Conflicts Policy

Conflicts Policy

Beaufort Securities has implemented a Conflicts Management Policy in respect of the investment research it produces and disseminates. Although not required to do so by the FCA’s Conduct of Business Rules because our business model does not enable us to hold out our research as impartial, we set out our policy regarding the issue and publication of research as below.

Introduction

Beaufort Securities is a full service Category A stockbroker, offering Retail Client services.
 
Beaufort Securities is particularly active in the AIM and smaller companies markets, dealing as principal as well as providing corporate finance and broking services to companies in this market, including a number of the companies referred to in our published research.
 
Whilst Chinese Walls and other internal procedures have been implemented to prevent persons gaining improper access to, or influencing the content or recommendations of our investment research, investors should nevertheless be aware that Beaufort Securities may have actual or potential conflicts of interest that could affect the objectivity, independence and impartiality of its research. 

Policy

Beaufort Securities’ business model does not enable it to hold out its research as being impartial, and it should not be viewed or relied upon as wholly objective. However, in accordance with FCA’s Principles, we endeavour at all times to ensure that our research produced is to a high standard, and is fair, clear and not misleading.
 
Where potential conflicts are recognised, these are fully disclosed and managed so as to minimize any threat to the objectivity of our research. In this context, Beaufort Securities pays particularly close attention to the following of FCA’s Statements of Principle:

  • Principle 1: A firm must conduct its business with integrity
  • Principle 2: A firm must conduct its business with due skill, care and diligence
  • Principle 3: A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems
  • Principle 5: A firm must observe proper standards of market conduct
  • Principle 6: A firm must pay due regard to the interests of its customers and treat them fairly
  • Principle 7: A firm must pay due regard to the information needs of its clients, and communicate information to them in a way that is clear, fair and not misleading
  • Principle 8: A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client

Application

Responsibility

The Board of Beaufort Securities is responsible for ensuring that its systems, controls and procedures are able to identify, manage and control the potential conflicts of interest that may arise.
 
Taking into account Beaufort Securities’ size, scope of business, client base, the nature of the research produced and its intended audience, the Board is confident that it effectively implements its Conflicts Management Policy, and that the potential conflicts of interest inherent in the publication of its research are properly managed in the manner set out below.

Systems & Controls

Conflicts of interest arise in a variety of ways. For example, between the personal interests of the researcher, the company being written about and between clients of Beaufort Securities and Beaufort Securities itself. Even where there is no actual conflict of interest, it may appear to third parties that a conflict does exist. In order to identify and properly manage potential conflicts of interest, Beaufort Securities  has detailed internal controls and procedures, including those summarised below:

Policy of Independence 

  • Policy of full disclosure of material interest
  • Detailed Chinese Walls procedures
  • Policies and procedures regarding Treating Customers Fairly
  • Policies and procedures regarding stock sourcing and dealing as principal
  • Personal Account dealing polices and procedures
  • Rigorous Compliance Monitoring policies and procedures

Analysts Role

The primary role of Beaufort Securities’ Analysts acting in a ‘Retail’ capacity is to provide investment recommendations on companies which they research, be they companies which the firm proposes to deal in as principal for subsequent distribution to its retail client base, or to provide research for the Marketing division to identified shareholders in listed companies with a view to those shareholders potentially becoming private clients of Beaufort Securities. The Analysts may also provide recommendations and tips to Sales and Trading staff together with information and advice to Beaufort Securities’ investment clients.
 
The role of the Analyst acting in ‘Corporate Finance and Institutional Sales’ capacity is to assist in soliciting for and retaining Corporate Finance or Corporate Broking business by participating in pitches to current or prospective clients, and screening of potential corporate finance clients or potential deals as part of the due diligence process.

Involvement of Analysts in Other Activities

The Corporate Finance and Institutional Sales Analysts may attend road shows, or meetings between investors, investment clients and corporate finance and broking clients, in order to answer questions or provide advice to corporate clients regarding aspects of a proposed transaction. However, they may not actively participate in client marketing road shows or act in such a way as to appear that they were acting on behalf of the company concerned.

Supervision and Management of Analysts

The Analysts are based within the same office as the rest of the firm's employees, however there is a distance that separates Analysts from the trading floor. Analysts report directly to the Chief Financial Officer.
 
Compliance is consulted regarding the timing of research after the research has been independently reviewed by another analyst, and is responsible for ensuring it is signed off in accordance with the in-house sign-off procedures following FCA’s COB Chapter 4 Financial Promotion Rules and COB Chapter 11 Investment Research rules.

Remuneration of Analysts

The Analysts performance is ordinarily assessed annually by the Chief Executive Officer and the Chief Financial Officer and in accordance with Beaufort Securities’ appraisal procedures.
 
The Chief Executive Officer is responsible for setting the Analysts’ remuneration and bonus. Any bonus element is linked to the overall group profitability of Beaufort Securities  but under no circumstances is remuneration linked to specific research recommendations or to specific corporate transactions.

Means and Timing of Publication of Research

Research is published in electronic format on Beaufort Securities’ website and also issued in hardcopy. Research published on Beaufort Securities’ website is usually placed in an archive folder after one month.
 
Internal procedures are designed to ensure that there is no breach of Chinese Walls prior to commencing trading as principal.
 
Where Beaufort Securities is acting on behalf of a company in a corporate capacity, the Analysts are not generally permitted to publish pre-transaction research within 3 weeks, or such other period as agreed with Compliance, prior to an IPO or Secondary Offer where a prospectus or Information Memorandum is prepared, except where such research is intended solely for distribution to market counterparties, and is appropriate caveated.
 
In general, Beaufort Securities will not permit publication of research for at least one month subsequent to an IPO or secondary offering as noted above in which it has been involved with.

Editorial Control

The departmental heads may initiate or request investment research coverage, but the Analysts are solely responsible for the content and recommendations.
 
Whilst the Analysts may allow the issuer to view its research before publication in order to verify factual accuracy, Beaufort Securities does not permit any person outside of the Analysts to approve the content or exert editorial control of the research produced by its Analysts.

Inducements

Beaufort Securities has a strict Gifts and Entertainment policy, which, amongst other things, requires that all gifts and invitations be cleared through Compliance, and specifically prohibits Analysts and employees from soliciting or accepting any inducement to provide favourable research.

Issuer Paid Research

Beaufort Securities does not issue paid-for research.

Personal Account Dealing Policy for Analysts

Beaufort Securities has rigorous Personal Account Dealing policies and procedures. The following summarise those procedures that have particular relevance to the Analysts (and connected persons):
 
Analysts are not permitted to do any Personal Account Dealing in the relevant company (or in a derivative of such) within one week before or after publication of a research note on which they have worked.
 
Where an Analyst has not issued a recommendation following a visit to a company, the Analyst is not permitted to do any Personal Account Dealing in that stock (or derivative of such) for a period of three months.
 
Analysts are not permitted to do any Personal Account Dealing in a stock (or a derivative of such), contrary to a recommendation made them, within 3 months of such a recommendation being made, and without the express written consent of the CEO and Head of Compliance.
 
Where an Analyst holds securities or a financial interest in a company subject to research, then this will be disclosed by the Analyst to Compliance and recorded on the research note.

General

Our research is issued in good faith and on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst all reasonable care is taken to ensure that the facts stated are accurate and the opinions given are fair and reasonable, the information does not constitute advice and may be subject to change without notice. Accordingly, neither Beaufort Securities nor any of its directors, officers or employees shall in any way be responsible for its contents.
 
Beaufort Securities Ltd may further have a material interest in any investment concerned, and may be providing or have provided within the previous 12 months significant advice or investment services in relation to any company or a related company referred to in its published research or any other associated document.