Conflict of interest disclosure

Conflicts of interest — generally

Actual, potential and perceived conflicts of interest arise where an action or decision by someone has the effect of benefiting an individual (including him or her) or a group of people at the expense of others. Such conflicts exist in almost all human interactions and will arise from time to time:

between you and our firm, as well as between you and your MD Private Investment Counsel (MDPIC) Portfolio Manager.
between you and our other clients: we act for many clients and must allocate investment opportunities among all of them fairly, so as not to favour intentionally one client over another.
between us and our related or associated companies.

Canadian securities laws require us to take reasonable steps to identify and respond to material conflicts of interest in your best interest. We also are required to tell you about them, including how the conflicts might impact you and how we address them in your best interest.

We have policies and procedures in place to address how we will manage material conflicts of interest in your best interest, which are referred to in the table below.

We seek to avoid or minimize conflicts where reasonably possible. We seek to avoid actual or perceived favouritism or discrimination amongst clients and to ensure that no client receives preferential treatment over another in the operation and management of their account and execution of trades.
We avoid conflicts prohibited by law as well as material conflicts that we cannot effectively manage in your best interest. Some conflicts cannot be avoided. In situations where we do not or cannot avoid conflicts and where our interests may compete with yours, your interest is always put first.
We control or manage acceptable conflicts by physically separating different business functions, restricting the internal exchange of information in person or through systems, reducing the possibility of one part of our organization unsuitably influencing another, removing the financial incentive of an employee to favour a particular product or service over another that may be more suitable, and setting up and testing our operational review and approval processes.

In connection with your MDPIC account, the most significant conflict that we have is that we generally use the Pools (which are also referred to as “proprietary products”) to fulfill your portfolio strategy. If you have opened an MD Platinum^™ Account, you will invest in the MD Platinum Pools, which are also managed by MD Financial Management (MDFM). You will receive information about your investments and all information about the fees you directly and indirectly pay to us, which is one way in which we manage this conflict.

Because we generally invest your account in the Pools, the suitability determination we conduct will not consider the larger market of non-proprietary products or whether those non-proprietary products would be better, worse or equal in meeting your investment needs and objectives.

There are also conflicts of interest inherent in the management of the Pools by MDFM. The conflicts of interest are addressed by MDFM in the best interests of the funds and are referred to and considered by the Independent Review Committee for the applicable Pools. The members of the Independent Review Committee are independent of MDFM and other members of the MDFM and Scotiabank group.

Material conflicts arising from being a member of the Scotiabank group

MDFM is a wholly owned indirect subsidiary of The Bank of Nova Scotia (Scotiabank). Our relationship to Scotiabank and its other financial services subsidiaries (the Scotiabank group) creates conflicts of interest when we provide products and services to you that are sourced from or provided by other members of the Scotiabank group.

Scotiabank and its various financial services subsidiaries, including MDFM, are commercial businesses and seek to maximize profits while providing fair, honest and appropriate services to clients. This means that MDFM may encourage you to do more business with us and the other members of the Scotiabank group, and we may engage affiliates to provide us with products and services for your account, but will always do so in a way that we consider in your best interests. MDFM will enter into these transactions or arrangements only where they are permitted under applicable securities laws and where we believe they are in your best interests.

Although MDFM is under common ownership with the other members of the Scotiabank group and may from time to time have directors and officers in common with these other firms, MDFM is a separate and distinct corporate entity.

MDFM generally carries on its advising activities independent of the other firms owned by Scotiabank. However, from time to time there may be certain cooperative business arrangements between us and the other firms, such as arrangements relating to introduction of clients, distribution of products, advisory relationships or administrative support.

In all cases, the conflicts described in this section raise perceptions that MDFM will favour the business interests of the various members of the Scotiabank group, rather than your interests. These conflicts and how MDFM manages them to ensure that it acts in your best interests are described below.

Related service providers to MDFM

The following entities that are part of the Scotiabank group provide services to you and/or MDFM.

Scotiatrust acts as the custodian of any segregated securities in your account and is our affiliate and a member of the Scotiabank group.
Jarislowsky, Fraser Limited provides sub-advisory services to certain of the Pools.
1832 Asset Management LP provides advisory or sub-advisory services to certain of the Pools or MD Funds.
MD Management Limited shares common management and back office and oversight functions with MDFM.
Estate and trust services are provided by The Bank of Nova Scotia Trust Company (Scotiatrust®).

Distribution activities of our affiliates

Affiliates of MDFM may participate as a dealer, including as a member of a selling group, in distributing securities, including securities of issuers that are related to the Scotiabank group. MDFM may take investment actions for your account or in the Pools in securities that are distributed by our affiliates. We avoid conflicts of interest inherent in these circumstances because the business of MDFM is separate from the corporate finance and research activities of its affiliates. Information barriers are in place to prevent the transfer of material non-public and other confidential client information between MDFM and our affiliates.

Relationships between the MD Group of Companies and Scotiabank

MDFM has direct and sole ownership in the following companies:

MD Management Limited
MD Life Insurance Company
MD Growth Investments Limited
MD Platinum Global Private Equity GP Ltd.
MD Platinum Global Real Estate GP Ltd.
MD Platinum Global Private Credit GP Ltd.
MD Platinum Global Private Equity 2023 Trust

None of the above-noted companies are reporting issuers.

Certain directors and officers of MDFM are also officers and/or directors of the above-noted companies and of other entities within the Scotiabank group. Each such director or officer has been retained by the related MDFM or Scotiabank company in his or her respective capacity due to his or her business experience, skills and education. As well, the various MDFM companies utilize common personnel and resources to achieve cost savings.

MDFM believes that the relationships described above and the utilization of related personnel within the MD Group of Companies do not raise conflicts of interest since all of the above-disclosed companies are affiliates and are working toward achieving the common objective of better serving the financial needs of their respective stakeholders. It is the position of MDFM that any relationships an MDFM director or officer might have with another MDFM or Scotiabank entity do not raise conflicts as none of the individuals is in a position to personally influence clients of MDFM to invest in any of the MD Family of Funds, the Pools or the MD Platinum Pools, nor are they compensated by any of the MDFM entities or Scotiabank entities on a commission or other basis that could result in decisions being made, or influence being exerted, against the interests of any of the MDFM clients.

In addition to applicable regulatory provisions and contractual provisions respecting any business arrangements that may exist between MDFM, the other MDFM entities and the other Scotiabank group firms, the directors, officers and employees of each of the firms are subject to guidelines or codes of conduct governing their actions. These guidelines are supplemented by our internal compliance policies and procedures.

Investments in related and connected issuers

Under certain circumstances, MDFM may cause your account to invest in securities where the issuer of the securities or another party to the transaction is a party having an ownership or business relationship with us. Since these transactions may create a conflict or the appearance of a conflict between our interests and yours, MDFM has adopted policies and procedures to assist in identifying and minimizing any conflicts of interest that may arise.

The Pools and the MD Platinum Pools are all related and connected issuers to MDFM.

For a full list of The Bank of Nova Scotia’s related and connected issuers, please visit Related_and_Connected_Issuer_list.pdf.

Other material conflicts

MATERIAL CONFLICT OF INTEREST	HOW CONFLICTS WILL BE ADDRESSED
We earn compensation for the services we provide you, and in connection with the investments made in your account. MDPIC Portfolio Managers are compensated through a combination of salary and bonus. Portfolio Managers may, from time to time, participate in internal promotional events. Nominal rewards may be earned.	We will inform you of fees, commissions and other compensation so that you know what you will be paying. Please see your Investment Counselling Agreement for a summary of fees applicable to your account. Bonuses for MDPIC Portfolio Managers are driven by many components, such as professional practice standards, sales targets, the delivery of benefits and client satisfaction. No portfolio manager compensation, however, is generated directly from commissions. Rewards for MDPIC Portfolio Managers are structured to ensure that they do not influence recommendations.
Different products and services have differing levels of compensation.	MDPIC Portfolio Managers are not compensated based on products and services sold to clients. MDPIC Portfolio Managers are required by securities regulations and firm policy only to make “suitable” investment decisions that are in the best interest of the client and put the client’s interest first. MDFM monitors the investment products as part of its product due diligence and takes into account the compensation structures and fees of those products.
We would like you to use more of our services and buy more of our products.	We do not engage in “tied selling,” where purchase of one service is conditional on buying another as well, a practice that is prohibited by regulation in any event. We have policies and procedures prohibiting recommendations solely for the purpose of generating revenue for us without such recommendations being in your best interest. We have in place compliance programs to monitor MDPIC Portfolio Managers to help identify and address concerns.
We would like you to use more of the services and products offered by MDFM and our related companies, including MD Management Limited and other members of the Scotiabank group.	Where we use referral arrangements, we disclose and manage them according to regulatory standards. We have policies and procedures, against which we monitor MDPIC Portfolio Managers’ activities, prohibiting recommendations solely for the purpose of generating revenue for us without such recommendations being in your best interest. MDPIC Portfolio Managers may make referrals to other MDFM affiliates for other financial products or services, and to the approved partners for banking products, as appropriate. Before any referral, you will be told about any referral fees we pay or receive in respect of your referral.
We may need to select which clients will be offered certain securities if availability is limited.	We have a “fair allocation” policy to ensure equitable treatment of clients in respect of segregated securities. Availability of the securities of the Pools is not limited since they are issued daily. Our fair allocation policy provides for practices for ensuring prices, commissions and trade fills are fairly allocated among clients when conducting block trades; where applicable, initial public offerings are allocated fairly and equitably among clients.
Individuals registered with us may also be registered with another registered firm related to MDFM. We may permit certain individuals who are registered with us (including your MDPIC Portfolio Manager or account representative) to be employed by, participate in, or accept compensation from other persons or firms, outside the scope of his/her relationship with us.	These relationships are subject to legislative and industry regulatory requirements that impose restrictions on dealings between related registered firms and/or individuals that are dually registered with a related registered firm. Such restrictions are intended to minimize the potential for conflicts of interest resulting from these relationships. We have adopted internal policies and procedures that supplement the regulatory requirements, including policies on privacy and confidentiality of information, conflicts of interest and outside business activities. All such arrangements must be reviewed and approved by management to ensure all potential conflicts are avoided, disclosed and/or controlled.
Individuals may serve on a board of directors or take on other activities that could take time or attention away from your account.	Securities legislation prohibits a registered individual from serving as a director of another registered firm that is not an affiliate of our firm. When an MDPIC Portfolio Manager sits on a board of directors of a charity or undertakes other community activities in any substantive way, they are subject to regulatory guidance on the disclosure and approval of outside business activities.
Potential relevant conflicts may arise from gifts and entertainment from third parties to MDFM employees with which MDFM has active or potential business relationships.	MDPIC Portfolio Managers are required to obtain pre-approval before accepting any gifts or entertainment where the value exceeds $200. No MDPIC Portfolio Manager may give or accept cash gifts or cash equivalents to or from a client, a prospective client or an entity that does business with or on behalf of MDFM. No MDPIC Portfolio Manager may provide or accept extravagant or excessive entertainment to or from a client, prospective client, or any person or entity that does or seeks to do business with or on behalf of the company. MDPIC Portfolio Managers may provide or accept a business entertainment event, such as dinner or a sporting event, of reasonable value, if the person or entity providing the entertainment is present. Receipt of entertainment is acceptable if the expenses would have been paid as a firm business expense.
We may have access to confidential information about the trading activity, plans or strategies of a client which may be used to make a personal trade prior to placing a client order (front-running).	We have adopted a Code of Ethics for Personal Trading and an Insider Trading Policy, each of which prohibits this type of behaviour.
An MDPIC Portfolio Manager or an employee may engage in personal financial dealings with clients.	We have adopted a Code of Conduct and a Conflicts of Interest Policy to address this issue.

MD Platinum^TM is a trademark of The Bank of Nova Scotia, used under licence.

MD Private Investment Counsel offers investment counselling services, delivered by MD Financial Management Inc.

The information provided in this Conflicts of interest disclosure document is intended to assist you in understanding and assessing material potential and actual conflicts of interest, including the nature of such conflicts, the potential impact on and risk that the conflict could pose to you and how we address the conflict to minimize its impact and risks to you and our other clients. Ultimately, we seek to resolve all material conflicts of interest in your best interests. This is an overview of a complex subject. If you ever have any questions or concerns, whether they involve conflicts of interest or other matters, you should never hesitate to say so and ask your MDPIC Portfolio Manager for an explanation and/or further information.

Management fees and expenses may be associated with pooled fund investments and the use of an asset allocation service. Before investing, please read the prospectus of the pooled funds or MD Family of Funds in which investments may be made under the asset allocation service. Pooled funds or MD Family of Funds are not guaranteed. Their values change frequently, and past performance may not be repeated. The MD Family of Funds is managed by MD Financial Management Inc.

MD Financial Management Inc. wholly owns or has a majority interest in the MD Group of Companies. It provides financial products and services, is the fund manager for the MD Family of Funds and offers investment counselling services. For a detailed list of the MD Group of Companies, visit md.ca.

(01/22) 524892