Effective: September 2017
National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations requires securities dealers to disclose information that a reasonable investor would expect to know about the client’s relationship with the dealer, including any material conflicts the dealer or its representatives may have with a client. These regulations require dealers to provide this disclosure to clients prior to making any trades.
WTCMI is registered as an exempt market dealer in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, and Newfoundland and Labrador. The Alberta Securities Commission (ASC) is the principal regulator for WTCMI.
As a registered exempt market dealer, WTCMI can trade and underwrite securities where the trade is made pursuant to an exemption under National Instrument 45-106 – Prospectus Exemptions (NI 45-106) in jurisdictions where it is registered. WTCMI sells securities of related and unrelated issuers to clients meeting an exemption under NI 45-106. WTCMI acts solely as an intermediary and does not hold or have access to client funds or to any securities in safekeeping on behalf of clients.
As an exempt market dealer, WTCMI can trade and underwrite exempt market securities. There are risks associated with exempt market securities. Exempt market securities may not be listed on any stock exchange which could restrict your ability to resell them. There could be a lockup period that applies to the security which restricts you from trading, selling or transferring the security.
Issuers of exempt market securities generally do not have to file a prospectus. A prospectus describes the investment in detail and gives you some legal protections. There is a risk that the issuer will be unable to meet interest and principal payments on its obligations on a timely basis. Furthermore, the securities could be from a non-reporting issuer. This type of issuer does not have to publish financial information or notify the public of changes in its business.
WTCMI is related to 1644614 Alberta Ltd. through common ownership and Directors. 1644614 Alberta Ltd. is owned by Nadine Wellwood and Jason Brown. 1644614 Alberta Ltd. is a holding company for the owners’ assets and it does not own or hold any of the shares of WTCMI. Nadine Wellwood is the sole shareholder of WTCMI.
WTCMI is related to two issuers: Port Renfrew Development Fund and Valhalla Diamond Fund. WTCMI sells the securities of both of these issuers and receives commission revenues from their sales. In addition, Nadine Wellwood as a Dealing Representative sells securities of the related issuers and receives commissions.
Selling securities of related entities creates a material conflict of interest with clients. WTCMI is required to manage material conflicts of interest in a timely manner. WTCMI manages the conflicts with the Valhalla Diamond Fund and the Port Renfrew Development Fund through disclosure and signed acknowledgement. The nature of the conflict of interest and potential impact as described below is disclosed to clients prior to the sale of securities.
The Valhalla Diamond Fund is a limited partnership. The General Partner of the LP is owned by Valhalla Capital Group which is owned by Nadine Wellwood and Jason Brown. Jason Brown is also a Director of the General Partner. Valhalla Capital Group earns income by providing management services to the Valhalla Diamond Fund and General Partner and indirectly benefits from the compensation received from the sale of the securities of the Valhalla Diamond Fund.
WTCMI sells the securities of the Valhalla Diamond Fund and receives commission revenues from the sales. In addition, Nadine Wellwood as a Dealing Representative sells securities of the Valhalla Diamond Fund and receives commissions. As a result, Nadine Wellwood and Jason Brown have a conflict of interest.
The Port Renfrew Development Fund is a limited partnership. The General Partner of the LP is owned by Valhalla Capital Group which is owned by Nadine Wellwood and Jason Brown. Jason Brown and Karl Ablack are Directors of the General Partner. Valhalla Capital Group earns income by providing management services to the Port Renfrew Development Fund and General Partner and indirectly benefits from the compensation received from the sale of the securities of the Port Renfrew Development Fund.
WTCMI sells the securities of the Port Renfrew Development Fund and receives commission revenues from their sales. In addition, Karl Ablack is registered as a Dealing Representative on behalf of WTCMI. Karl Ablack and Nadine Wellwood as Dealing Representatives sell securities of the Port Renfrew Development Fund and receive commissions. As a result, Nadine Wellwood, Jason Brown and Karl Ablack have a conflict of interest.
These types of investments may not be suitable for all clients. WTCMI is obligated under section 14.2 of National Instrument 31-103 to make a determination to ensure the proposed investment is suitable for you. To assess the suitability of proposed investments, WTCMI will obtain information relating to your investment objectives, risk tolerance, investment knowledge, financial position and other relevant information situation. In addition, section 13.2 of NI 31-103 requires WTCMI to obtain information related to your identity. All this information is collected through the Investor Information Form provided.
Using borrowed money to finance the purchase of securities involves greater risk than a purchase using cash resources only. 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 or becomes zero. Using borrowed money can result in investment losses which exceed the amount of your investment.
WTCMI does not charge a fee to clients, however, it does earn a one-time sales commission which is paid by the issuer where WTCMI has acted as agent. The sales commission paid the issuer to WTCMI can be up to 15% of the subscription price. WTCMI pays its dealing representatives a commission ranging anywhere from 60 to 80% of the commission received from the issuer. Trailer or servicing fees range from 0.3% to 2% per annum. Details of the commission are disclosed in the offering documents of the issuer.
The charges and fees associated with a purchase or sale of securities will be disclosed to you before receiving instructions to purchase or sell the securities.
In accordance with s. 14.12 of NI 31-103, WTCMI provides trade confirmation notices for purchases of investment products such as units of limited partnerships. The confirmation provides information about your transaction including: date, quantity, price, and name of the dealing representative. The confirm will also identify is the issuer is related to WTCMI.
The contractual agreement regarding the investment is between you and the issuer. The issuer or its agent provides clients with a subscription agreement or other documentation to demonstrate ownership of an investment. WTCMI deals with clients on a transactional and often infrequent basis and does not hold or have access to client assets. As a result, clients do not make payments to WTCMI but to the issuer or its agent. WTCMI does not hold or control any cash or securities of a client.
WTCMI delivers quarterly statement to clients who have made a transaction during a quarter. The statement will provide all information related to the transactions during a quarter as required by NI 31-103.
Investment benchmarks generally provide a broad measure of return generated by specific asset classes over a given period. An investment benchmark can be used as a standard against which performance of a security or investment portfolio can be measured. The most common form of investment benchmark is an index such as a stock or bond index, for example the S&P/TSX Composite Index.
WTCMI does not provide benchmarks for performance reporting. The securities sold by the Firm are not be listed on any stock exchange. As a result, The WTCMI does not believe there are meaningful benchmarks for the securities it sells.
WTCMI offers independent dispute resolution or mediation service through Ombudsman for Banking Services and Investments (OBSI), at its own expense, to clients to resolve client complaints. The Firm may be required to make the independent service available when a complaint:
The client may escalate an eligible complaint to the independent service made available by WTCMI in two circumstances:
In either instance, the client may escalate the complaint by directly contacting the independent dispute resolution or mediation service.
In accordance with section 13.16 of NI 31-103, the Firm will inform a client how to contact OBSI and use the dispute resolution service or mediation service, when a complaint has been made by the client about any trading activity of WTCMI or its Representatives.
A registered firm does not have to offer dispute resolution for complaints from permitted clients that are not individuals.
WealthTerra Capital Management Inc. is a registered Exempt Market Dealer in the provinces of AB, BC, MB, NL, & SK. There are risks associated with investing please be sure to read and understand these risks prior to investing.