CONFLICT MANAGEMENT POLICY

Transcription

1 G OVERNOR P HILLIP T OWER L EVEL 27 O NE F ARRER P LACE S YDNEY NSW 2000 A USTRALIA T 61 (2) F 61 (2) CONFLICT MANAGEMENT POLICY 1. Introduction This policy applies to the research reports published by Moelis Australia Securities Pty Ltd ( Moelis ) (AFSL: and ACN: ). It is available from Moelis on request and is made available on the Moelis public website. Moelis reserves the right to amend or supplement this policy at any time. For the current policy, please check the Moelis website or contact Moelis representatives. 2. Identification and disclosure of possible conflicts 2.1 Identification of potential conflicts The Moelis internal conflict management policy requires Moelis to identify the actual and potential conflicts of interest, avoid any perception of conflicts of interest that might arise or raise questions about the impartiality and integrity of Moelis research reports. The conflicts might arise between the interest of the recipients of the research reports and Moelis, Moelis affiliates or Moelis research analysts. How various conflicts are identified depends on the nature of conflicts. Conflicts in connection with Moelis research analysts Each Moelis research analyst is given extensive training with respect to Moelis conflict management policy and procedures as part of their induction training. Ongoing training is also offered when Compliance and senior management identifies any weakness of awareness or in light of business and regulatory changes. The individual research analyst is responsible to notify Compliance of any potential conflict of interest that might affect the impartiality and integrity of his or her research report. The incident that might give rise to the conflicts in this situation includes the analyst s personal holding of the subject security (including the holding of any person who is dependent on him/her) that is under the analyst s coverage, any assistance received form the product issuer and any position he or she holds with the product issuer.

2 Conflicts in connection with Moelis and/or its affiliates Moelis Compliance monitors potential conflicts arising out of the publication of research reports in the period before, during and after Moelis investment banking transactions. Compliance also monitors the activities of the research analyst who is brought over the Chinese Wall to assist the Moelis investment banking transaction and ensures any restrictions in terms of the timing and content of his or her research report is imposed and adhered to. The editorial and supervisory review of research reports prior to publication is assigned to Moelis senior analysts to ensure that the content of the research report is based on the publicly available and factual information and the rating and recommendation is reasonable. 2.2 Disclosure of potential conflicts Compliance reviews and updates the research disclosure and disclaimers for each stock Moelis covers to ensure the proper disclaimer and disclosure is given to avoid the potential conflicts of interest that might affect the impartiality and integrity of Moelis research reports. Compliance periodically sends out the updated disclaimer and disclosure with the approved format and content to Moelis research analysts to be adopted within their research reports. Moelis has in place Standard Disclaimer and Disclosure and Company Specific Disclaimer and Disclosure. Both versions are available from the Moelis public website and are updated regularly by Compliance to ensure all end users of Moelis research reports have access to the disclosure and disclaimers for Moelis research reports. 3. Supervision and remuneration of analyst No Moelis research analyst is directly supervised by, or reports directly to the management of Moelis Equities Trading or Moelis Investment Banking. The remuneration or the performance incentive of the research analyst is not linked to the revenue of the other business units within the Moelis group (Moelis Equities Trading, Moelis Investment Banking and Moelis Asset Management). Nor is it linked to any specific rating and any recommendation contained in the research analyst s report for a particular product issuer. The remuneration and performance incentive of the research analyst is based on the overall revenue of the Moelis Group and is determined by a number of factors by adopting the scorecard approach. Factors that are considered include, among other

3 things, the overall quality of his or her research reports, the satisfaction level and feedback of the research recipients and the research analyst s compliance rating. 4. Interaction with Moelis affiliates Potential conflicts of interest may also arise as a result of the normal business conduct of Moelis Investment Banking and Moelis Equities Trading. Moelis has a robust Chinese Wall policy in place to safeguard the segregation between various business areas. Compliance and senior management monitors the effectiveness of the segregation on a daily basis. 4.1 Inappropriate influences Moelis research analysts have an office separate from that of Moelis Equities Trading and Investment Banking staff. Moelis Equities Trading and Investment Banking staff are prohibited from influencing or attempting to influence the timing or content of any research analyst s research report; and Moelis research analysts are not allowed to disclose the timing and content of their research reports prior to publication 1 to employees of other business areas. Moelis Investment Banking employees must not provide Moelis research analysts with material or confidential non-public information regarding an issuer or investment, unless the research analyst is brought over the wall in accordance with Moelis wall crossing procedures. Moelis Investment Bankers are also prohibited from asking a research analyst to initiate coverage of an issuer or investment and from promising its potential client positive research reports to induce the client to mandate a transaction. 4.2 Coverage decision While the research coverage decision is generally made by the research analysts and Moelis research management independently, to avoid the perceived conflicts, research management may consult with Compliance with respect to the timing of the coverage. The most common potential conflict that can be avoided by such consultation would be initiating research coverage for a product issuer while Moelis Investment Banking is working on a capital raising deal for the same product issuer. The issue of the research report in this circumstance would otherwise breach the quiet period restriction. 1 Under special circumstances, and with Compliance pre-approval, Moelis research analysts can send the research reports that do not contain any specific recommendations or price targets to the product issuers or Moelis Investment Bankers for fact checking purposes only.

4 5. Timing and content of research Moelis conflict management policy is designed to ensure that decisions about the timing and content of the research report is not made, or inappropriately influenced by persons with interests conflicting with those of the recipients of Moelis research reports and that new research and other material statements of a research analyst s views are not disclosed selectively before being made generally available. The timing of publication of Moelis research reports is determined primarily by the research analyst on the basis of events affecting the issuer or investment concerned, perceived investment opportunities for research clients and developments in the analyst s opinion. Moelis Equities Trading or Investment Banking personnel have no control over, or input into, decisions on timing of publication of Moelis research reports. In relation to the offering of securities, Moelis follows market best practice to impose a quiet period or blackout period before and/or after an offering involving the product issuer. An initial public offering of shares usually has a longer period than a secondary offering. Once Moelis Investment Banking advises Compliance of a role in a transaction for the product issuer, Compliance is responsible for monitoring compliance with the appropriate quiet periods and any other restrictions. Moelis research reports are made available to Moelis clients simultaneously through a number of established distribution channels (including via and web-based portals). Any material update of a research analyst s view, for example an immediate response to issuer news in advance of a full research report, is made available to Moelis clients through similar channels. Moelis does not allow its research reports or their content or timing to be made available to non-research personnel, including Moelis Equities traders, before they are made available to Moelis clients. 6. Review and comment on research report Moelis conflicts management policy ensures that parties with interest which may potentially conflict with that of recipients of Moelis research reports are not able to review or comment on research reports in a manner that might affect the impartiality of Moelis research reports. Prior to publication, Moelis research reports are reviewed by another research analyst. The review is to ensure the content is clear, fair and based on reasonable grounds. A research analyst may check the accuracy of factual statements with the product issuer that is the subject of a research report, prior to publication. This may be achieved by

5 providing the issuer with a summary of facts for checking that contains no valuation, price target or investment recommendation. 7. Personal dealing Where personal account trading is permitted, research analysts are required to comply with Moelis policy and procedures on personal account dealing, which include requirements for dealing to be conducted through Moelis accounts (or in limited circumstances, in other permitted accounts held outside the firm which must be preapproved by Compliance on exceptional basis) and be pre-cleared by the business head and the Compliance. Some of the restrictions are: Once executed, stock must be held for at least 14 working days; The approval given is only valid until close of business the next business day; Analysts must not trade stocks that are on the Watch List or Restricted List; Analysts must not trade ahead of publication of research reports; Analysts must not trade against the recommendation contained in the most recent research report. Moelis research analysts are prohibited from covering a product issuer if the analyst serves as an officer, director or member of the board of the issuer. If an analyst s household member serves in such capacity, the analyst is required to disclose that fact to Compliance who will consider, in consultation with research management whether, based on the facts and circumstances, the analyst should cease covering the issuer. 8. Additional disclosure information All companies under coverage are assigned a rating of Buy, Hold or Sell based on the expected 12 month total return estimated by the analyst(s). The total return is a combination of the estimated capital gain or loss, in addition to the estimated 12 month forward dividends or distributions. In relation to all companies that Moelis Australia Securities conducts research coverage on the relevant total return bands that derive the ratings are: Buy: > 12.5% Hold: 5% to 12.5% Sell: < 5%

6 Important Notes This policy is not intended to create third party rights or duties that would not already exist if the policy had not been made available, or to constitute or form part of any contract between the firm and any client or customer of the firm. This policy is supplemented by more detailed policies and procedures adopted by Moelis. In particular, Moelis also has in place a high level conflict management policy that applies across all Moelis business units. Moelis research analysts are also required to comply with the requirements contained in that policy. Variations and exceptions may be approved by Moelis Compliance in consultation with management if necessary, with a view to promoting the objectives of this policy in the particular circumstance.