are permitted clients or where Prime Quadrant is your advisor in respect of a managed account) who are investing in the exempt markets, are generally required to complete and sign a “risk acknowledgement form” (“Form 45-106F9”) that describes, among other things, the risks of investing, including the risk of loss and liquidity risk. Please see Schedule D for more information.

Borrowing to Invest

Our clients may or may not borrow to make investments. There are certain risks involved in using borrowed money to finance the purchase of a security. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest, as required by its terms, remains the same even if the value of the securities purchased declines. Generally, you should only borrow to invest if you are comfortable with taking risk; you are comfortable taking on debt to buy investments that may fluctuate in value; you are investing for the long-term; and you have a stable income.

Client Reporting Confirmations and Statements

Where, on an on-going basis, Prime Quadrant acts as your dealer or advisor, Prime Quadrant will provide you with reporting, at a minimum of once every three months, containing, among other information, the following:

  • Details of any security transaction that occurred during the period covered by the statement;
  • Details about each security held through Prime Quadrant at the end of the reporting period.

In addition, we will provide annual reports containing (i) the charges and compensation associated with your investments, and (ii) the investment performance of the securities in your account, which will include an annualized total percentage return for positions in your account.

For clients for whom we provide a transactional service only, Prime Quadrant will provide you with a written trade confirmation after each trade has been placed, containing information regarding the name, description and quantity of the security purchased or sold, the price per security paid or received by you, the total value of the transaction, if a debt security the security’s annual yield, the commission, sales charge or any other amount charged to you or received by Prime Quadrant, the settlement date of the transaction, and the name of the Prime Quadrant dealing representative.

Use of Investment Performance Benchmarks

An investment performance benchmark is a market or industry sector index against which you can measure the relative performance of your investment. Benchmarks should reflect a similar asset class, industry sector and/or risk level so they are comparable to the investment you are comparing the performance to. By comparing your investment to a benchmark that closely replicates the investment or investment’s strategy, you can see how your investment performed compared to the market or industry sector. It is important to note however that benchmarks do not include operating or transaction charges or any expenses related to the investment, all of which impact an investment’s performance.

While Prime Quadrant may use benchmarks for internal research purposes, we do not currently use benchmark comparisons as part of our reporting to our clients.

Internal Targeted Returns

While Prime Quadrant does not use external benchmarks, Prime Quadrant’s Investment Committee sets longer-term target returns for each primary asset class based on several factors including historical returns, expected market conditions and our expectations, along with those of other institutions whom we respect. While these target returns are adjusted from time to time, these changes should be infrequent. These internal targeted returns may show up in reporting we give to you.

Compensation Received by Prime Quadrant

Prime Quadrant may receive placement or trailer fees or other compensation from investment managers for investments made by its clients; however, to the extent that it is legally permissible, Prime Quadrant reduces the fees paid by our advisory clients by an amount equal to all placement or trailer fees or such other forms of compensation in order to forward all savings on to its advisory clients and avoid all conflicts of interest. For investments made on behalf of our transactional dealing clients, placement or trailer fees or other forms of compensation received from investment managers will usually be retained by Prime Quadrant.

Occasionally, Prime Quadrant may be directly involved in the structuring and execution of an investment in order to make it available for our clients. To recover our costs, we may receive a time-based fee paid by the investment structure directly (and therefore indirectly by any clients that choose to participate).

All such compensation is defined in advance of any client transaction and all compensation received in respect of our services to you will be set out in either a formal agreement or otherwise agreed in writing prior to the execution of our services. In addition, you will be provided with a statement indicating the amount and type of compensation, if any, Prime Quadrant has received in connection with investments made on your behalf.

Potential Conflicts of Interest

Prime Quadrant takes reasonable steps to identify existing material conflicts of interest [1], as well as material conflicts that might be expected to arise between itself and a client. Prime Quadrant will resolve these conflicts in our clients’ best interest.  Please see our separate conflicts of interest disclosure for further information. This disclosure can be found at www.primequadrant.com

Complaints and Dispute Resolution

Please direct any complaint you may have about Prime Quadrant’s services, in writing, with as much detail as possible, to our Chief Compliance Officer at compliance@primequadrant.com. In accordance with securities regulations, Prime Quadrant is a member of the Ombudsman for Banking Services and Investments (“OBSI”), a national, independent dispute resolution service. This service is available to you, at our expense, to mediate any dispute arising between us. If your complaint is not resolved by Prime Quadrant within 90 days, or if you are not satisfied with the resolution within 180 days of receiving our decision, you will have the option to request that OBSI act as mediator for the complaint, provided the amount claimed is $350,000 or less, and is related to a trading activity conducted by us within 6 years of you taking action. If you provide Prime Quadrant with a written complaint, additional information regarding OBSI’s process will be provided to you within 10 days of the compliant being made.

[1] A conflict of interest can generally be described as any circumstance where the interests of different parties, such as the interests of Prime Quadrant and of a client, are inconsistent or divergent.

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The offering, sale, and/or distribution of the products or services described on this website are not intended for any U.S. Person. If you intend to obtain any product or service from Prime Quadrant that is described on this website, you must first inform Prime Quadrant whether you are a U.S. Person. This website and its contents do not constitute an offer or invitation to purchase or subscribe for any securities or a solicitation of any offer to sell any securities to U.S. Persons. “U.S. Persons” are generally defined as natural persons residing in the United States, or entities organized or incorporated under the laws of the United States. U.S. citizens living abroad may also be deemed “U.S. Persons”.

References herein to Prime Quadrant refer to Prime Quadrant Corp., which is registered as a Portfolio Manager and Exempt Market Dealer in Alberta, British Columbia, Manitoba, Ontario and Quebec, and as an Investment Fund Manager in Ontario and Quebec.