Clients of Japaninvest Inc should review the following important regulatory disclosures:

 

 

OUR REGULATORS

 

Japaninvest is a registered FINRA broker-dealer in the United States of America. In the United Kingdom we are authorised and regulated by the Financial Services Agency (reg no 219918). In Japan we are registered with the FSA as a Non Discretionary Investment Adviser. IND-X is authorised and regulated in the United Kingdom by the Financial Services Authority and in Hong Kong by the HK SFC.

 

 

BUSINESS CONTINUITY PLANNING

 

Japaninvest Inc. Business Continuity Planning Disclosure FINRA Rule 3510(e)

 

Japaninvest Inc. has developed a Business Continuity Plan on how we will respond to events that significantly disrupt our business.  Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur.  With that in mind, we are providing you with this information on our business continuity plan.

 

Contacting Us – If after a significant business disruption you cannot contact us as you usually do at 212-867-7300 or sean.forbes@japaninvest.com, you should call our alternative number 917-941-2320 or go to our website at www.japaninvest.com.  If you cannot access us through either of those means, you should contact our designated execution partners for instructions on how they may provide to you continued financial services in the event of a significant business disruption such as prompt access to funds and securities, enter orders and process other trade-related, cash, and security transfer transactions. Our clearing firm, Merrill Lynch, can be reached at 212-449-1000 or www.ml.com.  Also, for our other designated execution partners, Instinet can be reached at 888-819-3202 or www.instinet.com and BNP Paribas can be reached at 212-841-2601 or www.bnpparibas.com/en/home/.

 

 Our Business Continuity Plan – We plan to quickly recover and resume business operations after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the firm’s books and records, and allowing our customers to transact business.  In short, our business continuity plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption.

 

 Our business continuity plan addresses: data backup and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; critical supplier, contractor, bank and counter-party impact; regulatory reporting; and assuring our customers prompt access to their funds and securities if we are unable to continue our business.

 

 Our clearing firm, Merrill Lynch, backs up our important records in a geographically separate area. While every emergency situation poses unique problems based on external factors, such as time of day and the severity of the disruption, we have been advised by our clearing firm that its objective is to restore its own operations and be able to complete existing transactions and accept new transactions and payments from nearly instantaneous to approximately four hours.  Your orders and requests for funds and securities could be delayed during this period.  However for some business functions, next-day recovery is projected.

 

 Varying Disruptions – Significant business disruptions can vary in their scope, such as only our firm, a single building housing our firm, the business district where our firm is located, the city where we are located, or the whole region.  Within each of these areas, the severity of the disruption can also vary from minimal to severe.  In a disruption to only our firm or a building housing our firm, we will transfer our operations to a local site when needed and expect to recover and resume business within one to two days.  In a disruption affecting our business district, city, or region, we will transfer our operations to a site outside of the affected area, and recover and resume business within three to four days.  In either situation, we plan to continue in business, transfer operations to our clearing firm if necessary, and notify you through our website www.japaninvest.com or our customer emergency number, 917-941-2320 how to contact us.  If the significant business disruption is so severe that it prevents us from remaining in business, we will assure our customer’s prompt access to their funds and securities.

 

 For more information – If you have questions about our business continuity planning, you can contact us at 212-867-7300 or sean.forbes@japaninvest.com (3/09)

 

 

CONFLICTS POLICY

 

1. DEFINITIONS

 

1.1. “relevant persons” Japaninvest Limited , and where relevant the wider Japaninvest Group  and all of their managers and employees,.

 

1.2. “the Wider Japaninvest Group”: Japaninvest KK, Japaninvest Inc., Japaninvest Group plc, and Ji Asia Research Limited.

 

 

 

2. INTRODUCTION

 

2.1. This policy is specifically designed to cover the activities of the Japaninvest Group’s EEA entity, Japaninvest Limited. The non-EEA entities comprising the Wider Japaninvest Group are subject to separate local regulation but should follow this policy to the extent that it does not conflict with the local regulations they are subject to.

 

2.2. This policy sets out key areas where Japaninvest Limited (“Japaninvest”) may be subject to a conflict of interest in the provision of services to clients whilst carrying out regulated or ancillary activities. The policy covers those circumstances which either constitute or could give rise to a conflict of interest entailing a material risk of damage to the interest of one or more clients.

 

2.3. The policy describes the structures that have been put in place to limit the consequences of these actual or potential conflicts of interest. The structures make use of both separation of function and Chinese Walls and are designed to ensure that relevant persons maintain an appropriate degree of independence.

 

 

3. ACTIVITIES OF THE JAPANINVEST GROUP

 

3.1. The main activity of the Japaninvest Group and its principal source of income is the provision of sales advice and investment research to institutional fund managers.

 

3.2. A matrix summarizing the key activities undertaken within the various Group entities is set out at in the List of Group Entities at the bottom of the Appendix.

 

 

4. CIRCUMSTANCES WHICH CONSTITUTE OR COULD GIVE RISE TO A CONFLICT OF

INTEREST

 

4.1. We have listed below actual or potential conflicts of interest that could arise entailing a material risk of damage to the interest of one or more clients.

 

4.2. Investment advice

 

·         Conflicts relating to the interests of the Japaninvest Group and/or its investor clients who are Sales and Trading customers.

·         Substantial Gifts or entertainment;

·         Conflicts relating to differing interests of investment clients who are Research and Trading customers;

·         Front running of client orders by relevant persons.

 

4.3. Investment research:

 

·         Relevant persons dealing on their own account prior to distribution of research to clients;

•       Selective distribution of research to favoured clients or to relevant persons;

·         Provision of research in relation to an entity or group to for which Japaninvest Limited is also providing other services leading to pressure to produce favourable research;

·         Substantial gifts or entertainment provided to analysts leading to a lack of Independence through undue influence; and

·         Remuneration structures of analysts leading to a lack in independence.

 

5. PROCEDURES AND MEASURES TAKEN TO MANAGE CONFLICTS

 

The procedures and measures we have taken to manage the conflicts of interest identified above are summarized below. These procedures and measures are designed to ensure that relevant persons involved in business areas identified above maintain an appropriate degree of independence. The measures taken have been split into firm/ group wide measures and business specific measures.

 

5.1. Group wide measures

 

5.1.1. Chinese Walls

 

Chinese walls separate certain business activities carried out within the Japaninvest Group. The key Chinese Wall arrangements in place are summarized below:

·         Japaninvest Limited staff are separated from the rest of the Japaninvest Group by formal Chinese Wall arrangements which prevent the flow of confidential information to the rest of the Japaninvest Group. These arrangements include physical segregation of the department and policies and procedures governing the security of documents and electronic data.

 

5.1.2. Reporting lines

 

Reporting lines are designed to avoid conflicts arising. However as a small Group it is not possible to entirely remove conflicts.

 

5.1.3. Remuneration Structures

 

Remuneration policies are designed to avoid rewarding behaviour that could lead to the disadvantage of clients. Remuneration of analysts is not linked to any specific transaction but is based upon the general profits of the firm. Each department’s remuneration is decided separately except that all staff remuneration is linked to the general profits of the firm.

 

5.1.4. Training

 

All staff have received training on the procedures the Japaninvest Group has put in place to manage conflicts of interest.

 

5.1.5. Substantial Gifts and Entertainment

 

All gifts given and received are reported to the Compliance Officer.

 

5.1.6. Restrictions on personal account dealing

 

All personal account deals require pre-clearance from the Compliance Officer.

 

 

5.2. Business specific measures

 

5.2.1. Research and Sales - Exposure to unpublished price sensitive information.

 

Should research or sales staff inadvertently receive Unpublished Price Sensitive Information, they must cease activity in their research or sales function in respect of the securities issued by the particular subject company and inform Compliance immediately.

 

5.2.2. Management of Conflicts Relating to Research

 

All of the research produced in the UK by Japaninvest meets all of the criteria specified to be classified as independent investment research. In order to minimize the potential for conflicts of interest to arise in relation to the provision of research the following measures have been put in place:

·         Research is a client facing service, and is the stand-alone core service. In particular, IND-X sales and trading staff do not supervise analysts; do not decide on coverage, timing or content of research and do not determine analyst's remuneration.

·         Japaninvest Limited does not offer or agree to provide favourable investment research on any company or security, nor to make or change any particular recommendation.

·         Research analysts' remuneration is not linked either to specific transactions nor to their stock recommendations.

·         Sections of draft research reports may be shown to subject companies before publication, but only for the purpose of verification of factual statements. Draft research reports must not include recommendation or price targets or any references to fair value.

·         Any comments relating to the analyst's opinions are required to be ignored or, if necessary, escalated to Compliance.

·         If any inducement were to be offered by any party to an analyst in order to secure favourable treatment from that analyst, this must be reported to Compliance.

·         Responsibility for the content of research recommendations rests primarily with the investment analysts named as having produced them. Editorial control is not given to anyone whose role or interests might reasonably be considered to conflict with the interests of the clients to whom the esearch is to be published or distributed.

·         The timing of publication of research is controlled by the Head of Research. Research is distributed to clients simultaneously.

·         Analysts must not discuss the potential timing or content of research with anyone outside the research department except for the purpose of checking factual accuracy until such time as either the research has been distributed to all relevant clients.

 

List of Group Entities

	Investment Research	Research Sales
Japaninvest Limited	YES
Japaninvest Inc		YES
Japaninvest KK	YES	YES
Ji-Asia Research Ltd
Japaninvest Group plc