Information on the management of conflicts of interest
It is not always possible for investment companies that provide portfolio management services to their clients to avoid conflicts of interest. We have therefore provided the following information on our comprehensive arrangements for dealing with conflicts of interest, in accordance with the provisions of the Wertpapierhandelsgesetz (WpHG – German Securities Trading Act). We will be happy to provide further details on request.
Conflicts of interest may arise between the investment company, other companies belonging to our Group or our parent company, our management, our employees, tied agents, or other parties associated with us and our clients, or among our clients. In particular, conflicts of interest may arise:
in asset management due to our interest in generating revenue from the sale of financial instruments, particularly the Group’s own products;
when receiving or granting inducements (for example, placement commission, trail commission, or pecuniary advantages) from or to third parties in connection with the investment services provided to you;
from the performance-based payment of employees and brokers;
when granting inducements to our employees and brokers;
from other business activities of the Group, particularly due to the Group’s interest in generating profits from proprietary trading and in selling securities it has itself issued;
from relationships between the Group and issuers of financial instruments, e.g. if a lending relationship exists, or in the event of cooperation in securities issues, or other cooperation agreements;
from obtaining information that is not publicly known;
from the personal relationships of our employees or management, or persons associated with them;
from the participation of these persons on supervisory or advisory boards.
To prevent extraneous interests from influencing our asset management activities, we and our employees have made a commitment to adhere to the highest ethical standards. We expect diligence and honesty, legal and professional conduct, compliance with market standards and, especially, consideration of the client’s interests at all times.
An independent compliance office, which reports directly to the management, is responsible for identifying, avoiding and managing conflicts of interest. The measures taken include:
establishing organisational procedures to safeguard client interests (e.g. new product approval process);
implementing rules on accepting and granting inducements and their disclosure;
ensuring confidentiality through the establishment of Chinese walls, the separation of duties and/or physical segregation;
maintaining an insider list or watch and restricted list, which makes it possible to monitor sensitive information and prevent the misuse of insider information;
disclosure to the compliance office of the securities transactions of employees who could experience conflicts of interest in their work;
training our employees;
informing the clients concerned of any conflicts of interest that cannot be avoided before executing a transaction or providing advice.
With regard to asset management, you, as the client, have delegated the management and hence also decisions on buying and selling financial instruments to your asset manager. Consequently, we make decisions on purchases and sales in accordance with the investment guidelines agreed with you, without first obtaining your approval. This arrangement could exacerbate any existing conflicts of interest. We counter the resulting risk by taking suitable organisational measures, and particularly by adopting an investment selection process that is geared to the client’s interests.
Finally, we receive non-cash inducements from other service providers in connection with our securities business. These take the form of information materials and training, for example. We use these inducements to ensure that we continue to provide and continuously improve the high-quality services you expect from us.