RISKS ASOCIATED WITH FINANCIAL INSTRUMENTS

Leverage effect – (1) Using money loaned by a company for increasing the profitability generated by stockholders capital. If a corporation achieves with the loan fund a higher profit than the cost of its due, it means that the leverage effect had been successfully enforced. (2) The used method for increasing profitability of an investment without increasing the investment itself. Buying securities in margin is an example of leverage effect with loaned money. In this case you can obtain an additional leverage effect if the securities bought in margin are convertible in common shares. Although it does not imply using loaned money, pre-emptive rights, guaranties and options represent another example of leverage effect, offering the perspective of obtaining a higher profitability with a low investment or with none.

Among the risks associated with financial instruments traded on regulated markets or on alternative trading systems, we count prices volatility and financial instruments liquidity.

The investor can get, as a follow-on his financial instruments transactions, financial commitment or other additional obligations, including conscriptions, additional to the financial instruments costs. So, in his quality as a stockholder, the client benefits of all the rights and obligations reverted according to Law in this attribute.

CONFLICT OF INTEREST

The company takes all the precautions measures so that the conflict of interest situations between the company, including managers, employees, agents or any other person found in a direct or indirect control position in the company, and company’s clients or between two of the company’s clients, or any other combination of the situations above, are identified and then prevented and managed in such case that the clients’ interests won’t be affected.

The organizational chart of the company as to the Internal Organizational Regulations, assures the separation of the deployed activities. Access to confidential information is limited only to those who use the information in their current activity.

The company’s management establishes the staff with access to different categories of information contained by the informational system, the person responsible with the system’s security (using passwords and changing them periodically).

The company does not conclude transactions on its own, in the account of relevant persons, or in the account of third parties, or interested clients on a base of information that have not yet become public and which could influence the market price, information which it’s employees knew during their activity.

The company provide services and carries investment activities as counterpart of the client, or on behalf of the client towards is, direct or indirect, in a conflict of interests, considering inclusively the interests that derive from trades within the group the company is a part of, only if the nature and the expense of his interest are revealed to the client, either in writing or by phone and only if the client greed to conclude a transaction in the given conditions. The notification to the client and the client’s agreement must be registered by the S.S.I.F., inclusively on magnetic support if the communication is made by phone.

Note: Any further details regarding the conflict of interests policy will be at the clients’ disposal at any moment, on request, on a durable reliance.

COMPLIANCE DEPARTMENT

According to the organizational chart, the company has a functional Compliance Department. The representative of compliance department:

Cătinaş Florin, Compliance Officer (pending authorization) Phone: +4 021.207.48.80

All complaints will be recorded by the Compliance Officer.

The compliance function operates independently and has the following responsibilities:

a)        To monitor and, on a regular basis, to assess the adequacy and effectiveness of the internal measures and procedures, and the actions taken to address any deficiencies in the firm’s compliance with its obligations;

b)        To advise and assist the relevant persons responsible for carrying out investment services and activities to comply with the obligations of SSIF under the legal provisions.

In exercising its responsibilities, the compliance officer shall be in charge of the following duties:

a)        To monitor and verify on a regular basis the legal provisions relevant to the activity of the S.S.I.F. and its internal procedures, to keep record of the deficiencies found;

b)        To ensure provision of information to the firm and its personnel on the legal framework applicable to capital markets;

c)         To endorse the documents submitted by the company to Romanian National Securities Commission (R.N.S.C.) to the purpose of obtaining the authorisations referred to in R.N.S.C. regulations, as well as the reports submitted to R.N.S.C. and capital market entities;

d)        To prevent and propose remedial measures in the event of breaches of the laws and regulations in force that are relevant to the capital market, as well as of the internal procedures of the firm by the company or by its personnel;

e)        To keep record of all the complaints received from clients and the measures taken for their resolution;

f)         To review and endorse the marketing materials of the company;

g)        To ensure the exclusive use by each of the investment agents of the access codes and passwords assigned by capital market entities;

To report to the Board of Administration, the senior managers and the internal auditors situations when the legislation, the regulations in force or the internal procedures have been breached.