Liontrust Responsible Capitalism Report 2021 - Flipbook - Page 30
Conflicts of interest and stewardship
Liontrust takes the management of conflicts of interest seriously.
Effective management of this area ensures that the Group can
maintain credibility across its own business operations; ensure that
the investment processes of its fund management teams are followed;
and provide an environment in which engagements with holdings
and proxy voting follow each team’s investment process. The Group
is transparent regarding its conflict of interest policy and keeps
detailed information on any potential or actual conflict of interest
for oversight and audit purposes. Ultimately, this approach provides
stability to the Group’s overall Responsible Capitalism programme.
INSIDE INFORMATION
Definition
Inside information is any information that Liontrust employees,
including its fund managers, may obtain which is not in the public
domain. The abuse of inside information (i.e. using this information to
trade or influencing others to trade using this information) is a breach
of insider trading rules and is strictly forbidden at Liontrust.
Reducing the Group’s exposure to risks around inside information
Liontrust has some exposure to the risk of insider trading, but this
risk is mitigated by the use of strict controls around the receipt and
sharing of inside information. Liontrust’s Compliance team operates
an Insider List which is regulated by the Group’s Insider List policy.
(This is specific to Liontrust Asset Management inside information.
The Financial Crime & Market Abuse Policy covers market soundings
and other, non-Liontrust Asset Management, inside information. See
below for more details.)
Front office employees receive annual training and regular guidance
on the rules around inside information and how to manage
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it effectively. Liontrust also has a “one in all in” policy on inside
information in which the ability is removed for fund managers to trade
any stock on the “stop list” on Eze, the Group’s dealing platform.
Instances in which Liontrust employees may
hold inside information
From time to time, the Group’s investment managers or other employees
may be made “inside” for the purpose of market sounding. In such
circumstances, Liontrust’s Compliance team act as gatekeepers and
tight controls are established so that those Liontrust individuals are not
permitted to trade. These include pre-trade restrictions on Liontrust’s
dealing systems, both for trading in the funds and also for trading
in personal accounts (for which pre-approval must be sought and
given before Liontrust employees trade on personal accounts). The
Group’s Compliance team operates as a gatekeeper for all market
soundings and follows the processes documented in the Group’s
Financial Crime and Market Abuse Policy and related procedures.
The Compliance team confirms with the fund managers once the
information is made public before removing any restrictions.
Other instances in which fund managers or employees may come
into possession of inside information is in working with smaller
companies. Smaller companies may be less experienced with
procedures and/or protocol regarding inside information and may
relate information that is considered inside and/or market sensitive.
In such instances, or in instances where Liontrust employees and/
or fund managers are made inside inadvertently during discussions
with companies, the same restriction and documentation process is
followed as for market sounding. In instances where it is unclear as to
whether the information disclosed is considered inside information,
Liontrust will err on the side of caution and restrict the company until
further clarification can be made.